ASSEMBLY TELECOMMUNICATIONS AND UTILITIES
COMMITTEE
STATEMENT TO
ASSEMBLY, No. 5267
with committee amendments
STATE OF NEW JERSEY
DATED: MARCH 20, 2025
The Assembly Telecommunications and Utilities Committee
reports favorably and with committee amendments Assembly Bill No.
5267.
As amended and reported, the Board of Public Utilities (board) is
required to establish a program to procure and provide incentive
awards for the development of transmission-scale energy storage
systems with a reasonable likelihood of successful and timely
completion. The board is required to solicit applications for the
program in an initial Tranche 1. As outlined in the bill, the board is
permitted to procure additional tranches by either continuing under
the same program as Tranche 1 or implementing a successor
program.
Under the bill, “transmission-scale energy storage system”
means an energy storage system, with an installed capacity of at
least 5 megawatts of alternating current (MW AC), that is
interconnected with the PJM Transmission Network and situated
inside a Transmission Zone in New Jersey or is otherwise located in
New Jersey and qualified to provide energy, capacity, or ancillary
services in the wholesale markets established by PJM
Interconnection, L.L.C. (PJM).
Tranche 1 Procurement
The bill requires the board to solicit Tranche 1 applications for
eligible projects whose collective installed capacity totals at least
500 MW AC.
Under the bill, the Tranche 1 application period is to begin no
later than January 15, 2026, regardless of the publication status of
the rules and regulations to be issued pursuant to the bill, and is to
end within 60 days of the date on which the application period
began. Within 60 days of the closure of the Tranche 1 application
period, the board is to evaluate and select eligible projects to
receive an award. The board is to finalize and approve all incentive
awards for Tranche 1 by no later than April 1, 2026. 2
To qualify for a Tranche 1 incentive award, a transmission-scale
energy storage system is required to: (1) not participate in any
other energy storage program, except for the New Jersey Energy
Storage Incentive Program (NJ SIP) to the extent that the energy
storage program established by the bill may be incorporated into the
NJ SIP; (2) have an anticipated commercial operations date of no
later than December 31, 2030, unless the board permits an
exception; (3) have entered the PJM interconnection process and, at
the time of application for Tranche 1, have a fully-executed
Generation Interconnection Agreement through PJM, have a
completed Surplus Interconnection Study through PJM, or have
notified PJM of intent to transfer existing Capacity Interconnection
Rights associated with a deactivating generation station; and (4)
meet any other eligibility criteria set by the board.
A Tranche 1 application is required to include certain
information and a fee, as provided in the bill.
At its discretion, the board may instruct an applicant on curing
minor defects in a Tranche 1 application. The board is required to
evaluate each application based on the bid prices of the requested
incentives, using certain criteria to guide its evaluation as outlined
in the bill. The bill permits the board to place an eligible project
that does not receive an incentive award for Tranche 1 on a waiting
list and consider the eligible project for an incentive award during a
subsequent tranche or successor program.
Tranche 1 Incentives
Under the bill, by no later than December 31, 2026, the board is
required to approve: (1) incentive awards totaling a collective
minimum of $60 million in annual payments for eligible projects in
Tranche 1, which projects are to total a collective minimum of 500
MW AC; or (2) incentive awards for eligible projects that
collectively have an installed capacity totaling at least 1,000 MW
AC. The board is permitted to approve all 1,000 MW in incentives
in Tranche 1 or through awards in Tranche 1 and subsequent
tranches, provided that incentives in subsequent tranches are
awarded by no later than December 31, 2026. An incentive award
is to be conditioned upon a developer’s compliance with the board
order determining the incentive award and with any conditions the
board requires.
Tranche 1 Board Orders
The bill outlines certain requirements for a board order issuing
an incentive award to an eligible project, including that the board
order is required to: (1) define the eligible project receiving an
incentive award and the eligible project’s installed capacity; (2)
define the incentive award, including a payment schedule for the
10- to 20-year award period of the incentive award, which term is to 3
commence no earlier than the commercial operations date of an
eligible project, and during which term an eligible project is to
receive an annual incentive award on each anniversary of the first
payment date; (3) determine the amount of funding to be allocated
for payment of the incentive award beginning in the fiscal year in
which the eligible project commences commercial operations; (4)
include a participation fee as the board is permitted to require from
the developer; (5) require, for an eligible project awarded an
incentive, a pre-development security not to exceed $100,000 per
megawatt and not to exceed in total $10,000,000; (6) outline the
conditions under which the board may, in the event of a developer’s
failure to operate an eligible project by the deadline stated in the
board order or to meet deadlines included in the board order, revoke
an incentive award or retain some or all of the pre-development
security; (7) provide that receipt of an incentive award for an
eligible project is to be contingent on achievement of baseline
performance requirements, including, but not limited to, availability
for dispatch in a minimum number of hours per year, as determined
by the board. The board is permitted to use the PJM Equivalent
Forced Outage Rate or another metric deemed appropriate by the
board to measure energy storage availability. The board order is to
require that the developer report data for this purpose at regular
intervals and is to provide for a reduction of an incentive award in
proportion to the number of hours of required availability that is
unmet by the eligible project; and (8) require that a developer
provide additional information to the board during the term of the
incentive award, as the board may require. The board may set
additional requirements at its discretion, including, but not limited
to, a requirement that the developer report major development and
construction milestones to the board, maintain financial security
throughout the term of the incentive award, or any other
requirement the board determines necessary to ensure continued
progress and operational viability of an eligible project.
Future Procurement
If the board elects to extend the procurement of transmission-
scale energy storage through additional tranches, the board is
permitted either to continue the program under which Tranche 1
was conducted or to establish a successor program, as outlined in
the bill.
If the board administers subsequent tranches under the same
program as Tranche 1, the board is required to do so in a similar
manner to how it administered Tranche 1, modifying as appropriate
for each subsequent tranche: (1) the amount of megawatts to be
solicited; (2) the application requirements or eligibility criteria; (3)
the timeline for an eligible project, including, but not limited to, 4
application deadlines or the contract term; and (4) any other
administrative modification the board deems appropriate.
If the board establishes a successor program, the board is to
administer the successor program by adopting rules and regulations
that implement the NJ SIP, provided that the final version of the NJ
SIP complies with the requirements of the bill. The board is
permitted to continue any rule, regulation, or policy used to
administer Tranche 1 as the board determines necessary and
appropriate to administer a successor program.
Incentive Award Funding Mechanisms
The bill requires the board to fund incentive awards issued for
Tranche 1, any subsequent tranches issued under the same program
as Tranche 1, and a successor program through: (1) the societal
benefits charge; (2) the “Global Warming Solutions Fund”; and (3)
alternative sources of funding that are available to the board.
Beginning in Fiscal Year 2028, the board is required to annually
appropriate and allocate sufficient monies from these sources to
fully fund incentive awards issued for Tranche 1 for eligible
projects totaling a collective minimum of 500 MW AC. The
funding mechanism of an incentive award issued for Tranche 1, or
for any subsequent tranches issued under the same program as
Tranche 1, is not to be changed without the consent of the
developer.
COMMITTEE AMENDMENTS :
The committee amended the bill to:
(1) define “accredited capacity,” “base residual auction,” “energy
storage capacity,” “Generation Interconnection Agreement,” “NJ SIP,”
and “unforced capacity”;
(2) clarify that the definition of “energy storage” means, in
relevant part, a device that is capable of absorbing energy from a
generation resource located behind the same point of interconnection
as the device, rather than from a Distributed Energy Resource;
(3) clarify that “energy storage program” includes, among other
programs, NJ SIP, rather than NJ SIP’s replacement or successor in its
final form;
(4) change the award period of an incentive award from 15 years
to 10-20 years;
(5) clarify that the fixed series of annual payments that constitute
an incentive award are to be based on the maximum useable installed
capacity or the energy storage capacity of an eligible project, which
energy storage capacity is to be measured in dollars-per-megawatt-
hour;
(6) require incentive awards to be subject to any conditions
imposed by the board, including, but not limited to, satisfactory up-
time performance metrics; 5
(7) revise the definition of “transmission-scale energy storage
program”;
(8) remove the requirement for the board to conduct a ratepayer
impact report prior to extending the procurement of transmission-scale
energy storage in subsequent tranches or in a successor program;
(9) permit an eligible project to participate in NJ SIP, to the extent
that the energy storage program established by the bill is incorporated
into NJ SIP;
(10) require an eligible project to have entered, rather than
completed, the PJM interconnection process;
(11) require an eligible project to have a fully-executed
Generation Interconnection Agreement through PJM, rather than a
draft or fully-executed Large Generator Interconnection Agreement
through PJM; have completed a Surplus Interconnection Study through
PJM, rather than a System Impact Study or equivalent study; or have
notified PJM of intent to transfer existing Capacity Interconnection
Rights associated with a deactivating generation station;
(12) remove the requirement for an eligible project to demonstrate
evidence reasonably satisfactory to the board that the applicant
controls all rights of way to the proposed point of interconnection;
(13) remove the requirement for an eligible project to submit as-
built drawings of a transmission-scale energy storage system
comprised of new equipment in its application for an incentive award;
(14) clarify that an eligible project is to submit, in its application
for an incentive award, evidence reasonably satisfactory to the board
that the applicant has submitted all interconnection applications and
initial application fees, rather than fees in general, that may be
necessary to obtain permission from the appropriate electric public
utility or grid operator to operate the transmission-scale energy storage
system;
(15) require an eligible project to adhere to any safety
requirements, standards, or measures that the board deems appropriate
in addition to nationally recognized minimum safety requirements;
(16) require the board to evaluate an application for an incentive
award based on the bid prices of the requested incentives instead of
requiring the board to establish a scoring system to review an
application;
(17) permit the board, in its evaluation of an application for an
incentive award, to compare bid prices based on the measure of the
capacity of a transmission-scale energy storage system by the lesser of
its installed capacity or its energy storage capacity divided by four
hours or based on the expected accredited capacity of a transmission-
scale energy storage system;
(18) permit the board, in its evaluation of an application for an
incentive award, to consider project maturity, likelihood of success,
and whether the installed capacity of the project has the associated 6
Capacity Interconnection Rights through PJM, in addition to other
factors outlined in the bill;
(19) provides goal of either $60 million or 1,000 MW by
December 31, 2026 in Tranche 1 and subsequent tranches;
(20) clarify provisions concerning funding of incentive awards;
(21) clarify that a board order issuing an incentive award in
Tranche 1 or subsequent tranches is to allocate funding for the award
beginning in the fiscal year in which the eligible project commences
operations, rather than in the fiscal year beginning on July 1, 2028;
(22) permit the board to require a participation fee from the
developer of an eligible project;
(23) require an eligible project to be available for dispatch in a
minimum number of hours per year, as determined by the board, in
order to receive an incentive award;
(24) remove the requirement for the board to develop application
requirements and eligibility criteria for Tranche 1 within 120 days of
the bill’s effective date;
(25) require the board to begin accepting applications for Tranche
1 by no later than January 15, 2026 and to stop accepting applications
for Tranche 1 within 60 days of the date on which the application
period began;
(26) require the board to evaluate and select projects to receive an
award within 60 days of the closure of the Tranche 1 application
period;
(27) require the board to finalize and approve all incentive awards
for Tranche 1 by no later than April 1, 2026;
(28) remove the requirement for the board to allow an applicant to
submit an early application for Tranche 1;
(29) permit the board to establish a successor program by adopting
rules and regulations to implement NJ SIP, provided that NJ SIP is
consistent with the requirements of the bill, if the board determines
that it requires additional energy storage to meet energy storage goals
under current law;
(30) remove the requirement that the successor program be funded
through base rate recovery;
(31) require an incentive award for energy storage procurement to
be funded through revenues generated by the societal benefits charge,
the “Global Warming Solutions Fund,” and other sources of funding
available to the board;
(32) require the board to appropriate and allocate sufficient
monies from funding sources outlined in the bill, rather than a
minimum of $60 million from the societal benefits charge, to fully
fund the incentive awards issued by the board in Tranche 1;
(33) remove the requirement that rules and regulations issued in
Tranche 1 be similar to the board’s rules concerning Grid Supply
projects for NJ SIP; 7
(34) require the board to publish a notice of proposal containing
certain proposed rules within 90 days of the bill’s effective date;
(35) permit the board to adopt rules and regulations implementing
NJ SIP as the successor program outlined by the bill in the same
rulemaking proceeding in which the board proposes and adopts certain
other rules and regulations outlined in the bill;
(36) provide that the board is to allocate sufficient funding from
the societal benefits charge to cover the remaining cost of fully
funding incentive award payments, after accounting for funding
allocated to this purpose from other sources; and
(37) make technical corrections to the bill.