Dive Brief:
- Customer-sited energy storage devices will be among the assets cleared to participate in a two-year, technology-neutral virtual power plant program administered by electric distribution companies in New Jersey beginning next year, the state Board of Public Utilities said in a straw proposal released on July 15.
- The “explicitly transitional” two-year program would evolve into a market-based, open-access VPP tariff from 2029 onward, according to the straw proposal. Where permitted, it would allow batteries and other distributed energy resources to stack payments for distribution-level grid services with PJM Interconnection wholesale market participation payments, the BPU said.
- The framework makes New Jersey one of a growing number of states in both restructured and vertically integrated utility markets moving toward open-access VPP programs that allow non-utility companies to aggregate electric vehicles, residential batteries and other small-scale resources.
Dive Insight:
The BPU is accepting written comments on the straw proposal until Aug. 17. It sought input on the proposal from utilities, technology providers, ratepayer advocates and other stakeholders at an all-day public meeting on July 30.
The proposal fulfills a key directive in one of the energy-related executive orders Democratic New Jersey Gov. Mikie Sherrill issued upon taking office in January, the BPU said.
Executive Order No. 2 set aggressive capacity targets and timelines for BPU procurement of distributed, community-scale and utility-scale solar and energy storage capacity. It also directed the BPU to develop a VPP program within 180 days that would leverage existing demand response programs, look for opportunities to boost third-party electricity supply offerings and enable “operational and policy changes” to allow distributed energy assets in New Jersey to participate “to the fullest extent possible” in the PJM Interconnection capacity market.
The BPU said it would coordinate the straw proposal with several ongoing proceedings, including a virtual power plant request for information issued on April 20, the multi-phase Garden State Energy Storage Program proceeding and multiple proceedings on passive and managed electric vehicle charging.
It outlined eight principles governing the future VPP program, including equitable design and inclusive participation; technology neutrality and inclusive participation opportunity; “non-discriminatory aggregator access and friction-free enrollment and exit for qualified, participating resources”; and cross-program coordination to prevent double compensation.
The two-year transitional program would be administered by New Jersey’s four electric distribution companies and begin no later than July 1, 2027, the BPU said. It would take advantage of the utilities’ existing advanced metering infrastructure, direct load control platforms and demand response customers enrolled under New Jersey’s Triennium energy-efficiency program, it said.
The proposal sees the open-access second phase beginning in 2029 and running indefinitely thereafter. Bringing it to fruition will require “substantial stakeholder inputs, EDC investment, and third-party systems integration around a fully specified service architecture,” the BPU said.
At the July 30 stakeholder meeting, utility representatives detailed present and future battery-based demand response programs and the factors — both internal and external — that may increase their chances of success.
Tim Fagan, manager for planning and evaluation at PSE&G New Jersey, said the utility plans to roll out a VPP program this month that would provide an upfront incentive of about $5,000 for an 8-kW home battery and allow the customer to pay off the remaining installation balance through PSE&G’s on-bill repayment program. In return, the customer would allow PSE&G to discharge the battery during so-called peak-shaving events, he said.
Future battery-eligible VPP programs could feature recurring payments to customers, Fagan said, adding that PSE&G believes resilience-minded customers have already deployed “several thousand” small-scale batteries in New Jersey.
“Certainly we see a lot of opportunities for expansion … there’s an opportunity to enroll existing battery owners into a similar type of VPP program which would be a pay-for-performance type of program,” he said.
Fagan urged New Jersey to consider allowing electric distribution companies to own energy storage, a practice he said is increasingly common in both restructured eastern states like Massachusetts, New York and Maryland, and in vertically integrated markets like Hawai’i and Minnesota. With geographically targeted procurements for customer-sited batteries falling short recently in Hawai’i and Massachusetts, utility-owned storage can act as a backstop to add capacity on increasingly congested distribution circuits, he said.
Andrew Bayne, manager for energy efficiency programs at Pepco Holdings, said his company was thinking about how to minimize attrition among the 100-to-300 devices enrolled in its Delaware “bring your own battery” pilot.
Participating Delmarva Power customers will receive an estimated $1,080 in annual performance payments by direct deposit, not bill credits, Bayne said.
Among the questions Bayne said PHI is hoping to answer with the pilot — and potentially bring to customers of Atlantic City Electric, its New Jersey utility — is whether “that juice [is] worth the squeeze for the customer — is that $1,000 a year worth it” to allow the utility to cycle the battery? And, relatedly, how many called events can customers tolerate each season?
“These devices behave differently when you call upon them,” he said. “That behavior drives customer attrition from the program … [which affects] the value we can glean.
