NJBIA is raising cost and efficacy concerns over a bill that will require the state Board of Utilities (BPU) to procure and incentivize transmission-scale energy storage in reaction to rising energy costs.

Bill A-5267 (DeAngelo, D-14; Bailey, D-3; Egan, D-17) is scheduled for a vote in the Assembly Telecommunications and Utilities Committee this morning.

NJBIA Deputy Chief Government Affairs Officer Ray Cantor said a comprehensive analysis of energy storage issues and existing New Jersey energy policies are needed before throwing money toward an effort that likely will not solve the problem.

“We are all looking for effective responses to recent increases in rates for electricity,” Cantor said. “However, before we spend tens of millions of dollars on energy storage, we need to first understand why rates are rising, how to best lower them and provide for enhanced grid reliability, and why more storage has not been built.

“While we are supportive of and recognize the need for cost-effective, grid-scale energy storage, we are concerned that this bill expends resources without firm controls over costs and without a full understanding of what projects are necessary to support the transmission grid.”

The bill requires the BPU to 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 system would need to be capable of energy storage of at least 5 megawatts and connected to the PJM transmission grid.

The board would be required to approve incentive awards totaling a collective minimum of $60 million for the first tranche, using New Jersey’s Societal Benefits Charge (SBC) for funding.

Cantor questioned the efficacy of such a program.

“We note that the BPU has had monies appropriated to it over the last two years, but they have failed to expend it,” Cantor said. “Would giving the BPU even more money result in it getting expended?

“Further, given the fact that the bill requires that any project be substantially through the PJM process, we question whether an incentive is even needed. The market should be able to pick the projects that get built.”

Cantor also stressed concerns about using SBC funds for the program.

“The bill specifies that at least $60 million will be allocated but there is no limit on how much the BPU can spend,” he said. “Worse, the BPU is given the authority to increase the SBC to cover the expense of whatever it thinks the program should cost.

“It’s also appropriate to ask what isn’t getting funding If SBC monies are used. The SBC is regularly taken from the BPU to supplement the General Fund. Will the state stop taking this money for the General Fund or NJ TRANSIT before it approves an increase in the SBC? The SBC is a significant part of utility bills and increasing it should be avoided.”

Last week, Cantor testified to the BPU that the update of the state’s 2024 Energy Master Plan continues to prioritize all-electrification policies, despite great affordability and reliability concerns in the state resulting from those efforts.

He said that should be addressed first before funding another program.

“Nothing in this bill encourages the development of new, natural gas-powered generation facilities,” he said. “NJBIA believes that the creation of high-efficiency and low carbon emitting natural gas EGUs will lower energy costs and provide grid stability.

“Many of those projects are already underway, given the market signals. We should be looking at all options.”