Two laws signed by New Jersey Gov. Phil Murphy (D) aim to dramatically expand community solar and storage incentive programs as the state searches for new generation sources to help meet a predicted energy shortfall.

One of the laws, S4530, instructs the New Jersey Board of Public Utilities (BPU) to increase the capacity of community solar by 3,000 MW by 2029, or whenever the limit is reached. The state’s current allowed capacity is 150 MW a year, although a one-time measure increased it to 250 MW in 2025.

The second law, S5267, requires the BPU to launch an incentive program that would stimulate the development of “transmission-scale energy storage systems,” those with a capacity of at least 5 MW that are connected to PJM. The total project capacity would be 1,000 MW. In the first phase of the project, the legislation requires the BPU to approve projects with a capacity of at least 350 MW by the end of 2025 and approve the remainder by June 30, 2026. Eligible projects must have a commercial operations date of no later than Dec. 31, 2030, and have completed the PJM connection process to the system impact study stage.

Under the law, the BPU must allocate $60 million each year to the incentive fund.

“This legislation addresses real problems,” said BPU President Christine Guhl-Sadovy. “More New Jerseyans will get access to the benefits of expanded community solar programs — one of the best ways for residents to lower their utility bills while contributing to clean energy in the Garden State. And large-scale battery storage will strengthen our electric grid and keep the lights on when we need it most.”

Officials in New Jersey, an importer of energy, argue that solar and storage development are key elements in the effort to boost electricity generation, and that the two methods can create power more cheaply and rapidly than would be possible by developing other sources, such as nuclear or gas generation.

New Jersey, like other states in PJM, faces a dramatic increase in demand, due mainly to the expected development of energy intensive data centers. PJM also argues that future energy capacity has been hindered by the closure of fossil generating sources at a faster pace than new sources — mainly clean energy — have come online to replace them.

Officials say the predicted shortfall in generation contributed to a 20% increase in the average New Jersey electricity bill in June.

Powering 1M Households

Murphy said he expected the new laws to “build a cleaner, more resilient future” for state residents.

“By accelerating the process for bringing new sources of energy online and rapidly building new energy storage facilities, we will meet growing demand while also making life more affordable for our state’s families,” he said at a press conference Aug. 22.

The New Jersey branch of the Sierra Club said the solar legislation would “enable the equivalent of one million households to receive solar power by 2028.” The storage bill will “vastly” accelerate the construction of storage in the state, the environmental group said in a release.

“Energy storage is essential to make renewable energy sources like solar provide energy to its fullest potential by allowing excess energy generated during sunny periods to be saved for peak demand,” said Anjuli Ramos-Busot, director of the club’s state branch. “Incentivizing transmission-scale energy storage while increasing community solar targets will generate more power capacity, help reduce cost of electricity, improve grid reliability, reduce emissions and combat climate change.”

New Jersey’s community solar program has been a bright spot, and a source of pride for state officials. The first two solicitations in the program were fully subscribed, allocating 500 MW of capacity. A third solicitation is underway. The program is seen as a key element in the state’s goal to reach 12.2 GW of solar energy by 2030 and 32 GW by 2050.

The BPU’s June report showed that 456 community solar projects were providing 740 MW, or about 11%, of the state’s 6.56 GW of installed solar capacity. BPU officials in the past opposed efforts to dramatically expand the program, saying the extra stress would negatively impact the state’s solar programs. (See NJ BPU Opposes Community Solar Program Expansion.)

New Jersey has struggled to develop storage. The state missed a legislative goal of developing 600 MW of storage by 2021 and now is seeking to put 2,000 MW of storage in place by 2030. (See Developers Seek Deadline Extension in NJ Storage Plan.)