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Energy Incentive Programs, New Jersey

Updated September 2008

Below you will find questions and answers regarding New Jersey's utility energy efficiency programs, including options for load management, demand response, and distributed energy resources, and information about state-sponsored energy efficiency programs.

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. Almost $150 million was spent in 2007, across all program types (including low-income and residential). A single, consistent set of programs is administered by each utility under the rubric of the New Jersey Clean Energy Program.

Federal customers can take advantage of the SmartStart Buildings Program, which provides financial, technical, and design assistance for energy-efficient retrofit, renovation, and 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.

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, three of which may be attractive to federal facilities:

  • 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. Program participants have the choice of two options: the Real-Time or Day-Ahead Option. In the Real-Time Option, participants can decide at any time to provide load curtailments (with one hour notice to PJM), and receive payment based on the real-time electricity price (minus their retail rate for generation and transmission). In the Day-Ahead Option, participants submit load reduction bids (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 (also with their generation and transmission rates subtracted). Reductions are figured based on a "customer baseline load" (CBL), essentially the average load levels for the same hours in four of the facility's previous non-responding days. Retail electricity customers can participate in the program through any existing PJM Member, such as their utility, a third-party electricity supplier, or a specialty "curtailment service provider" (CSP); they may also participate directly by becoming a "Special Member" of PJM. 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. Customers on real-time (hourly) electricity pricing can participate, but at much less attractive remuneration terms (since they are already exposed to market electricity rates).

  • The Emergency Load Response program (energy only) provides participants with a payment representing the marginal cost of power at the nearest hub on the PJM system (the locational marginal price, or "LMP") for providing load reductions when notified by PJM of a system emergency. Compliance with any load reduction request is voluntary; no penalties are assessed if a participant decides not to respond. Retail electricity customers may participate through any PJM Member (for example, their utility, third-party electricity provider, or an independent CSP) or directly, by registering as a Special Member with PJM. While the remuneration can be very high in an event, the emergency program is rarely called (only five times over the past three summers, and each time only in certain zones). However, emergency program customers may also participate in the economic program (above), as long as reductions are not credited toward both programs simultaneously.

  • PJM's Interruptible Load for Reliability (ILR) offering is an emergency "capacity" program in which 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. Participants must register by March 2, 2009 (and should start sooner since registrations must be cleared by their third-party electricity providers and distribution utilities). Remuneration is based on the results of annual capacity auctions in various PJM regions, but ranges from about $40 to $80/kW (depending on the zone and year) through 2011-12. Most participants are also eligible to receive energy payments for actual reductions, if and when the program is called.

In all three 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 Renewable Energy 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 Customer On-Site Renewable Energy (CORE) program. This program provides rebates to customers for installing clean distributed generation, including technologies such as small wind turbines, fuel cells, landfill gas, and sustainable biomass (but not solar PV - see below). 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 60% of the installed cost of some projects.

  • For solar PV projects, federal customers can take advantage of New Jersey's Solar Renewable Energy Certificate Program. Because the state has an aggressive renewables portfolio standard (RPS), including a large solar requirement, the New Jersey Board of Public Utilities created a trading market whereby owners of solar PV installations can sell 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 near $0.30/kWh recently (mid 2008), and are expected to increase in value as the RPS thresholds bump up annually (each June 1st) and CORE payments (see above) for PV are completely discontinued (some customers that have been in line for these payments for a year or more are still being remunerated for their systems). Federal facilities can sell SRECs from their New Jersey solar installations and buy back an equivalent amount 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?

No state government programs are currently available to federal customers.

What additional opportunities are available to me?

Federal customers also have energy efficiency opportunities available with utilities that have area-wide contracts with GSA (e.g., Atlantic City Electric, First Energy/JCP&L, and New Jersey Natural Gas) and, by extension, all other federal agencies. Federal facilities should contact their account executive to determine the level of participation by their local utility.

NOTE: Energy efficiency funds and demand response programs are updated at least annually. Please contact the FEMP webmaster if changes are needed between updates.