Moving quickly to back New Jersey Gov. Mikie Sherrill’s call for a generation capacity increase, the Board of Public Utilities (BPU) approved the state’s first incentivized storage projects and launched new community and grid-scale solar solicitations.

The board voted 5-0 on March 4 to approve three transmission-scale storage projects with a combined capacity of 355 MW as part of the effort to install 2,000 MW of storage capacity by 2030. The projects were the first to emerge from the Garden State Energy Storage Program (GSESP), the state’s first storage incentive initiative.

Sherrill, who took office in January, has prioritized solar and storage capacity. She views it as the quickest way to help address the predicted shortfall in generating capacity, and the related price hikes that raised the average electricity bill by 20% in June 2025.

“This will create our fastest path forward to achieve energy reliability and affordability,” said BPU Commissioner Zenon Christodoulou, who described the state’s position as one of “urgency.”

He noted that when state officials initially conceived of the storage program, it was because of the urgency of climate change.

“That is still an important driving issue,” he said. “But the urgency of needing more electricity, particularly in this region, and having it built in the state of New Jersey is even more pressing right now.”

Affordability vs. Growth

The board also unanimously approved the opening of a second storage solicitation under the same program, authorizing the agency to procure 645 MW of transmission-scale storage, which is larger than 5 MW. Draft application instructions for the solicitation — which supports standalone projects or those connected to solar developments — will be released in April with a bid deadline Aug. 7 and final decision on bids planned for October.

In addition, the board approved three projects totaling 24 MW under the Competitive Solar Incentive (CSI) program, which provides incentives for grid scale projects. And the agency approved the opening of a new solicitation – the state’s fourth — under the program.

Finally, the board authorized the opening of a solicitation that would add up to 3,000 MW of community solar projects.

“States that invest in energy infrastructure today will have lower costs and greater reliability tomorrow — and New Jersey is going to lead the way,” Sherrill said in a statement, referring to the BPU actions. “By investing in battery storage, solar and grid modernization, we’re building an energy system that is ready for the future.”

Investing In the Future

Sherrill, a Democrat and former congresswoman, made the state’s energy difficulties a central element of her campaign and pledged to freeze rates as soon as she took office. On her first day, she signed two executive orders that called for a rapid acceleration of energy source development, especially solar and storage. (See New N.J. Governor Rapidly Confronts Electricity Crisis.)

PJM, which provides power to New Jersey and 12 other states, says dramatic price hikes that have impacted ratepayers in its zone are driven mainly by the sudden demands of data centers under development. At the same time, older, mainly fossil fueled generators have shut faster than new facilities have been built, the RTO says. But New Jersey and other states blame PJM for failing to anticipate the demand.

While the initiatives show Sherrill moving rapidly on her agenda, parts of the package had been in the works for awhile. Among them was the 3,000-MW expansion of the community solar program, which her predecessor Gov. Phil Murphy had enacted.

Eric Miller, New Jersey policy director at the Natural Resources Defense Council, called the BPU’s approvals “a critical step to getting more clean energy generation online as fast as possible.”

Capacity Cost Cuts

While New Jersey under Murphy aggressively expanded its solar and wind sector, the state has lagged in storage. The legislature set the 2,000-MW goal in 2018 but missed a target of 600 MW of storage in place by 2021, and the state’s storage capacity still is minimal. (See N.J. Launches Ambitious Energy Storage Incentive Program.)

BPU launched the GSESP in June. The first phase authorizes storage capacity of up 1,000 MW and will pay annual incentives for 15 years, with a second phase to follow. The board order says the agency will hold at least two more solicitations under the first phase.

The board received 11 applications in the first solicitation, and approved three, for a combined capacity of 355 MW. BPU staff said the incentives will cost $27.58 million per year for 15 years, or about $169 million in total once discounted, and will bring the state financial benefits in the long run. The agency estimated the storage projects will reduce capacity costs by $333 million to $420 million.

Storage offers a variety of benefits, of which capacity cost savings, or the money saved by not having to invest in such large generating plants because batteries can help meet peaks, is perhaps the most “significant financial benefit to ratepayers,” according to the board order. Other benefits include “peak shaving, energy arbitrage [and] deferring costly infrastructure upgrades,” the order says.

Assessing Incentive Benefits

Christodoulou, while supporting the storage approvals, expressed skepticism at the accuracy of benefit estimates, saying the savings are “not as conclusive, as the future will show. These are estimates.”

Still, he said, “the urgency of this moment requires us to take some leaps of faith.” He later urged agency officials to plan for future limits on incentives, specifically referring to those paid in the grid solar program.

“We always incentivize new and infant industries, which is critically important,” he said. But he added that “the industry should never be depending on long term investment tax credits. They need to become like every other mature business in the world, and that is to stand on their own two feet, to gain or lose on their own merits. “

He urged the BPU staff to “accelerate that process to make sure that they (project developers) find ways to gain managerial efficiencies, supply chain efficiencies [and] drive prices down.”

Balancing Incentive with Capacity Goals

The BPU for a while has sought to curb incentive payments, a task complicated by the removal over time of federal investment tax credits by the Trump administration.

In the CSI solicitation, the BPU rejected most of the bidders because they were too high. Of 18 bids received, only two were eligible for BPU approval; the remainder exceeded the confidential maximum incentive agency staff had calculated was acceptable for the state to pay in the current market conditions.

The agency approved the third successful bid — a 10-MW project submitted by the North Jersey District Supply Commission — through a rule that allows the agency to waive the cap for projects whose bid is within 10% of the maximum. The project will be the largest floating solar generation facility in the state.

The board also voted to reduce the incentive for the community solar program as it opened a solicitation for an additional 3,000 MW of capacity, which Sherrill, like Murphy before her, had called for. The board reduced the incentive offered in the program from $80/MWh to $60/MWh.

“Staff believes that the recommended decrease balances the need to reduce costs for ratepayers with the statutory directive to achieve 3,000 MW of additional community solar registrations over the next four years,” the board order stated.

However, Morgan Sawyer, a BPU research scientist who outlined the plan outlined in the order, said the BPU also expects to study the issue further in light of the federal tax credit loss by “soliciting stakeholder feedback and updated economic modeling based on market conditions.”

He added, however, that the process “potentially” could result in a future increase in the incentive.