Direct BPU to establish certain incentive programs for energy storage and management.**
What changed between versions
Target capacity increased from 500 MW of utility-developed battery storage to at least 2,000 MW of installed capacity across customer-sited and front-of-the-meter systems, with a broader goal of 3,000 MW total when combined with other BPU programs by 2030.
Program structure changed from a distributed capacity program where utilities directly develop storage under BPU-set requirements to an incentive program where BPU sets rules and utilities administer fixed annual incentive payments (dollars per kWh per year for 15 years) to approved applicants.
New provision requires BPU to establish minimum performance standards for incentivized systems, covering renewable hosting capacity, congestion relief, capacity value, voltage control, ramp rate control, and transmission/distribution investment deferral. Incentive payments may be adjusted based on compliance after the first year.
The incentive program shall not prevent or discourage participation in wholesale markets (especially PJM capacity market), except temporarily to ensure peak load reduction value is reflected in PJM load forecasts before systems can act as capacity suppliers.
Incentive payments are capped so that the total present value over the 15-year term does not exceed 40 percent of a project's total cost, using a 7 percent discount rate. Different incentive levels distinguish between project sizes and whether systems are customer-sited or front-of-the-meter.
New section requires each electric public utility to file a tariff within 12 months applying only to front-of-the-meter energy storage systems, establishing a new rate design reflecting cost causation and exempting these systems from consumption-based charges including the societal benefits charge.
Cost recovery mechanism changed: utilities may recover actual costs of implementing and administering the program through a separate rate component. A rate of return is only permitted if the utility meets implementation benchmarks established by BPU, and it may be less than the rate from the most recent base rate case.
Stand-alone energy storage or storage paired with renewable sources (including solar) are eligible. Systems must become operable after program establishment and must be either customer-sited (owned, hosted, leased, or operated by a customer) or front-of-the-meter within a utility's service area.
At least one quarter of incentives for customer-sited systems must be reserved for low-to-moderate income customers and customers in overburdened communities.
Nine new definitions added including accredited capacity, critical community facility, customer-sited energy storage system, energy storage, energy storage capacity, front-of-the-meter energy storage system, incentive program, installed capacity, and PJM Interconnection.
Definition of 'Board' expanded from simply 'the Board of Public Utilities' to 'the New Jersey Board of Public Utilities or any successor agency.'
Project completion deadlines added: 30 months for customer-sited systems and 42 months for front-of-the-meter systems after application approval, with waiver provisions for extenuating circumstances including utility delays, PJM issues, permitting, or supply chain disruption.
First year of the incentive program targets up to 350 MW with applicants accepted on a first-come, first-served basis. BPU must establish the program within 180 days of the effective date of the companion bill.
Annual reporting requirement added: beginning in 2027 and ending the first calendar year after cost recovery ends, BPU must report annually to the Governor and Legislature on incentive program information.
