NJ regulators approve virtual power plant, battery storage programs

The Board of Public Utilities on Thursday unanimously approved the launch of an interim virtual power plant program and the next phase of the state’s energy storage program.

The approved programs make up PowerUp New Jersey, the state’s bid to tap into smart devices and smaller-scale battery projects to soften the impact peak demand has on power prices by paying for reductions in power use or stored energy transmitted to the grid.

“Residents and businesses can lend power from their homes — through smart devices, in-house batteries, solar panels, and other energy sources — to help support the grid when they are not using them, and we will pay you for that energy. That means more money in your pockets, less strain on the grid, and lower energy costs across our state,” Gov. Mikie Sherrill said in a statement.

Virtual power plants seek to remotely reduce the power draw of certain devices, like smart thermostats or electric vehicle chargers, during the parts of the day that grid demand is highest and compensate ratepayers for their reduced electricity use.

Price effects are magnified when demand for electricity approaches the grid’s capacity to generate power. Relatively small amounts of additional generation can have an outsized impact on per-kilowatt-hour rates under those conditions.

The project aims to reduce peak energy use at each of the state’s four regulated utilities —companies like PSE&G or Atlantic City Electric that transmit electricity to ratepayers — by 3%.

Existing devices paid for by state energy efficiency or electric vehicle charger programs could already meet up to 82% of the sought-after reductions at each of the utilities if three-quarters of the eligible devices were enrolled in the virtual power plant program. The state is seeking an overall reduction of 547.1 megawatts across the four electric distribution companies.

“I don’t know if everyone in New Jersey understands, but it is the most expensive hours of the year that are driving the really unsustainable price hikes in the utility and electricity bills that we saw in the last few years,” Board of Public Utilities Commissioner Emma Rebhorn said Thursday.

The order approved by the BPU Thursday requires the state’s four regulated utilities to stand up their interim virtual power plant programs by Oct. 1, 2027. Those programs would run until Sept. 30, 2029, after which they would be replaced by more permanent versions.

By approving PowerUP New Jersey, the board also approved the first block of the second phase of the state’s energy storage program, which seeks to stand up new capacity by expanding residential battery storage in New Jersey.

That program would pay $200 per kilowatt of residential or small-scale commercial new storage capacity, or $100 for each kilowatt of existing storage capacity that joins the program, with adjustments for how much power those batteries actually put into the grid.

Overall, block one seeks to collect 150 megawatts of new storage and 100 megawatts of existing storage. New Jersey’s energy storage program aims to build 2,000 megawatts of capacity by 2030.

Individuals or businesses enrolled in the distributed battery program would receive payments through a distributed energy resource manager, while those enrolled in the virtual power plant program could be paid directly by their utility or through such a manager.

Thursday’s votes are the latest in a series of actions across administrations that have sought to curb spikes in electricity costs driven by the mammoth power demands of artificial intelligence data centers.