Earlier this year, Gov. Murphy released an ambitious plan to transition New Jersey to 100% clean energy by 2050. In order to achieve this ambitious goal, the Energy Master Plan outlines strategies that will accelerate the use of renewable energy, increase energy efficiency, deploy energy storage technologies and modernize our energy system.
Achieving this bold vision will require significant investments to modernize New Jersey’s energy infrastructure. One essential step has been initiated by the Board of Public Utilities (BPU) in its recently released “Energy Efficiency and Peak Demand Program Administration Straw Proposal.” That straw proposal provides a preliminary outline to cutting energy use through efficiency programs, which can lead to lower bills for customers and create tens of thousands of jobs across New Jersey.
Effective energy efficiency policy should encourage greater management and reduction of peak demand loads, as it would help to achieve the state’s energy transition affordably and efficiently. Energy storage should play a significant role in delivering energy efficiency and peak demand reductions. This is one objective of the New Jersey Clean Energy Act of 2018, which includes an energy storage target of 600 megawatts by 2021 and 2,000 MW by 2030. As New Jersey works to modernize its energy system, we must enable customer investments in energy storage to ensure they provide the most benefit possible to the energy system as a whole.
How energy storage works
Here is a brief description of how energy storage — such as batteries — actually works and how batteries can help New Jersey’s ratepayers. Batteries can charge off peak when system demand and electricity costs are lower, and then deliver that electricity during peak periods of demand to relieve grid stress. Batteries can save money for not only the individual consumer that installs the technology, but all ratepayers, by reducing the amount of spare capacity needed to meet system peak demands, while better utilizing generation resources available during off-peak periods. Deploying batteries, especially when paired with existing energy resources such as rooftop and community solar, increases energy resiliency and helps to create new employment opportunities across the state.
Regrettably, the Energy Storage Study produced by Rutgers University did not quantify the statewide economic benefits of storage deployment, but Massachusetts’ 2016 state-commissioned energy study of widespread energy storage deployment found benefits to its ratepayers of $2.3 billion over 10 years, most of which comes from reducing system and local peak demands. Given that New Jersey has a system peak 40% greater than Massachusetts, a similar order of magnitude in benefits to ratepayers is reasonably expected.
The straw proposal calls for requiring New Jersey’s utilities to develop and file for peak-demand reduction programs specific to their service territories. The BPU should provide guiding principles and frameworks for program design that will streamline the proposal process and direct the utilities to learn from other states that have successfully integrated batteries into their peak-demand reduction programs.
For example, there are several programs currently available to customers or under consideration in Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. These programs largely leverage a customer’s private capital investment in deploying resources on their premises and provide them compensation aligned with the savings to the entire system and all ratepayers. These programs are not incentive programs, where grants or rebates are provided to customers deploying assets. Rather, these programs are compensating customers for savings provided to the system.
‘Bring your own device’
One such program is the “bring your own device” (BYOD) program currently available for customers in Vermont, Massachusetts and New Hampshire. Under this program, customers are able to provide peak-demand reduction benefits and other grid services to the utility and are compensated for the value provided through an on-bill credit. The savings provided by customer-sited storage comes over time through the reduction of capacity obligation that the utility has in the wholesale market; without the need for costly grid upgrades and, perhaps most importantly, by improving the overall resiliency of the grid, including during extreme weather events. These programs also offer unique economic advantages to New Jersey, as they relieve ratepayers of investment risk.
Public Service Enterprise Group is already quite familiar with the BYOD concept, as it is currently implementing such a program in Long Island. This program provides space for the storage market to innovate and implement solutions that will achieve maximum program participation. It would make a lot of sense to replicate learnings from this program and extend the benefits to PSE&G customers in New Jersey.
New Jersey policymakers should view energy efficiency as part of an integrated energy system and take the necessary steps to enable, among other things, customers to become grid resiliency contributors, and true partners with the utility to reduce peak demand and address climate change. This solution is a win-win. New Jersey must fully take advantage of batteries in reducing our energy consumption while saving money in the process.