New Jersey May Pay Home Battery Owners To Help Grid When Demand Surges

New Jersey officials are weighing a plan that would allow homeowners to use batteries as emergency energy backups and a way to earn extra money. Under the proposal, storage systems installed at customers’ homes could join a virtual power plant program, helping the grid when electricity demand surges and paying participants for taking part.

On July 15, the New Jersey Board of Public Utilities issued a straw proposal for a two-year, technology-neutral VPP. The state’s electric distribution companies would oversee it, and it would need to launch no later than July 1, 2027 Utility Dive reported.

In its transitional form, the Cool Down notes that the program would cover customer-sited batteries as well as other distributed energy resources. Officials are also looking ahead to a market-based, open-access VPP tariff for 2029 and beyond. Where rules allow, participants could combine payments for local grid services with wholesale market revenue from PJM Interconnection.

For NJ residents curious what a battery setup could look like for your own home, it may be worth exploring EnergySage’s free tools to compare home battery storage options and get competitive installation estimates. EnergySage has teamed up with the electrification brand Qmerit to guarantee you get the best price on home battery storage solutions. Those who want a small-scale backup option, Pila is worth checking out. Its plug-and-play batteries are priced at a fraction of what whole-home backup systems cost.

For homeowners, battery storage is one of the best tools for riding out blackouts because it can keep critical equipment such as lights, refrigerators, medical devices, and internet service operating when grid power fails.

Batteries can also trim power bills by saving solar energy or low-cost electricity for use later, and they can help households move closer to off-grid living or rely less on their utilities.

As opposed to large power plants, VPPs let utilities and grid operators draw on many smaller devices at the same time. That can ease pressure on a grid during peak-demand periods and reduce pollution derived from fossil-fuel-based plants.

The BPU said any program should be guided by principles including fair design, technology-neutral rules, equal access for aggregators, and coordination among programs so participants are not compensated twice for the same service, Utility Dive reported.

The straw proposal carries out a directive in Executive Order No. 2, which Gov. Mikie Sherrill issued in January. It called for a VPP program to be created within 180 days and pushed for broader participation by distributed energy resources in the PJM Interconnection capacity market. At a July 30 stakeholder meeting, Tim Fagan, manager for planning and evaluation at Public Service Enterprise Group New Jersey, said the utility is developing a VPP offer that would include an upfront incentive of roughly $5,000 for an 8-kilowatt residential battery.

Participants could cover the remaining installation cost through an on-bill repayment program if they agree to allow a battery to discharge during peak-shaving events, Utility Dive reported.

Andrew Bayne, manager for energy efficiency programs at Pepco Holdings, said Delmarva Power’s Delaware “bring your own battery” pilot is providing participants with an estimated $1,080 per year in performance payments sent by direct deposit instead of bill credits.

Such programs are examining how often batteries can be dispatched, which compensation level is enough to keep customers enrolled, and how straightforward the signup process must be for household participation.

Bayne said utilities still need to know whether “that juice [is] worth the squeeze for the customer — is that $1,000 a year worth it? … These devices behave differently when you call upon them.”

In the latest update, UtilityDive reports that eligible customers of Atlantic City Electric, Jersey Central Power & Light, Public Service Electric & Gas and Rockland Electric could receive up to $200/kW per year over a 10-year term to dispatch energy stored in small-scale batteries during periods of grid stress under the procurement proposed last week by the New Jersey Board of Public Utilities.

The proposal targets up to 150 MW of behind-the-meter energy storage capacity that can reliably discharge during dispatch events called by the four electric distribution companies, which will administer capacity enrolled in their service territories. The BPU will host a virtual stakeholder meeting on Sept. 3 to solicit feedback.

The procurement is the first capacity block of the second phase of the Garden State Energy Storage Program, a statutory framework that requires New Jersey to deploy 2 GW of bulk and distributed energy storage capacity by 2030. The BPU is halfway to meeting that goal after procuring a combined 1 GW of transmission-connected storage in the program’s two-block first phase earlier this year.

In a statement, BPU President Ben Hertz-Shargel tied the Aug. 17 proposal to an executive order signed by Democratic Gov. Mikie Sherrill shortly after taking office on Jan. 20. It directed the BPU to issue solicitations for new solar and storage capacity and to begin developing a virtual power plant program open to third-party energy suppliers.

“The Garden State Energy Storage Program advances Governor Sherrill’s Executive Order No. 2 by growing energy storage deployments in-state to meet growing energy demand while improving affordability and resilience,” Hertz-Shargel said.

Residential and small commercial batteries would be eligible to participate in a temporary, technology-neutral VPP program that will begin next year and run for two years before transitioning into a market-based, open-access VPP tariff in 2029, the BPU said last month in a separate straw proposal. 

The BPU refers to the capacity discussed in last week’s straw proposal as “Distributed Storage Capacity Block 1.” Its primary objective is to reduce peak demand on New Jersey’s electric distribution system through coordinated discharge, which “will help avoid future capacity obligations and system costs, thereby accruing savings to all residential customers,” according to the straw proposal.

The proposal envisions the four electric distribution companies calling dispatch events to mitigate local congestion, distribution-level thermal constraints and other abnormal grid conditions. The BPU said it looked at similar programs in other states and conducted its own gap analysis to arrive at the $200/kW maximum annual incentive, which it said factors in “the private resilience value of residential energy storage systems.”

“This decision reflects [BPU staff’s] assessment that many consumers have some willingness to pay for resilience and thus do not require an incentive high enough to render the net cost of battery back-up power [to] zero,” the BPU said.