New Jersey Enacts Energy Storage System Installation Incentive Bill

On 5 February, the New Jersey Senate passed a bill to encourage and subsidise the deployment of energy storage systems. The bill directs the New Jersey Board of Public Utilities (BPU) to create a pilot programme to provide pre-construction incentives and post-operational performance-based incentives for energy storage systems. This bill takes effect immediately. The pilot programme will be launched within 90 days of the effective date of the bill. Within 180 days after the effective date of the bill, the pilot program would be announced with its specific incentive amounts and application process.

The upfront incentives for a project will be calculated based on the rated capacity of the energy storage system (based on the AC output side capacity). , with the subsidy amount limited to no more than 40% of the total project cost. The Public Utilities Commission will pay a one-time subsidy in the form of a cash payment to owners of energy storage systems participating in the pilot programme to reduce the initial financial burden on investors and participants and to encourage them to invest in energy storage facilities.

Performance incentives will be given based on how much the value of the benefits the energy storage system can provide, which will include support for mitigating peak demand on the grid, acting as a backup to improve grid resilience, etc. The subsidy is open to both power-side, grid-side, and customer-side energy storage and wind-solar distribution and storage facilities.

In terms of funding, the upfront incentives will be funded by the Public Utilities Commission at no less than $60 million per year and will be used for the pilot programme. Performance incentives would be paid for by companies providing public electric service, and would amount to a disguised purchase of grid services provided to the system by the owner of the energy storage system.

SMM sees the bill as a sign that New Jersey is seeking to address as quickly as possible the fact that the current deployment of energy storage systems is lagging far behind other states. The total capacity of large battery storage on the grid side of the state is currently only about 77 MW, which lags behind many other states. It is expected that the bill, and in particular the pre-project incentives included in it, will significantly advance the construction of existing and planned energy storage facilities in the state and facilitate additional related investments.