TRENTON, N.J. — New Jersey Democrats are moving forward with legislation that would authorize the state Board of Public Utilities to use ratepayer funds to support large-scale energy storage systems, raising concerns over potential increases in electricity costs through expanded hidden fees.
Under the bill, the board is mandated to establish and oversee a program to incentivize the development of transmission-scale energy storage systems, defined as projects capable of storing at least 5 megawatts of electricity and connected to the PJM transmission network. The board is required to begin with a Tranche 1 procurement round targeting at least 500 megawatts of new storage capacity.
To fund this initial round of projects, the legislation requires a minimum of $60 million to be distributed through incentive awards. That funding is to be sourced through the societal benefits charge — a fee already collected from electric utility customers to support clean energy and low-income programs. Starting in Fiscal Year 2029, this charge will cover awards from Tranche 1 and any similar future tranches.
Applicants will be allowed to submit early applications within 45 days of the bill’s effective date, even before formal rules and eligibility requirements are finalized. The board will score projects based on price, viability, and community impact. Applications must include a participation fee and may require pre-development security of up to $10 million per project.
Funding model could expand beyond societal benefits charge
Should the board opt to pursue a successor program following Tranche 1, incentive awards would shift from being funded by the societal benefits charge to being recovered through each electric public utility’s base rate cases. This mechanism allows utilities to pass the costs on to consumers in proportion to their electric usage, raising the possibility of higher base rates in future billing cycles.
According to the bill, any developer receiving a Tranche 1 award can decline to switch to the new funding mechanism if the board adopts a successor program. In that case, those specific awards would continue to be funded through the societal benefits charge.
A required report to be issued one year after the initial procurement is intended to assess the financial and operational impacts of the energy storage programs. The report will evaluate progress toward the state’s goal of 2,000 megawatts of storage by 2030 and determine whether additional tranches or a new program should be initiated.
Long-term commitments and developer obligations
Tranche 1 incentive awards are structured as 15-year commitments, with payments beginning no earlier than July 1, 2028 or the project’s commercial start date. Projects must demonstrate minimum availability standards, submit regular operational data, and maintain financial security throughout the award period. Developers also face penalties, including reduced awards or forfeited securities, for failing to meet deadlines or performance thresholds.
The bill grants the board wide discretion to set application criteria, project milestones, and reporting requirements. It also allows for rejected applications to be placed on a waiting list for consideration in future rounds.
Electric bill impacts remain a key concern
As New Jersey moves forward with aggressive clean energy targets, the decision to fund incentives through existing and potentially expanded utility charges raises the risk of increased electricity bills. While the legislation requires a review of ratepayer impacts, it does not cap total program costs or set limits on how much utilities can recover from customers.
Critics argue the bill leaves open the door to continued reliance on fees that lack transparency. Proponents, meanwhile, frame the program as a necessary investment in grid reliability and emissions reduction.
The state board is expected to begin accepting Tranche 1 applications once it finalizes rules and regulations under the new law.
New Jersey’s plan to meet storage goals relies heavily on ratepayer-backed incentives with uncertain cost ceilings.