The New Jersey Board of Public Utilities has launched a storage incentive program, aiming to develop 1,000 MW of capacity to mitigate the state’s energy shortfall. 

The first phase of the Garden State Energy Storage Program has a goal of developing 350 to 750 MW in transmission scale capacity by October. The agency aims to award the remainder of the first phase capacity by next May. 

The program will have a competitive solicitation, according to the June 18 board order explaining the plan. Financial support in the form of fixed incentives will be paid over 15 years. The program will be open to stand-alone energy storage projects as well as solar-plus-storage projects. The pre-qualification process will start June 25, and the final bid submission deadline is Aug. 20. 

“These projects are essential for mitigating the electric capacity supply crunch that is driving dramatic rate increases for New Jersey customers,” according to the order. It adds that “quantitative analysis” by the BPU staff indicates the project will “provide net savings to ratepayers within the first few years of its operation.” 

Boosting Supply

New Jersey, like other states, faces a potential energy shortfall, which PJM attributes in part to the closure of fossil fuel generators faster than new — mostly clean energy — facilities come online. Surging demand from data centers and electric vehicles exacerbates the problem. 

A BPU release said the storage project “directly addresses demand growth and limited supply.” 

“By strategically investing in energy storage now, we’re building a resilient system that can better withstand both man-made and weather-related disruptions,” BPU President Christine Guhl-Sadovy said in a release. She added that storage also can “support the critical integration of more clean energy, which is vital for New Jersey’s sustainable future and peace of mind.” 

Democratic legislators and BPU officials argue that solar and storage projects are the quickest and cheapest way to add new electricity generation. Storage can provide power overnight or when the sun is not out, and help meet spikes in demand. The BPU says storage can boost the supply of electricity, thus reducing prices.   

Guhl-Sadovy called the launch of the program a “pivotal moment for New Jersey’s energy landscape,” 

“This isn’t just about meeting our climate goals, it’s about making sure every family can afford to keep their lights on and their home comfortable,” she said. 

New Jersey’s Clean Energy Act of 2018 requires the state to deploy 2,000 MW of energy storage. The state already has missed a state target of having 600 MW of storage in place by 2021. The BPU said last year the state had just 560 MW of installed storage. 

Future Phases

The BPU in 2015 established the Renewable Electric Storage Incentive Program and also offered incentives to solar projects coupled with storage under the agency’s Successor Solar Incentive (SuSI) program, neither of which covered the large scale and sweep of the latest program.  

The BPU’s first version of the Storage Incentive Program (SIP), released in 2022, focused on how to stimulate storage. It since has been modified into the current version through a series of public hearings. (See Impact of NJ’s Storage Plan on Overburdened Communities Questioned.)  

The second phase of the new program is intended to be launched in 2026 but was not approved in the June 18 order. It would “focus on incentives for smaller energy storage systems connected to local distribution grids, including both “in front of the meter” (grid-connected) and “behind the meter” (residential or commercial) systems, according to the BPU release. 

A third phase that would offer transmission performance incentives also is under consideration, but the phase is “currently deferred” according to the order. 

Fred DeSanti, executive director of the New Jersey Solar Energy Coalition, said in an email to RTO Insider that he understands “the potential good that can come of transmission level storage in terms of helping with the capacity shortfall.” But he expressed concern that the funding would come from the Regional Greenhouse Gas Initiative (RGGI). 

DeSanti said the state, an energy importer, has reaped most of the benefits it can from participating in the RGGI program. He added that by deferring the behind-the-meter proposal to the second phase of the storage program, the state “misses an opportunity to help this important market” just as it faces the loss of crucial tax credits in the federal budget being shaped by Congress. 

Mitigating Ratepayer Pain

The BPU emphasized the way extensive storage capacity could help bring down electricity prices in the state, as the agency also backed a series of initiatives designed to mitigate the impact of the recent 20% hike on the average ratepayer bill. 

The board approved changes in the state universal service fund (USF), which provides credits to low- and moderate-income ratepayers struggling to pay gas and electricity bills. The board increased the minimum USF benefit from $5 to $20 and the maximum benefit from $180 to $200. 

The board order also requires utilities to increase ratepayer enrollment in the program to ensure that more eligible ratepayers benefit. The state’s four utilities are required to increase by 5% their enrollment in the program during the year from October 2024 to September 2025. They should increase enrollment by 3% in the second year and by 2% in the third year, according to the plan. 

The changes are expected to affect 136,000 existing customers who receive the minimum benefit and an additional 8,000 who receive the maximum benefit, according to the BPU. The utility enrollment efforts are aimed at the 80% of eligible household that are not signed up for the benefit. 

The changes will cost about $28.5 million, which will be paid with existing funds, the board said.