New Jersey proposes a 10-year home battery incentive of up to $200 per kW for 150 MW of storage
New Jersey BPU staff issued a straw proposal on 17 August 2026 for up to 150 MW of residential batteries paid up to $200 per kW a year for 10 years.
Photo by Robert So on Pexels
Staff at the New Jersey Board of Public Utilities issued a straw proposal on 17 August 2026 targeting up to 150 MW of behind-the-meter battery capacity, paid through a New Jersey home battery incentive of up to $200 per kW of awarded capacity each year for 10 years. The document, “Garden State Energy Storage Program (GSESP) Phase 2: Distributed Energy Storage Capacity Block 1 Straw Proposal”, was filed in docket QO26040116 and announced publicly on 19 August 2026. It is a staff proposal, not a Board order: staff expect to bring minimum filing requirements to the Board in October 2026, with utility response petitions in December 2026 and the block opening by July 2027.
The $200 per kW figure is a ceiling, not a payment. The proposal sets the annual payment as the incentive rate multiplied by awarded capacity in kW AC, multiplied by a Performance Factor capped at 100 per cent. The Performance Factor is the average of each dispatch event’s minimum output divided by awarded capacity across a performance year running 1 June to 31 May, with payment due by 30 June. The document’s own worked example makes the gap plain: an 11.5 kW, 13.5 kWh battery responding to 35 events across 125 performance intervals, averaging 2.7 kW of minimum discharge, scores a Performance Factor of 23.5 per cent and earns $540 for the year.
How the New Jersey home battery incentive was set
Staff derived the rate from a gap analysis and then deliberately set it below the gap. The modelled total installed cost is $1,250 per kWh, with a 30 per cent federal investment tax credit assumed and only 20 per cent of participants assumed to be on time-of-use rates, leaving a modelled revenue gap of $300 per kW. The proposal argues 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 zero”. Staff put the cost-benefit ratio at 2.16 for all ratepayers and 1.79 for non-participant residential ratepayers. Costs are recovered through a distribution tariff rider and treated as an expense, so the utilities earn no rate of return on them.
The proposal benchmarks the rate against three existing programmes, the only cross-state comparison in the document.
| Programme | State | Incentive level | Participation |
|---|---|---|---|
| New Jersey Distributed Storage Capacity Block 1 (proposed) | NJ | $200 per kW per year | Target up to 150 MW |
| Energy Storage Solutions | CT | $300 per kW | 1,235 customers, about 15 MW |
| Luma Energy CBES | PR | $1 per kWh, equal to $280 to $400 per kW | 81,000 customers, about 500 MW |
| ConnectedSolutions | MA, RI | $275 per kW | 5,251 customers, about 29 MW |
Source: NJ BPU, GSESP Phase 2 Block 1 Straw Proposal, Table 4, 17 August 2026.
Who can join and how often batteries would be called
Block 1 is residential only. Front-of-the-meter systems are ineligible, as are retrofits, repowering and expansions, since only new systems qualify. Customers on a third-party supply rate that passes through wholesale energy, capacity or transmission charges are excluded, and projects under bilateral contract with a data centre or other new large load are excluded. Third-party ownership and aggregation are permitted, and aggregators must pass through no less than 70 per cent of pay-for-performance incentives to the host customer. Applications carry a $50 non-refundable fee, are handled first-come first-served with same-week applications treated as simultaneous, and projects have 12 months to reach commercial operation. Whether to admit small commercial customers is one of five open stakeholder questions.
Preliminary dispatch rules cap events at four hours, with a maximum of 20 events in the summer season from 1 June to 30 September, including the five PJM coincident peaks, plus 10 events in the winter season from 1 December to 28 February, and no more than 35 dispatch events in a calendar year including off-season calls. Test calls are excluded. Minimum notice is two hours, falling to 10 minutes for emergency events. Metering must be at device level rather than net load.
Capacity is allocated across the state’s four electric distribution companies in proportion to 2025 residential sales, and the block ramps over 30 months.
| Electric distribution company | 2025 residential sales (MWh) | Share | Block 1 allocation (MW) |
|---|---|---|---|
| PSE&G | 13,843,426 | 49% | 73 |
| Jersey Central Power & Light | 9,763,108 | 34% | 52 |
| Atlantic City Electric | 4,066,021 | 14% | 21 |
| Rockland Electric | 723,904 | 3% | 4 |
Source: NJ BPU, GSESP Phase 2 Block 1 Straw Proposal, Table 2, 17 August 2026.
The ramp schedule sets 50 MW cumulative by July 2028, 100 MW by May 2029 and the full 150 MW by February 2030. Responses to a staff request for information from the utilities and Tesla indicate 8,500 to 11,000 batteries are already installed in New Jersey.
Once Block 1 opens it becomes the only residential storage incentive in the state for new systems, replacing the residential storage programmes certain utilities established under their second energy efficiency triennium. Participants may opt out at any time and move to a future virtual power plant tariff, and stacking is contemplated later without duplicative compensation. Winss Solutions previously covered New Jersey’s preparations for a virtual power plant and energy efficiency plan; the separate VPP straw proposal of 15 July 2026, in docket QO26030099, sets an interim utility-administered programme launching no later than 1 July 2027 and running two years, followed by a market-based open-access VPP framework from 2029.
Where this sits against New Jersey’s 2 GW target
New Jersey’s Clean Energy Act of 2018 sets a target of 2,000 MW of energy storage by 2030. The split between grid-supply and distributed storage is not statutory: the Board’s order of 18 June 2025 launching the Garden State Energy Storage Program allocated 1,000 MW to transmission-scale storage in Phase 1 and 500 to 800 MW to distributed storage in Phase 2, while reserving the right to change those allocations. Competitive Solar Incentive procurements are expected to add a further 200 to 500 MW.
Phase 1 is not yet complete. The Board awarded 355 MW in Tranche 1 by order of 4 March 2026, to Woods Landing Storage in Sayreville (200 MW), Two Rivers Energy Storage in Ridgefield (150 MW) and North America Energy Storage in Bordentown (5 MW), with projected ratepayer savings the Board put at upwards of $169 million. Tranche 2, a 645 MW solicitation in docket QO25120634, opened on 20 May 2026 and had its final application deadline extended from 7 August to 5 October 2026 after PJM delayed its Cycle 1 Phase 1 studies to 28 September. Staff expect to bring Tranche 2 award recommendations to the Board at the end of the fourth quarter of 2026. Trade coverage describing 1 GW as already procured overstates the position.
| Segment | Target | Status as of 26 August 2026 |
|---|---|---|
| Statutory total by 2030 | 2,000 MW | 355 MW awarded |
| Phase 1, transmission-scale | 1,000 MW | 355 MW awarded, 645 MW solicitation open to 5 October 2026 |
| Phase 2, distributed | 500 to 800 MW | Block 1 straw proposal for up to 150 MW |
| Competitive Solar Incentive contribution | 200 to 500 MW expected | Ongoing |
Sources: NJ BPU order of 18 June 2025; NJ BPU press releases of 5 March 2026 and 19 August 2026.
A virtual stakeholder meeting is scheduled for 3 September 2026 from 10am to noon Eastern, as a listening session with speaking slots of up to three minutes. Written comments close at 5pm Eastern on 10 September 2026, filed to docket QO26040116.
Background
Distributed storage entered New Jersey policy through the Clean Energy Act of 2018 and its 2,000 MW target, but procurement moved slowly until the Board launched the Garden State Energy Storage Program by order on 18 June 2025, setting the two-phase structure. Governor Mikie Sherrill’s Executive Order No. 2, signed on 20 January 2026, then set deadlines: open Tranche 2 within 45 days, launch Phase 2 within 90 days and start a virtual power plant programme administered by utilities and third-party suppliers within 180 days. The Board’s Tranche 1 awards followed on 4 March 2026 and the VPP straw proposal on 15 July 2026.
Board president Ben Hertz-Shargel framed the Block 1 proposal as advancing that executive order “by growing energy storage deployments in-state to meet growing energy demand while improving affordability and resilience”, and described the payment as compensation for “key transmission, distribution and capacity grid services, which will reduce utility cost to serve customers and reduce New Jersey’s exposure to PJM capacity prices”. Whether households accept a payment structure in which the headline rate is a ceiling most systems will not reach is the question the 3 September session is likely to test.
Sources: New Jersey Board of Public Utilities, GSESP Phase 2 Distributed Energy Storage Capacity Block 1 Straw Proposal; New Jersey Board of Public Utilities; New Jersey Board of Public Utilities, VPP Straw Proposal; New Jersey Board of Public Utilities, GSESP launch order; New Jersey Board of Public Utilities, Tranche 1 awards; Office of the Governor of New Jersey, Executive Order No. 2; Utility Dive
Featured image: photo by Robert So on Pexels (free Pexels license).
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I specialize in sustainability education, curriculum co-creation, and early-stage project strategy. At WINSS, I craft articles on sustainability, transformative AI, and related topics. When I’m not writing, you’ll find me chasing the perfect sushi roll, exploring cities around the globe, or unwinding with my dog Puffy — the world’s most loyal sidekick.
