A 1072 — Direct BPU to establish certain incentive programs for energy storage and management.**

A1072 ACS ACS ASSEMBLY COMMITTEE SUBSTITUTE FOR   ASSEMBLY COMMITTEE SUBSTITUTE FOR ASSEMBLY, No.

1072   STATE OF NEW JERSEY 222nd LEGISLATURE   ADOPTED MAYJUNE 28,23, 2026     Sponsored by:

KARABINCHAK District 18 (Middlesex)    Co-Sponsored  by:   SYNOPSIS      Requires BPU to establish distributed energy storage incentive program.

 Assemblywomen CURRENTBrennan, VERSIONQuijano, OFMcCoy, TEXTAssemblymen Freiman, Bhalla, Stanley and Macurdy       SYNOPSIS      SubstituteDirects asBPU adoptedto byestablish thecertain Assemblyincentive Telecommunicationsprograms andfor Utilitiesenergy Committee.storage and management.

  AnCURRENT ActVERSION concerningOF energyTEXT storage     andSubstitute supplementingas Titleadopted ofby the RevisedAssembly Statutes.Appropriations Committee.

       An Act concerning energy storage and management and supplementing Title 48 of the Revised Statutes.

       1.    As used in P.L.    , c.    (C.        ) (pending before the Legislature as this bill):       “Accredited“Block” capacity” means thean sameamount asof thatincentive termawards isfor definedcustomer-sited inenergy sectionstorage 1systems, front-of-the-meter energy storage systems, or both, measured in megawatts of P.L.2025,installed c.136capacity, (C.48:3-121.2).made available under the incentive program for a certain time period and the associated requirements governing those incentive awards.

     “Distributed energy resource” means the same as that term is defined in section 1 of P.L.

2023, c.316 (C.48:25-13).

     “Electric public utility” means the same as thethat term is defined in section 3 of P.L.1999, c.23 (C.48:3-51).

     “Overburdened community” means the same as thethat term is defined in section 2 of P.L.2020, c.92 (C.13:1D-158).

     “PJM Interconnection, L.L.C.” or “PJM” means the same as thethat term is defined in section 3 of P.L.1999, c.23 (C.48:3-51).

     “Public“Virtual utility”power plant” or “VPP” means thean sameaggregation asof distributed energy resources that termcan isbalance definedelectrical pursuantloads and provide grid services analogous to R.S.48:2-13.those provided by traditional generation resources or traditional distribution system investments.  “VPP” may include customer-sited energy storage systems and front-of-the-meter energy storage systems, provided that the customer-sited energy storage system or the front-of-the meter energy storage system is interconnected to the distribution system.

       2.    a.  (1) No later than 180 days after the effective date of P.L.    ,P.L.    , c.    (C.        ) (pending c.    (C.        ) (pending before the Legislature as this bill), the Board of Public Utilities shall establish, by order, a distributed energy storage incentive program to be administered by electric public utilities,utilities whichin incentiveblocks.  programIn shallgeneral, provide incentives for the development of at least 2,000 megawatts of installed capacity of customer-sited energy storage systems and front-of-the-meter energy storage systems by 2030.  The order establishing the incentive program shall specifybe minimumdesigned filing requirements for the incentive program, including, but not limited to:       (a)   the incentive levels to beachieve establishedor forexceed, customer-sitedtogether energywith storageother systems and front-of-the-meter energy storage systemsprograms connectedestablished toby the distributionboard system. through However,law, therule, boardregulation, mayor deferorder, determinationa total of incentiveincentives levels for front-of-the-meternew energy storage systemscapacity untilequal afterto an3,000 electricmegawatts public utility files the tariffs required by section2032. 3 of P.L.    , c.    (C.        ) (pending before the Legislature as this bill);

     However, (b) the aboard methodologymay, forby determiningorder, reduce this procurement goal to no less than 2,000 megawatts if the ratesboard forfinds that the tariffscost filedto byprocure an3,000 electricmegawatts publicof utilitysuch pursuantcapacity towill sectionlikely 3outweigh the benefits of P.L.    ,such c.   procurement (C.        )to (pendingratepayers.  beforeSpecifically, through the Legislatureincentive asprogram, thisthe bill)board shall provide incentives for front-of-the-meterthe energydevelopment storageof systems;at least:

     (c)  (1)   an1,000 applicationmegawatts processof forinstalled applicantscapacity seekingof ancustomer-sited energy storage systems and front-of-the-meter energy storage systems by 2030 in the first block of the incentive throughprogram, provided that the board shall provide incentive program;awards for up to 350 megawatts of such capacity by no later than December 31, 2027;

and      (d) (2)   eligibility2,000 requirementsmegawatts forof applicantsinstalled seekingcapacity anof incentivecustomer-sited throughenergy storage systems and front-of-the meter energy storage systems by 2032 in subsequent blocks of the incentive program.program.  However, the board may reduce or waive, by order, the procurement goal established pursuant to this paragraph if the board finds that the cost of additional procurement through subsequent blocks will exceed anticipated ratepayer savings.

     (2) b.    In(1)  The order establishing the incentive program shall specify minimum filing requirements for the first yearblock of the incentive program, theincluding, boardbut shallnot setlimited goalsto:  to     provide(a)   incentivesthe forincentive uplevels to megawattsbe inestablished for customer-sited energy storage systems and front-of-the-meter energy storage systems,systems withconnected applicantsto acceptedthe ondistribution asystem.  first-come,However, first-served basis.  In general, the incentiveboard programmay shalldefer bedetermination designedof toincentive achievelevels orfor exceed,front-of-the-meter together with other energy storage programssystems establisheduntil byafter thean boardelectric throughpublic law,utility rule,files regulation,the ortariffs order,required aby totalsection 4 of incentivesP.L.    , forc.    new(C.        ) energy(pending storagebefore capacitythe equalLegislature toas 3,000this megawattsbill); by 2030.

     (3) (b)   The incentives provided through the incentive program shall be structured as an administratively-determined,application fixedprocess incentive paid on an annual basis for aapplicants periodseeking of 15 years, or another period as may be established by the board, based on the energy storage capacity of the energy storage system, as measured in kilowatt-hours.  The amount of the incentive shall be expressed in dollars per rated kilowatt-hour of energy storage capacity per year.  The board shall establish different incentive levels that distinguish between different projects sizes, whether the energy storage system is customer-sited or front-of-the-meter, and other criteria as established by the board.  The total present value of an incentive provided through the incentive programprogram; over the 15-year incentive term, or other term as may be established by the board, shall not exceed 40 percent of a project’s total cost, based on a seven percent discount rate or other discount rate set by the board.  The board may develop a system of incentive bonuses to differentiate between projects by attributes, including, but not limited to, those serving overburdened communities and those providing resilient power to critical community facilities.

and      b.   (c)   Stand-aloneeligibility energyrequirements storage systems or energy storage systems that are paired with a renewable source of electric power, including, but not limited to, a solar photovoltaic array, shall be eligible for theapplicants incentiveseeking program. an However, the incentive programthrough shall only be available to an energy storage system that becomes operable on or after the date on which the incentive programprogram. is established pursuant to subsection a.

     (2)   No later than December 31, 2027, the board shall establish minimum filing requirements for all subsequent blocks of the incentive program, which shall include, but not be limited to, the minimum filing requirements specified in paragraph (1) of this subsection.

     c.     The incentives provided through the incentive program shall be structured as an administratively-determined, fixed incentive paid on an annual basis for a period of 15 years, or another period as may be established by the board, based on the energy storage capacity of the energy storage system, as measured in kilowatt-hours.  The amount of the incentive shall be expressed in dollars per rated kilowatt-hour of energy storage capacity per year.  The board shall establish different incentive levels that distinguish between different projects sizes, whether the energy storage system is customer-sited or front-of-the-meter, and other criteria as established by the board.  The total present value of an incentive provided through the incentive program over the 15-year incentive term, or other term as may be established by the board, shall not exceed 40 percent of a project’s total installed cost, based on a seven percent discount rate or other discount rate set by the board.  The board may develop a system of incentive bonuses to differentiate between projects by attributes, including, but not limited to, those serving overburdened communities and those providing resilient power to critical community facilities.

     d.    Stand-alone energy storage systems or energy storage systems that are paired with a renewable source of electric power, including, but not limited to, a solar photovoltaic array, shall be eligible for the incentive program.  However, the incentive program shall only be available to an energy storage system that becomes operable on or after the date on which the incentive program is established pursuant to subsection a.

     c.   e.     The board shall reserve at least one quarter of the incentives provided to customer-sited energy storage systems for customer classes or deployment scenarios that face greater economic hurdles, including, but not limited to, low-to-moderate income customers and customers located in or serving overburdened communities.communities.  However, the board may reduce this reservation goal if the board finds that reserving a quarter of such incentives will materially interfere with the board’s ability to meet the procurement goals established in paragraphs (1) and (2) of subsection a.

     d.    The incentive program shall not prevent or discourage customer-sited energy storage systems or front-of-the-meter energy storage systems from providing services to, or participating in, the wholesale markets, particularly the PJM capacity market, unless such restrictions are temporarily needed to ensure the peak load reduction value of energythis storagesection. systems supported by the incentive program is reflected in PJM load forecasts prior to the first delivery year in which the energy storage systems can act as capacity suppliers.  Any evaluation of costs and benefits of customer-sited energy storage systems or front-of-the-meter energy storage systems shall include benefits that accrue directly or indirectly to ratepayers due to the participation of the customer-sited energy storage system or front-of-the-meter energy storage system in wholesale markets.

     e.   f.     An applicant seeking an incentive award through the incentive program for a customer-sited energy storage system shall complete the project by no later than 30 months after the date on which the applicant’s application is approved.  An applicant seeking an incentive award through the incentive program for a front-of-the-meter energy storage system shall complete the project by no later than 42 months after the date on which the applicant’s application is approved.  However, the project timeline requirements established by this subsection may be waived or extended for an applicant that demonstrates extenuating circumstances that caused a delay in the completion of the project, including, but not limited to, delays caused by an electric public utility, PJM, a permit authority, or supply chain disruption.

     f.    g.    The board, with input from stakeholders, shall establish minimum performance standards for customer-sited energy storage systems and a method for measuring and ensuring compliance with those standards for energy storage systems receiving an incentive through the incentive program, which performance standards may include, but shall not be limited to, capability to increase distributed renewable energy hosting capacity, congestion relief, capacity value or peak load reduction, voltage control services such as Volt/Var control systems and Volt/Watt control systems, ramp rate control, and transmission and distribution infrastructure investment deferral or avoidance.  The performance standards may be autonomous or respond to signals from the local distribution utility.

     The board may include within the minimum filing requirements established inthrough board order pursuant to subsection a.b.

of this section, an adjustment to the incentive payments according to a project’s degree of compliance for program years after the initial program year.  The board may apply a preliminary version of these performance standards to the first yearblock of performance for the initial program year incentive recipients.

     g.   h.    After the board issues minimum filing requirements pursuant to subsection a.b.

of this section, each electric public utility shall file with the board a petition, or all electric public utilities shall file with the board a joint petition if the board so directs, proposing how to implement the applicable blocks of the incentive program.  Any individual petitions shall maximize common electric public utility elements and minimize electric public utility-specific elements.

     h.   i.     The board shall review each petition or the joint petition and may direct changes to the implementation plan presented in the submitted petitions or joint petition prior to board action.  The board shall approve, approve in part, or deny each submitted petition and shall determine the appropriate level of spending for each electric public utility’s implementation plan and allow each electric public utility to recover its costs through a separate component of the utility’s rate.  Each electric public utility’s cost recovery shall be limited to the actual cost of implementing the applicable blocks of the incentive program and administering the incentive payments, inclusive of any carrying costs needed to account for any difference between the timing of incentive program expenditures and cost recovery. recovery Notwithstandingand the foregoing, the board may allow an electric public utility to earn a ratereasonable of return, which may be less than the rate of return establishedon inany thecapital electricinvestments.  publicHowever, utility’sincentive mostaward recentpayments baseshall ratenot case,be ifconsidered thecapital electricinvestments publicfor utilitythe successfullypurposes meetsof incentivethis programsubsection. implementation benchmarks established by the board.

     i.    j.     Beginning in 2027 and ending in the first calendar year after cost recovery ends under the incentive program established by this section, the board shall report annually to the Governor, and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), information pertaining to the incentive program.

       3.    Eacha.  electricNo public utility in the State shall file a tariff with the board no later than 12six months after the effective date of P.L.    , c.    (C.        ) (pendingP.L.    , c.    (C.        ) (pending before the Legislature as this bill), whichthe tariffboard shall applyestablish, onlyby toorder, front-of-the-meterminimum energyfiling storagerequirements systems. for Thea tariffVirtual Power Plant Program, which shall be formulateddesigned to maximizeincentivize commonexisting elementsresources, amongincluding, eachbut electricnot publiclimited utilityto, andsmart compensatethermostats, front-of-the-meterelectric energyvehicles, storageand systemsdistributed forenergy theirstorage, value to theparticipate grid, as described in P.L.    ,a c.   program (C.        )that (pendingcompensates beforeelectric thepublic Legislatureutility ascustomers this bill).  The tariff shall establish a new rate design for front-of-the-meterreducing energy storageconsumption systemsduring thatperiods reflectsof costpeak causation.demand.

 The     tariffb.    mayAs distinguishpart between different sizes and types of front-of-the-meterthe energyminimum storagefiling systems. requirements Theestablished tariffthrough shallboard exemptorder front-of-the-meter energy storage systems from charges intended for customers who consume electricity, including, but not limited to, the societal benefits charge imposed pursuant to sectionsubsection 12a. of P.L.1999, c.23 (C.48:3-60).

 of     this 4.   section, Thethe board shall,shall inrequire accordanceeach withelectric public utility to develop cost estimates for incentives issued under the “AdministrativeVirtual ProcedurePower Act,”Plant P.L.1968,Program c.410and (C.52:14B-1estimates etof seq.),the adoptbenefits rulesfrom reducing energy consumption during periods of peak demand for the initial phase of the Virtual Power Plant Program.  The estimates shall include the costs and regulationsbenefits asof necessarysimilar programs in other territories and modeling of similar programs based on known costs and benefits in New Jersey and in other states to implementthe thisextent act.practicable.  The estimates, and the data utilized to create the estimates, shall be included in a filing submitted by an electric public utility under the Virtual Power Plant Program.

       5.   c.     ThisThe actboard shallmay takerequire effectan immediately.electric public utility to undertake a cost-of-service study or another similar analysis after the start of the Virtual Power Plant Program and to update the electric public utility’s incentives under the Virtual Power Plant Program based on the result of any such study or analysis to ensure the incentives are consistent with cost causation principles.

     d.    Each electric public utility shall file proposals that satisfy the board’s minimum filing requirements established through board order pursuant to subsection a.

of this section, in addition to any other requirement of this section, by no later than days after the board issues its order establishing such minimum filing requirements, unless the board specifies an earlier deadline.

     4.    a.  No later than 12 months after the effective date of P.L.    , c.    (C.        ) (pending before the Legislature as this bill), the board shall establish, by order, minimum filing requirements for electric public utility tariffs governing the interconnection of, rates applicable to, and compensation of front-of-the-meter energy storage systems that are consistent with the requirements of this section.  Each electric public utility shall file tariffs that satisfy the board’s minimum filing requirements established through board order pursuant to this subsection, in addition to any other requirement of this section, by no later than 120 days after the board issues its order establishing such minimum filing requirements, unless the board specifies an earlier deadline.