Energy Incentive Programs, New Jersey
Updated December 2011
What public-purpose-funded energy efficiency programs are available in my state?
New Jersey's 1999 electricity restructuring law paved the way for funding of energy efficiency by implementing a non-bypassable surcharge on retail sales of both electricity and natural gas. Nearly $400 million was budgeted in 2010 across all program types (including low-income and residential). A single, consistent set of programs is administered in each major utility's service territory under the rubric of the New Jersey Clean Energy Program.
Federal customers can take advantage of the SmartStart Buildings initiative, which provides financial, technical, and design assistance for energy-efficient retrofit, renovation, and some new construction projects. Rebates are available for a wide range of equipment, including lighting and lighting controls, motors, variable frequency drives, gas cooling, electric chillers, several types of unitary HVAC equipment, gas-fired space and water heating, and various custom measures. Rebate size in most cases depends on the equipment capacity and efficiency, though some rebates (e.g., $250 for qualifying dual enthalpy economizer controls) are fixed. Financial incentives are also available to cover some or all of the design and engineering costs related to analysis of efficient alternatives, ranging from specific assistance such as chiller plant or compressed air system optimization to whole building simulation. Pre-approval should be received before the purchase and installation of any equipment.
One offering under the SmartStart umbrella is the Pay for Performance program, in which whole building savings (in both new construction and existing buildings) are incentivized up to $2 million per project ($3 million if combined with a cogeneration installation). All buildings must achieve 15% source energy savings – existing buildings from their prior consumption levels and new construction relative to ASHRAE 90.1-2004. Incentives are issued upon three milestones: development of an energy reduction plan by an approved program partner ($0.10/sf), installation of approved measures ($0.09-0.11/kWh and $0.90-1.25/therm for estimated first-year savings, with higher incentives for greater percentage savings), and savings verification (also $0.09-0.11/kWh and $0.90-1.25/therm).
What utility energy efficiency programs are available to me?
For information on energy efficiency programs offered by utilities, please see the section above.
What load management/demand response options are available to me?
The PJM Interconnection (PJM), a regional transmission organization (RTO), offers several demand response programs. Two specific programs may be attractive to federal facilities in the PJM footprint:
The Economic Load Response program allows electricity users to provide load reductions in exchange for a payment based on hourly wholesale electricity prices. Participation is fully voluntary. Customers start by submitting load reduction bids through their curtailment service provider (any existing PJM member, such as their utility, a third-party electricity supplier, or a specialty CSP) of at least 100 kW into the day-ahead energy market. Participants whose bids are accepted are paid for their load reductions based upon the day-ahead, hourly electricity market prices (the day-ahead "locational marginal price," or LMP). Reductions are figured based on a customer baseline load (CBL), which is essentially the average load levels for the same hours in four of the facility's previous non-responding days. Regardless of which type of firm it is, the CSP will generally offer to split the revenues with the customer at a pre-determined percentage.
PJM's emergency "capacity" program allows demand resources to participate in PJM's Reliability Pricing Model (RPM) forward capacity market via a CSP. Participants pledge to either reduce their load by a specified amount (guaranteed load drop, GLD), or to a specific kW level (known as firm service level, FSL), within one or two hours of an event notification. Load reductions are mandatory and may occur up to ten times per year, lasting up to six hours per event. Penalties for non-compliance are substantial. Remuneration is based on the results of the annual RPM capacity auctions in various PJM regions. Remuneration levels for the 2012-13 and 2013-14 PJM years (which begin June 1, 2012 and June 1, 2013, respectively) range from $50,000-90,000 per MW for New Jersey customers. Participants are also eligible to receive energy payments for actual reductions, if and when the program is called.
In both programs, participants can provide load reductions either through curtailing electricity use or operating on-site generation consistent with local environmental regulations and permits.
What distributed energy resource options are available to me?
The Database of State Incentives for Renewables and Efficiency provides information on programs that offer incentives for renewable distributed generation. The following programs may be of interest to federal customers:
As part of the New Jersey Clean Energy Program (see above), all electric and gas utilities in New Jersey participate in the state's Renewable Energy Incentive Program (REIP). This program provides rebates to customers for installing small wind turbines and sustainable biomass projects. Systems must be designed to serve no more than their own on-site facilities. The rebate rate varies depending upon the size of the system, but ranges as high as 40% of the installed cost of some smaller projects. Also, feasibility studies for sustainable biomass, fuel cell, and wind projects are rebated at 50% of cost, up to $50,000.
For solar PV projects, federal customers can take advantage of REIP's SREC Registration Program. Because New Jersey has an aggressive renewables portfolio standard (RPS), including a large solar requirement, the state participates in a trading market whereby owners of solar PV installations can sell solar renewable energy certificates (SRECs) representing the clean energy benefits of their solar systems to the New Jersey utilities that are required to meet the RPS requirements. SRECs have been trading around $0.20/kWh recently (fall, 2011). Federal facilities can sell SRECs from their New Jersey solar installations and buy back an equivalent number of generic, national RECs at a fraction of a cent per kWh, thereby augmenting the financing of their solar installation but still maintaining their contribution towards EPACT's and Executive Order 13423's renewable energy goals. SRECs in the NJ market are traded on an electronic bulletin board in chunks of 1 MWh (1,000 kWh).
Are there energy efficiency programs sponsored by state government?
The New Jersey Economic Development Authority provides low-interest (2-4%) energy efficiency loans of up to $2.5 million through a revolving loan fund for retrofit or new construction projects participating in the New Jersey Clean Energy Program's Pay for Performance program (see above).
What additional opportunities are available to me?
Federal customers whose utilities have area-wide supply contracts through GSA (e.g., Atlantic City Electric, First Energy/JCP&L, and New Jersey Natural Gas), may be able to take advantage of 3rd-party financed energy efficiency projects called utility energy services contracts (UESCs). Information is available on GSA's Energy Center of Expertise Library Page. Federal facilities should contact their account executive to determine the level of each utility's participation.
PJM (see above in the demand response section) now allows energy efficiency projects to participate in its forward capacity markets, based on its Reliability Pricing Model (RPM). To be eligible, EE projects must reduce load continuously by at least 100 kW during peak summer hours, and not be dispatchable. This load reduction can be bid into PJM's annual (for three years in advance) and "residual" (nearer-term) capacity auctions, and if selected will receive the auction clearing price. Interested customers can participate through energy service companies conducting ESPCs or utilities executing UESCs at their sites.
NOTE: Energy efficiency funds and demand response programs are updated at least annually. Please contact the FEMP webmaster if changes are needed between updates.