By: Henry T. Chou, Esq.

On October 20, 2010, a partnership of Dallas-based Panda Power Funds and New York-based Con Edison Development began construction on one of the nation’s largest solar farms in Pilesgrove, New Jersey, a rural community in Salem County, approximately 20 miles from Wilmington, Delaware.

The 100-acre former farm was slated for residential development, but in the down housing market, the energy companies were able to acquire the property for use as a solar farm, consisting of 71,000 solar panels which will be installed and generating power by next spring.

Producing 20 megawatts of DC power, it will be the nation’s second largest solar farm. The only existing solar farm that is bigger is a 25-megawatt facility in Arcadia, Florida.

The solar farm developer was lured to New Jersey with an innovative solar-renewable energy certificate program, which works like the emissions trading program currently being considered by the U.S. Congress. Under the program, energy companies generating power from non-renewable energy sources must buy certificates from producers of renewable energy in order to avoid paying fines for carbon emissions.

The certificates, which are traded on the open market, cost approximately $400-$500 each. The Pilesgrove solar farm will generate about 27,000 certificates per year, which means that in addition to selling the energy they produce, the developers can make an additional $11-12 million per year in certificate sales.

Earlier this month, both houses of the Legislature passed a terse, three-sentence bill (A2550/S1299) that would allow owners of property zoned for industrial uses to install and operate “renewable energy facilities,” such as solar panel fields and wind farms. The land on which the facilities are built must comprise of at least 20 contiguous acres and must be owned by the same person or entity. If Governor Corzine signs the bill into law, renewable energy facilities will immediately become permitted uses in areas currently zoned for industrial use by municipalities.

The bill, as currently written, does not account for such facilities as an accessory use to a primary industrial uses, e.g., a paper mill powered by solar panels. Thus, at this point, it is unclear whether industrial business owners would be required to completely convert the use of their property from an industrial facility to a renewable energy power station in order to take advantage of the legislation.

It remains to be seen whether the conversion of industrial businesses to renewable facilities will be a profitable enterprise or whether municipalities will be amenable to the new uses. However, New Jersey’s politicians are hoping that the renewable energy grants and incentives contained in the federal government’s new stimulus package will convince some to take the leap into a new era of “green” energy.