OVERVIEW
The New Jersey Board of Public Utilities (“the BPU”) in an order dated June 18, 2025 has taken the first step to implement the New Jersey Clean Energy Act of 2018 by unveiling a multiphase program incentivizing public and private developers to install 2,000 megawatts (“MW”) of electric storage in state by 2030.
The first Phase of what the BPU has dubbed the Garden State Energy Storage Program (“GSESP”) is scheduled to be implemented in 2025 and 2026. It will focus on battery storage to enhance transmission grid reliability, also known as Storage as a Transmission Asset (“SATA”). SATAs are used to integrate renewable energy into the existing transmission grid, as well as to defer or avoid new transmission infrastructure for traditional energy sources.
Phase two of the GSESP is scheduled to commence in 2026. It will address distribution scale battery projects. Distribution involves moving electricity from its source (often a utility) to end users (often customers).
The BPU has announced that it has divided the first Phase into two tranches. Its solicitation for Tranche 1 announced the BPU’s intention to award between 350-750 MW by October 31, 2025, with a pre-qualification process commencing on June 25, 2025, and a final bid submission deadline of August 20, 2025. Tranche 1 is open to transmission-scale projects, including standalone storage (grid supply energy storage systems interconnected in front of the meter) and storage additions to existing solar, or solar-plus-storage energy resources with the storage systems interconnected behind a meter.
There are strict qualifications to participate in Tranche 1, focused on projects that can meet all of the milestones to be ready to initiate construction. The incentives for Tranche 1 will be paid out at a fixed annual rate per megawatt per year for a 15-year period. With some limited exceptions, the candidates selected will be chosen in the order of those proposing the lowest required incentive. Eligible applicants include government entities (e.g., municipalities or counties) and private entities. Electric Distribution Companies (“EDCs”) are precluded from applying. Also, to qualify, construction cannot have commenced prior to submitting the application for the GSESP. The BPU Rules have not yet been implemented but eventually will be, and such absence does not stop the program from moving forward.
The BPU reported in the June 18 Order that it intends to fund the GSESP using its existing Clean Energy Program budget, Regional Greenhouse Gas Initiative revenues, and potentially other funding sources—without increasing Societal Benefit Charge rates, with the conclusion that there would be no gross rate increase due to the GSESP.
More details of the GSESP are provided below, as well as links to the implementing BPU Order and the forms required to be submitted to qualify and submit a bid.
GARDEN STATE ENERGY STORAGE PROGRAM
Following passage of the New Jersey Clean Energy Act of 2018, which mandated the deployment in New Jersey of 2,000 megawatts (“MW”) of energy storage by 2030, the BPU, in 2022, undertook to implement a new electricity storage program. Taking into account stakeholder input, the BPU, with staff guidance issued an Order on June 18, 2025 (posted on June 24, 2025[1], the “June 18 Order”) outlining the GSESP.
Most basically, the GSESP involves the BPU conducting competitive solicitations for battery storage projects in New Jersey - where the BPU awards financial incentives to selected projects.
THE GSESP WILL BE IMPLEMENTED IN MULTIPLE PHASES
Phase 1 will award incentives to eligible transmission-scale energy storage systems via a competitive solicitation process that will determine both which projects are selected, and the size of the incentive awards each project receives. These incentives will be paid out at a fixed annual rate per megawatt per year for a 15-year period. Phase 1 will target procuring at least 1,000 MW of transmission-scale energy storage over the course of multiple solicitations.
- The first solicitation (“Tranche 1”) will aim to award 350-750 MW by October 31, 2025, with a pre-qualification process commencing on June 25, 2025, and a final bid submission deadline of August 20, 2025. Tranche 1 is open to transmission-scale projects, including standalone storage (grid supply energy storage systems interconnected in front of the meter), and storage additions to existing solar, or solar-plus-storage distributed energy resources. However, storage additions to existing solar and the storage component of any solar-plus-storage resource are only eligible if they do not and will not receive any storage incentives from the existing New Jersey solar incentive program. The June 18 Order initiates Phase 1 of the GSESP and focuses on the implementation of Tranche 1.
- The BPU intends to award the remaining capacity necessary to achieve the 1,000 MW target in one or more solicitation Tranches in 2026.
Phase 2 will launch the distributed segment of the GSESP (located on the distribution systems). The design of Phase 2 is not included in the June 18 Order. The distributed segment is anticipated to provide both fixed incentives and performance incentives to eligible energy storage systems. The BPU also anticipates setting the size of fixed incentives and the amount of project capacity to award on an annual basis, offering fixed incentive through administratively determined capacity blocks. Phase 2 of the GSESP is expected to launch in 2026.
Phase 3 - The June 18 Order states that a potential Phase 3 would consist of a transmission performance incentive. However, the potential Phase 3 of the GSESP is currently deferred.
IMPLEMENTATION OF TRANCHE 1 OF PHASE 1
Tranche 1 of Phase 1 consists of a series of steps with the schedule listed below:
The below listed forms and instructions will be used in connection with making an application to participate in the Tranche 1 of Phase 1. These forms were posted by the BPU on June 25, 2025 and links have been provided below to access these forms:
One note that underscores the approach being taken in Tranche 1 of Phase 1 –there is an emphasis on the ability to pursue an accelerated time frame and for grid-supply projects, queue position is an important indicia of the likelihood of success. Further, an accelerated time frame in the GSESP depends on the developer having an approved interconnection agreement with PJM or equivalent (surplus interconnection rights or capacity interconnection rights from a deactivated generation facility). Analysis performed in connection with the GSESP recognized that a significant amount of New Jersey transmission-scale storage capacity has secured interconnection approval from PJM. As such, there are now hundreds of MWs of “shovel-ready” transmission-scale energy storage capacity that can be built - provided the necessary investment signals are sent. The June 18 Order also contemplated that other New Jersey storage projects may receive interconnection approval within the next year. Also consistent with an accelerated time frame, transmission-scale energy storage systems will be required to have (i) a planned commercial operation date (“COD”) that is no later than 30 months after the competitive solicitation application period closes, where a project will be considered operational only when it is fully constructed and interconnected with the PJM-managed transmission grid, including any necessary network upgrades., and (ii) a guaranteed COD no later than 150 calendar days after the planned COD.
Pre-Qualification Request Form
The pre-qualification form focuses on the identity of the storage project and the developer and seeks confirmation on PJM interconnection rights (or equivalent) and on confirming that the project is not receiving incentives for storage from any other program. SEE THE ACTUAL PRE-QUALIFICATION FORM FOR DETAILS.
Final Application Form
The required content of this Application Form is quite comprehensive and detailed and includes submission of specific documents such as an interconnection form or equivalent, a site plan, evidence of site control, evidence of financial capability, description of solar facility (if being paired), documentation on adherence to safety standards, documentation on alignment with state and regional transmission and resource adequacy, list of community benefits, whether the project involves a brownfield site, and a non-refundable application fee of $200 per MW. The application must also contain a specified list of project milestones and documentation on construction and operating cost structure and financing. The developer will identify its required incentive fee in dollars per megawatt (MW) per year. SEE DETAILED INSTRUCTIONS PROVIDED BY THE BPU AND THE ACTUAL APPLICATION FORM FOR SPECIFIC INSTRUCTIONS AND DETAILS.
Bid Application/Solicitation Fee Form
This form will be used in connection with the transmission of the check to cover the non-refundable application fee of $200 per MW.
THE BPU SELECTION CRITERIA
Selection will be based on the lowest-cost projects in price-ranked order, subject to consideration of community benefits, until the BPU awards enough transmission-scale energy storage systems to meet the solicitation’s minimum target installed capacity. The BPU will exceed the minimum target and award additional projects up to the maximum target installed capacity if the BPU determines, based on the submitted bids, that awarding more capacity is in the best interest of ratepayers. The BPU also retains the right to reject the award of a bid if it determines the award is too expensive in relation to the benefits it produces.
The solicitations will use a “pay-as-bid" model, in which winning bidders are awarded the incentives they request in their bid submission. These incentives will be paid out at a constant annual rate denoted in dollars per megawatt per year for a 15-year award period.
For Tranche 1, the lowest price bid will be determined on a per-unit basis by dividing the applicant’s requested annual incentives by the expected average accredited capacity of the transmission-scale energy storage system over the first five years of the system's commercial operation.
A proposed project’s expected average capacity value will be determined by multiplying the number of Capacity Interconnection Rights (“CIRs”) it holds by the average of PJM’s forward projections of Effective Load Carrying Capability (“ELCC”) rating for the relevant storage resource’s ELCC class in that five year-period. PJM provides these ELCC class rating projections on its website. A storage resource’s ELCC class (4-hour, 6-hour, 8-hour, or 10-hour) would be determined by dividing the proposed project’s energy storage capacity by the number of CIRs it holds.
Bidders awarded a GSESP transmission-scale incentive will have 30 days following the BPU order announcing the award to register their GSESP-eligible facility with the BPU by supplying information on the following project milestones, as applicable:
- Fully executed interconnection agreement;
- Fully executed engineering, procurement and construction agreement;
- Developer financial closing;
- Commencement of energy storage system construction;
- Planned COD; and Guaranteed COD.
COMPLIANCE REQUIREMENTS
Delay Penalties For Tranche 1-- Program Staff retains the ability to reduce the first annual incentive payment if the project does not achieve commercial operation by its planned COD date, unless the Division Director grants an extension of the planned COD deadline of up to 180 calendar days.
Post-COD Dispatch Availability Requirements & Incentive Payment Deductions-- A transmission-scale energy storage project’s continued receipt of the full value of its annual fixed incentive award payments will be contingent on being available for dispatch in a minimum number of hours per year (7,900 hours).
Technical Requirements-- Eligible systems must use new equipment and have not yet commenced construction at the time they apply for incentives. System owners must meet COD requirements by submitting as-built drawings and proof of permission to operate. They must follow installation guidelines and comply with all applicable federal and state laws, regulations, codes, standards, licensing, and permitting requirements.
[1] Link to June 18 Order: https://www.nj.gov/bpu/pdf/boardorders/2025/20250618/8E%20ORDER%20Garden%20State%20Energy%20Storage%20Program.pdf
