New Jersey regulators launched a procurement initiative targeting 150 megawatts of behind-the-meter battery storage to enhance virtual power plant resilience.
The Board of Public Utilities (BPU) has proposed a maximum annual incentive of $200 per kilowatt over ten years for behind-the-meter storage. State regulators justified the comparatively modest figure by citing the “private resilience value of residential energy storage systems.” This assessment reflects the BPU staff’s conclusion that “many consumers have some willingness to pay for resilience and thus do not require an incentive high enough to render the net cost of battery back-up power [to] zero.”
In a statement, BPU President Ben Hertz-Shargel linked the August 17 proposal to Executive Order No. 2, signed by Democratic Governor Mikie Sherrill shortly after she took office on January 20. The executive order directed the BPU to issue solicitations for new solar and storage capacity and to develop a virtual power plant (VPP) program accessible to third-party energy suppliers. “The Garden State Energy Storage Program advances Governor Sherrill’s Executive Order No. 2 by growing energy storage deployments in-state to meet growing energy demand while improving affordability and resilience,” Hertz-Shargel said.
Under a separate straw proposal released last month, the BPU outlined a temporary, technology-neutral VPP program open to residential and small commercial batteries. The initiative is scheduled to launch next year, operate for two years, and transition into a market-based, open-access VPP tariff in 2029.
The August proposal designates this initial phase as “Distributed Storage Capacity Block 1.” Its primary objective is to reduce peak demand across New Jersey’s electric distribution system through coordinated battery discharge. According to the straw proposal, this approach “will help avoid future capacity obligations and system costs, thereby accruing savings to all residential customers.” Block 1 will deliver a “temporary incentive” and near-term capacity to support the transitional VPP program, alongside existing behind-the-meter systems qualifying under legacy incentives. Once enrollment opens, Block 1 will serve as the exclusive incentive framework for new residential storage resources. However, enrolled capacity will remain eligible for “additional incentives or compensation mechanisms” introduced through a future tariff.
The BPU also positioned Block 1 as a large-scale pilot for potential future distributed storage capacity blocks. These subsequent phases may vary in “compensation mechanism design, eligible resources, and operational frameworks, based on market evolution and lessons learned from Block 1 implementation and other BPU workstreams.” Operationally, the proposal envisions four electric distribution companies issuing dispatch events to address local congestion, distribution-level thermal constraints, and other abnormal grid conditions. To determine the $200/kW incentive cap, the BPU reviewed comparable programs in other states and conducted a gap analysis that incorporated the aforementioned resilience valuation.