Modifies certain requirements for transmission-scale energy storage procurement under BPU incentive program.

S3819

SENATE, No. 3819

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MARCH 5, 2026

Sponsored by:

Senator� BOB SMITH

District 17 (Middlesex and Somerset)

Senator� JOHN J. BURZICHELLI

District 3 (Cumberland, Gloucester and Salem)

Co-Sponsored by:

Senators Diegnan, McKnight and Greenstein

SYNOPSIS

���� Modifies certain requirements for transmission-scale
energy storage procurement under BPU incentive program.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning the procurement of transmission-scale energy
storage and amending P.L.2025, c.136.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� Section 2 of P.L.2025,
c.136 (C.48:3-121.3) is amended to read as follows:�

���� 2.��� a.� (1) The Board of
Public Utilities shall establish a program to procure and provide incentive
awards for the development of transmission-scale energy storage systems with a
reasonable likelihood of successful and timely completion.� The board shall solicit
applications for the program established pursuant to this section in an initial
Tranche 1 and in Tranche 2, pursuant to paragraph (2) of this subsection.� The
board may place an eligible project that does not receive an incentive award
for Tranche 1 or Tranche 2 on a waiting list and consider the eligible project
for an incentive award during a subsequent tranche.

���� (2) By no later than
[
June 30
]

December
31
, 2026, the board shall approve incentive awards for eligible projects
totaling at least 1,000 MW AC in installed capacity.� However, at least 350 MW
AC of the 1,000 MW AC procurement goal shall be approved in incentive awards
for eligible projects in Tranche 1 by no later than December 31, 2025.� If the
board is unable to procure all 1,000 MW AC in installed capacity in Tranche 1,
the board shall approve incentive awards for eligible projects in Tranche 2,
provided that all incentive awards in Tranche 2 are awarded by no later than
[
June 30
]

December
31
, 2026.�

���� b.��� To qualify for an
incentive award in Tranche 1 or Tranche 2 pursuant to this section, a
transmission-scale energy storage system shall:

���� (1) not participate in any
other energy storage program, except for the GSESP, to the extent that the
energy storage program established pursuant to P.L.2025, c.136 (C.48:3-121.2 et
al.) is incorporated into the GSESP;

���� (2) have an anticipated
commercial operations date of no later than December 31, 2030, unless the board
permits an exception;

���� (3) meet the following project
maturity requirements, as applicable:�

���� (a) a transmission-scale
energy storage system applying for an incentive award in Tranche 1 shall have
entered the PJM interconnection process and, at the time of application, have a
fully executed Generation Interconnection Agreement or Interconnection Service
Agreement through PJM, have a completed Surplus Interconnection Study through
PJM, or have notified PJM of intent to transfer existing Capacity
Interconnection Rights associated with a deactivating generation station;

���� (b) a transmission-scale
energy storage system applying for an incentive award in Tranche 2 shall have
entered the PJM interconnection process and, at the time of application
[
,
]
:
have
a fully executed Generation Interconnection Agreement or Interconnection
Service Agreement through PJM
[
,
]
;
have
a completed Surplus Interconnection Study through PJM
[
,
]
;
have
been studied by PJM in a Phase I System Impact Study
[
and have paid a Decision Point I
Readiness Deposit to PJM,
]

or be in the process of undergoing a Phase I System Impact Study through PJM;

or have notified PJM of intent to transfer existing Capacity Interconnection
Rights associated with a deactivating generation station; and

���� (c) if a transmission-scale
energy storage system
applying for an incentive award in Tranche 1
fulfils
the project maturity requirements established pursuant to subparagraph (a)
[
or
subparagraph (b)
]

of this paragraph by completing a Surplus Interconnection Study or by notifying
PJM of intent to transfer existing Capacity Interconnection Rights associated
with a deactivating generation station, then the transmission-scale energy
storage system shall also have obtained the associated Capacity Interconnection
Rights through PJM; and

���� (4) meet any other eligibility
criteria the board may establish through board order or rulemaking.�

���� c.���� Any application for an
incentive award issued in Tranche 1 or Tranche 2 pursuant to this section shall
include:�

���� (1) evidence reasonably
satisfactory to the board of site control;

���� (2) evidence reasonably
satisfactory to the board that an applicant has or will obtain all required
permits, which evidence shall include an execution plan to obtain all required
permits;

���� (3) evidence reasonably
satisfactory to the board that the applicant has submitted all interconnection
applications and initial application fees necessary to obtain permission from
the appropriate electric public utility or grid operator to operate the transmission-scale
energy storage system;

���� (4) evidence reasonably
satisfactory to the board of the applicant�s financial means to construct the
transmission-scale energy storage system and ability to obtain revenues through
electricity markets or non-ratepayer funding, including, but not limited to,
energy arbitrage, ancillary services, and capacity revenues in PJM;

���� (5) evidence reasonably
satisfactory to the board of the status of the transmission-scale energy
storage system in the PJM interconnection process;

���� (6) assurances reasonably
satisfactory to the board that the transmission-scale energy storage system
will adhere to any safety requirements, standards, or measures that the board
deems appropriate as well as to any nationally recognized minimum safety requirements,
including, but not limited to, appropriate laboratory testing, and will comply
with all manufacturers� installation requirements, applicable laws,
regulations, codes, licensing, and permit requirements;

���� (7) a statement describing the
transmission-scale energy storage system�s alignment with State and regional
transmission and resource adequacy planning goals and demonstrating the
transmission-scale energy storage system�s coordination with PJM and the appropriate
electric public utility;

���� (8) an application fee as set
by the board; and

���� (9) any other information
required by the board.�

���� d.��� The board shall review
Tranche 1 and Tranche 2 applications consistently with the requirements of this
section.� At its discretion, the board may instruct an applicant on curing
minor defects in a Tranche 1 or Tranche 2 application.� The board shall evaluate
each application based on the bid prices of the requested incentive awards.�
The board may appropriately compare bid prices, at the board�s discretion,
based on the measure of a transmission-scale energy storage system�s installed
capacity, energy storage capacity, or expected accredited capacity.� The board
may also consider other factors such as:�

���� (1) project maturity and
likelihood of success;

���� (2) whether the project has
completed non-ministerial permits;

���� (3) whether the project is
proposed by an applicant with experience in energy storage development,
construction, and finance; and

���� (4) whether the project
promotes redevelopment, community benefits, brownfield redevelopment, or
existing or former fossil fuel plant replacement or provides demonstrated
benefits to environmental justice in communities where a transmission-scale
energy storage system is proposed to be located.�

���� e.���� Any board order issued
pursuant to P.L.2025, c.136 (C.48:3-121.2 et al.) shall be binding and
enforceable.� Any such board order shall:�

���� (1) define the eligible
project receiving an incentive award and the eligible project�s installed
capacity;

���� (2) define the incentive
award, including a payment schedule for the 15-year award period of the
incentive award, which term shall commence no earlier than the commercial
operations date of an eligible project and during which term an eligible
project shall receive an annual incentive award on each anniversary of the
first payment date;

���� (3) determine the amount of
funding to be allocated for payment of the incentive award beginning in the
fiscal year in which the eligible project commences commercial operations;

���� (4) include a participation
fee as the board may require from the developer;

���� (5) require, for an eligible
project awarded an incentive award, a pre-development security not to exceed
$100,000 per megawatt and not to exceed in total $10,000,000;

���� (6) outline the conditions
under which the board may, in the event of a developer�s failure to operate an
eligible project by the deadline stated in the board order or to meet deadlines
included in the board order, revoke an incentive award or retain some or all of
the pre-development security;

���� (7) provide that receipt of an
incentive award for an eligible project shall be contingent on achievement of
baseline performance requirements, including, but not limited to, availability
for dispatch in a minimum number of hours per year, as determined by the
board.� The board may use the PJM Equivalent Forced Outage Rate or another
metric determined appropriate by the board to measure energy storage
availability.� The board order shall require that the developer report data for
the purpose of this paragraph at regular intervals and shall provide for a
reduction of an incentive award in proportion to the number of hours of
required availability that is unmet by the eligible project; and

���� (8) require a developer to
provide additional information to the board during the term of the incentive
award, as the board may reasonably require.� The board may set additional
requirements at its discretion, including, but not limited to, a requirement
that the developer report major development and construction milestones to the
board, maintain financial security throughout the term of the incentive award,
or any other requirement the board determines necessary to ensure continued
progress and operational viability of an eligible project.�

���� f.���� The board may amend an
order issuing an incentive award pursuant to this section solely to change the
funding source of the incentive award.� Any incentive award for an eligible
project and the conditions for receiving funding pursuant to this section shall
remain effective for the full duration of the award period specified in the
board order issuing the incentive award, notwithstanding any change to the
funding source of the incentive award.�

���� g. (1) Notwithstanding the
provisions of the �Administrative Procedure Act,� P.L.1968, c.410 (C.52:14B-1
et seq.), or any other law or rule to the contrary, the board shall permit
applications for Tranche 1 without regard to the publication status of the
rules and regulations to be issued pursuant to P.L.2025, c.136 (C.48:3-121.2 et
al.), by no later than September 30, 2025.�

���� (2) The board shall accept
Tranche 1 applications for a maximum of 60 days after the beginning of the
formal application period for Tranche 1.� Within 60 days following the closure
of the Tranche 1 application period, the board shall:�

���� (a) evaluate projects in
accordance with this section, any rules or regulations proposed pursuant to
P.L.2025, c.136 (C.48:3-121.2 et al.), and any application requirements and
eligibility criteria approved pursuant to this subsection; and

���� (b) select eligible projects
to receive an award.�

���� h.��� An incentive award shall
be conditioned upon a developer�s compliance with the board order determining
the incentive award and with any conditions the board shall reasonably require.

(cf:� P.L.2025, c.136, s.2)

���� 2.��� This act shall take
effect immediately.

STATEMENT

���� This bill would extend the
deadline for the Board of Public Utilities (BPU) to approve Tranche 1 and
Tranche 2 incentive awards for eligible transmission-scale energy storage
systems under the energy storage program established by N.J.S.A.48:3-121.2 et al.
(program).� Under current law, the BPU is required to approve incentive awards
for eligible projects totaling at least 1,000 megawatts in installed capacity
by June 30, 2026.� This bill extends that solicitation deadline to December 31,
2026.� The bill also modifies certain project maturity requirements in order to
expand the amount of projects eligible to receive incentive awards under
Tranche 2 of the program.