TRENTON – The Senate Budget and Appropriations Committee advanced legislation from Senator Bob Smith and Senator John Burzichelli to require the Board of Public Utilities (BPU) to establish a program to procure and incentivize the development of transmission-scale energy storage systems.
In essence, energy storage systems are a technology that stores generated energy for use at a later time. For example, solar panels and wind turbines produce energy when the sun is out or when there is sufficient wind. Absent the correct conditions, they do not produce the amount of energy that may be needed to satisfy the demand for electricity at a given time. Energy storage systems allow surplus energy to be captured and stored for later use, such as when demand is particularly high or when other conditions, like lack of sun, reduce the amount of energy that can be generated. In doing so, they can reduce energy costs, improve grid resilience, and make a variety of different energy types more reliable.
“The benefits of energy storage systems are hard to understate. They enable wider application of clean, renewable energy and they can more broadly reduce energy costs by charging during low-demand, low-cost hours and discharging when demand on the wider electrical grid is higher,” said Senator Smith (D-Middlesex/Somerset). “As projected energy demand rises and electricity costs rise, it is especially important now to invest in these systems and enable the cost savings that they can create.”
The bill, S-4289, would define “transmission-scale energy storage systems” to mean an energy storage system capable of at least five MW of storage that is interconnected to the PJM Transmission Network and situated inside a Transmission Zone in New Jersey or is otherwise located within the state and qualified to provide services in the wholesale markets established by PJM. The legislation would authorize the BPU to develop a program to provide a long-term, stable financial incentive to large transmission-scale energy storage projects, with eligibility criteria targeting projects that are further along in the development process and show the most promise for successful deployment.
“Energy storage is one of the more effective ways to make the grid more resilient to fluctuations in demand and to reinforce the supply of energy – which will help lower costs,” said Senator Burzichelli (D-Cumberland/Gloucester/Salem). “We have to do what we can to protect consumers from being hit by rising electric bills, and investing in transmission-scale energy storage is an important part of that effort.”
The legislation would set a procurement goal for eligible projects totaling 1,000 MW of installed capacity, with a Tranche 1 deadline of December 31, 2025 to award eligible projects totaling at least 350 MW of that goal. Projects that are further along in development and are shovel-ready would be prioritized for Tranche 1. The remainder of the goal would be met in Tranche 2 by awarding projects that total 1,000 MW by June 30, 2026. Less mature projects would be eligible for consideration in Tranche 2. Incentive awards under the program would be a fixed series of annual payments issued over a 15 year period, conditioned upon the completion and successful operation of the project. After the BPU completes its procurement goal established under the bill it would begin a proceeding to determine whether to extend procurement under the same program. If the BPU were to elect to do so, they would be required to administer future tranches in a similar manner as Tranche 1 and Tranche 2.
The program would be funded through the establishment of a special, non-lapsing fund referred to as the “Energy Storage Fund”, administered by the BPU and credited with $60 million from the revenues of the societal benefits charge annually until the final award period is complete. The Fund would also be credited with any monies appropriated by the Legislature, any return on investments deposited in the funds, and monies made available from other sources such as federal funding.