New Jersey has spent years building one of the most active community solar markets in the country. The program's fundamentals are strong. New Jersey's market stands out for combining strong electricity demand, a dense subscriber base, supportive state policy, and one of the most mature community solar frameworks in the country.
Those conditions have helped create a development environment in which both subscriber enrollment and project economics have remained attractive compared with many other states.
The New Jersey Board of Public Utilities made the Community Solar Energy ProgFam permanent in 2023, and in August 2025, Governor Murphy signed legislation directing the BPU to open registration for an additional 3,000 megawatts of new capacity. That registration window opened in March 2026 and runs through December 2029, or until capacity fills.
But a permanent program with growing capacity doesn't mean the economics stay constant. The state incentives that support developer project economics — and therefore the lease income they can offer hosts — are on a documented downward trajectory. The BPU has been explicit that reducing incentive levels over time is a policy goal. Rates have already stepped down once, and further reductions are expected as the program matures. Each reduction that takes effect before a project registers locks in a less favorable economic baseline for the life of that project.
Capacity allocation adds another variable. Prior registration blocks in two of New Jersey's four utility territories were filled and closed before many property owners had completed a preliminary site conversation. The current 3,000 MW block operates on the same first-come, first-served basis.
Here's the timing reality: a realistic path from initial site assessment to commercial operation runs 14 to 32 months. A property owner who begins a development conversation today is looking at 2027 or 2028 before lease payments start.
Community solar allows commercial property owners to generate income from underutilized rooftops or land without owning or operating a solar system.
Under a typical host lease structure, a solar developer finances, designs, builds, owns, and operates the project at no cost to the property owner. The electricity generated is delivered to the grid, and subscribers receive credits on their utility bills based on their share of the system's output.
In exchange for hosting the project, the property owner receives long-term lease payments, typically structured over a 20-year term. The developer manages subscriber enrollment, billing, maintenance, and ongoing operations.
For REITs and portfolio owners, the model is particularly straightforward. Because the developer owns the system, they capture available tax incentives and assume operational responsibility, while the host receives a predictable income stream with no capital investment required.
For commercial property owners, the financial case is built on a simple premise: lease your rooftop or land to a qualified solar developer, collect predictable income for 20 years, and put no capital at risk.
Based on current New Jersey market conditions, property owners hosting community solar projects can expect average annual lease earnings of approximately $80,000 — translating to roughly $1.6 million in cumulative income over a standard 20-year term, with annual escalators of 1–2% built into most agreements.
Figure 1. Typical community solar host economics for a qualifying 150,000-square-foot commercial roof in New Jersey. Property owners may earn approximately $80,000 annually and $1.6 million over a 20-year lease term with no upfront capital investment.
1. Roof condition and useful life. A system installed today is expected to operate for 20 or more years. Developers will require confidence that the underlying roof can support that lifespan. Buildings with roofs nearing the end of life may need remediation before or alongside installation, affecting the timeline and net economics. Significant shading from HVAC equipment, parapets, or adjacent structures also reduces usable capacity. Roof condition and age are among the first things a credible site evaluation will assess.
2. Utility territory. New Jersey's four participating utility service areas — PSE&G, JCP&L, ACE, and RECO — each present different subscriber market dynamics and interconnection pathways. PSE&G territory, covering northern and central New Jersey, offers the deepest subscriber pool but historically the tightest grid capacity. ACE territory in southern New Jersey has marginally stronger solar resources and, in some cases, more available interconnection capacity. JCP&L and RECO territories present their own distinct dynamics. Where your property sits affects both the depth of the market a developer can tap and how quickly a project can reach commercial operation.
3. Grid access and interconnection feasibility. A building with strong physical characteristics can face significant cost increases or timeline delays if the nearest interconnection point lacks sufficient hosting capacity. Interconnection feasibility cannot be assessed without a formal study — a core component of any serious site evaluation. It is one of the variables that most often separates a viable project from one that looks good on paper.
4. Existing encumbrances. Roof or ground leases, easements, deed restrictions, or zoning classifications that limit energy development use all require review before a community solar lease can be structured. These are rarely dealbreakers, but they are better surfaced early than discovered mid-negotiation.
Those four factors determine where your property lands relative to the $80,000 annual average. A detailed site evaluation is typically required to assess revenue potential, interconnection feasibility, and project viability.
New Jersey's community solar framework has expanded significantly over the past three years and continues to evolve. Understanding its key elements directly affects project timelines, lease economics, and the value of moving forward now rather than later.
The permanent program and BPU oversight. The New Jersey Board of Public Utilities administers the Community Solar Energy Program, approving projects, setting incentive levels, and overseeing interconnection across all four participating utilities. The program was made permanent in August 2023, replacing a two-year pilot that had demonstrated strong demand and subscriber uptake. Individual projects are capped at 5 MW.
The 3,000 MW expansion. In August 2025, Governor Murphy signed S4530 into law, directing the BPU to open registration for an additional 3,000 megawatts of community solar capacity — roughly four times the amount built or allocated under the permanent program to that point. Registration opened in March 2026 and remains open through December 2029, or until the full 3,000 MW is registered, whichever comes first. The law also removed the prior 150 MW annual registration cap, enabling large-scale deployment at a pace the earlier framework couldn't accommodate.
The four utility territories. Community solar projects operate across PSE&G, JCP&L, ACE, and RECO service territories. While the program framework is statewide, each territory presents different interconnection conditions, subscriber market dynamics, and capacity allocation considerations. Those differences can affect both project viability and development timelines, making utility territory an important factor in any site evaluation.
Consolidated billing. New Jersey implemented consolidated billing as part of the 2023 permanent program legislation, streamlining the subscriber experience by combining the bill credit and subscription charge on a single utility statement. This reduces enrollment friction and subscriber attrition — both of which directly affect how quickly a project reaches full subscription and how stable that subscription base remains over the life of the project.
The SREC-II incentive and its trajectory. Developers earn production-based incentives, called SREC-IIs, under the state's Successor Solar Incentive (SuSI) program for 15 years from the project's registration date. These incentives are captured by the developer — not the host — and are a primary input into the project economics that determine what lease terms a developer can offer. The BPU has explicitly stated that reducing incentive levels over time is a policy goal, and rates have already declined. Projects that register earlier lock in higher incentive rates for their full 15-year term; those that register under future, lower blocks will offer hosts correspondingly less. This is the clearest economic argument for beginning a development conversation now rather than after the next BPU rate review.
Figure 2. Key New Jersey community solar regulatory milestones, including the permanent Community Solar Energy Program, the 3,000 MW program expansion, registration window timing, and Successor Solar Incentive (SuSI) program developments that influence project economics and host lease values.
"Every community solar project is unique, but one trend remains consistent: evaluating a property's development potential early provides owners with more options. Site suitability, interconnection availability, roof condition, and lease structure all take time to assess, and those factors are easier to address before registration windows become more competitive," said Wayne Pfisterer, CEO of Pfister Energy.
New Jersey requires every community solar project to allocate at least 51% of its capacity to low- and moderate-income (LMI) subscribers, who must receive a guaranteed bill credit discount of at least 20% relative to their standard utility rate. Managing that requirement is entirely the developer's responsibility — not the host's.
But LMI subscriber recruitment is consistently slower and more operationally demanding than market-rate recruitment, and a project that struggles to reach full subscription delays the stable lease income a host is counting on. How well a developer manages their LMI pipeline is a legitimate due diligence question — and one that plays out very differently depending on where your property sits.
New Jersey's four utility territories present an uneven LMI landscape. PSE&G territory, covering the state's densest urban corridor, has the deepest LMI subscriber pool in the state — but also the tightest grid capacity and the most competitive development environment. ACE territory in southern New Jersey has stronger grid hosting capacity and more available development sites, but a thinner, more geographically dispersed LMI population, meaning developers operating there need an established, low-density recruitment infrastructure to reliably hit the 51% threshold on schedule. JCP&L and RECO territories each present their own balance of subscriber pool depth and grid access that warrants individual assessment.
Figure 3. Comparison of New Jersey utility territories based on low- and moderate-income (LMI) subscriber availability, development opportunities, and interconnection conditions across PSE&G, JCP&L, Atlantic City Electric (ACE), and Rockland Electric (RECO).
The largest risks in community solar are rarely technical. They are development and execution risks — interconnection feasibility, project timelines, subscriber acquisition, and lease structure — that ultimately determine whether a project delivers on its expected economics. Evaluating these five areas before committing will improve the project's long-term ROI and success.
1. Confirm interconnection feasibility before committing to a lease. Lease terms are only as good as the project's ability to get built. A developer who moves quickly to secure a host site before completing a preliminary interconnection assessment may be prioritizing pipeline over execution. In New Jersey, where grid hosting capacity varies significantly by territory, and prior registration blocks have filled quickly in some areas, interconnection feasibility should precede any lease commitment.
2. Understand the development timeline — and its implications. A realistic path from initial site assessment to commercial operation runs 14 to 32 months, varying significantly based on utility territory, interconnection requirements, permitting complexity, and project size. While program rules generally require projects to reach permission to operate within 18 months of conditional registration — or 24 months for landfill or contaminated-site projects, with a possible six-month extension — the full process often begins earlier with site review, lease negotiation, interconnection analysis, permitting, and financing. In a market where program economics may change over time, delays can have financial implications beyond simple schedule impacts. Ask any prospective developer for a realistic timeline specific to your site and territory — not a best-case projection.
3. Discuss your developer's approach to LMI subscriber recruitment. LMI recruitment is more operationally demanding than market-rate recruitment, and a developer's capability in your specific utility territory is worth exploring before you sign. Ask how they source LMI subscribers, what their current subscription rates look like across their portfolio, and what community partnerships support their outreach.
4. Plan for roof remediation before solar installation. A roof requiring replacement mid-lease creates costly complications for both parties. Assess roof condition and useful life relative to a 20-year lease term before, not after installation. A credible developer will raise this proactively in the site evaluation process.
5. Look for escalator provisions, clear lease terms, and a proven track record. A flat lease payment over 20 years loses meaningful value to inflation, so most well-structured agreements include annual escalators of 1–2%. It's also worth reviewing how the agreement handles maintenance responsibilities, roof access, and end-of-term obligations. Because community solar leases often extend for 20 years or more, property owners should also understand who stands behind the project and whether the developer has the financial strength and operating history to support long-term performance.
New Jersey's community solar market has moved beyond the pilot stage and into long-term program maturity. The state's recent 3,000 MW expansion reflects a clear commitment to continued growth, creating meaningful opportunities for commercial property owners with suitable rooftops and land.
At the same time, the economics available to new projects are unlikely to remain static. For new registrations, the community solar incentive has already been reduced from $80/MWh to $60/MWh, reflecting updated market modeling, higher electricity rates, and changes to subscriber discount requirements. Capacity is allocated on a first-come, first-served basis.
The opportunity may remain available for years. The economics available to new projects may not.
If you own commercial property in New Jersey, a site assessment can help determine the feasibility of development, potential lease revenue, and the timeline required to move a project forward.
Explore our Community Solar services or contact Pfister Energy to discuss whether your property may be a candidate for development.