By Yiran He | Tue, December 17, 24
On October 30, the New Jersey Board of Public Utilities (NJBPU) approved the state’s next round of energy efficiency programs. These new programs have been a year in the making and include core energy efficiency investments and new initiatives for building decarbonization, demand response programs, and the creation of an online platform for all utility and state programs.
In July 2023, NJBPU kicked off the state’s second round of energy efficiency programs, issuing an order that directed utilities to file new programs that also included new building decarbonization and demand response programs. The intent of these programs was to demonstrate the state's newly strengthened focus on reducing building emissions as it works towards its goal of 80 percent GHG emissions reduction from 2006 levels by 2050. Now, NJBPU has approved Triennium 2 energy efficiency programs, which include exciting updates. This blog unpacks some major new programs and changes.
Background
New Jersey launched statewide energy efficiency programs through the 2018 Clean Energy Act. The state runs efficiency programs in three-year cycles. Triennium 1 (2022-2024) used its $1.8 billion budget to establish a portfolio of statewide programs implemented by both the utilities and the Clean Energy Program. Triennium 2 begins on January 1, 2025, and runs through July 1, 2027. (The upcoming Triennium is two-and-a-half years long because Triennium 1 was extended by six months to the end of 2024.) Across all utilities, the Triennium 2 budget totals $3.8 billion.
| 
|
Figure 1: Gas (left) and electric (right) utility maps of New Jersey.
Source: NJ Clean Energy Program
For Triennium 2, utilities will continue to offer their core statewide programs, which are categorized as Residential, Commercial and Industrial (C&I), or Multifamily. Residential covers Whole Home, Income Qualified, Energy Efficient Product, and Behavioral Programs; C&I covers Energy Solutions, Prescriptive and Custom, and Direct Install Programs; Multifamily leverages measures from both Residential and C&I, covering buildings with three or more units.
Most of these will remain in much the same form as the previous cycle. However, Triennium 2 features several updates. We highlight three big changes: new building decarbonization programs, demand response programs for electric utilities, and creation of a statewide platform for all customers to learn about and access rebates offered by their utilities.
New Building Decarbonization Programs are Being Implemented
Today, buildings are a major source of carbon emissions. They consume about two-thirds of the United States’ power supply and produce about 40 percent of carbon emissions. New Jersey policy reflects the urgent need to tackle building-sector emissions: Governor Murphy’s Executive Order 316 from 2023 set ambitious goals to electrify 400,000 additional residential units and 20,000 additional commercial or public facilities by December 31, 2030, and to get an additional 10 percent of households earning less than 80 percent of area median income “electrification ready.” A few months later, NJBPU released an order to initiate programs in Triennium 2 that align energy efficiency planning with climate goals, including through building decarbonization programs. The order specified that the building decarbonization programs would follow the BD Programs Framework created by NJBPU staff, which requires that Building Decarbonization Start-Up Programs reduce energy and help customers using fossil fuel equipment adopt more efficient electric equipment.
In response, the utilities are now running two new offerings: higher incentives for installing heat pumps and conducting feasibility studies for networked geothermal. With the implementation of these programs, totaling $171,439,780 for Triennium 2, the utilities and NJBPU seek to study the impacts building decarbonization programs have on energy efficiency portfolios and set the foundation to expand these programs in Triennium 3 (2027 – 2030).
The heat pump programs are offered by utilities Atlantic City Electric (ACE), Jersey Central Power & Light (JCP&L), Rockland Electric Company (RECO), New Jersey Natural Gas (NJNG), and Public Service Electric & Gas (PSE&G). These programs prioritize customers with delivered fuels by providing higher incentives for measures that replace fossil fuel-powered space and water heating equipment with electric heat pumps and heat pump water heaters. The residential portion of the program will integrate with existing programs. While incentives are higher for full displacement of existing fossil fuel equipment, lower incentives are still offered if fossil fuel heating systems are left in place as backup. Gas utilities will also continue to offer incentives for high-efficiency gas furnaces and natural gas-fueled stoves and dryers. Commercial programs will have incentives for certain technologies such as ductless mini-splits and packaged terminal heat pumps in smaller facilities and will consider installation of custom components for larger customers.
Additionally, NJNG and PSE&G will each conduct a feasibility study for a networked geothermal project. Networked geothermal heat pumps are among the most efficient heating technologies available, connecting multiple buildings to a large underground fluid distribution loop. Networked thermal systems are currently promoted and developed around the country through state legislation and US DOE-funded grants. The studies conducted by NJNG and PSE&G will evaluate the feasibility of installing, owning, and operating such geothermal loops to share excess heat and reduce energy consumption. This will, in turn, inform potential future projects.
Electric Utilities are Implementing Demand Response Programs
Demand response programs reduce customer peak electricity demand and lower stress on the grid. The July 2023 NJBPU Order directed utilities to propose demand response programs and to conduct a statewide study on a roadmap for distributed energy resources.
New demand response programs, totaling $59,499,737, will be offered by the electric utilities (ACE, JCP&L, PSE&G, and RECO). The Triennium 2 programs focus first on managing HVAC equipment through smart thermostats. Other technological options may be explored later. The programs also include a virtual power plant offering, which will provide upfront incentives and financing for a limited number of residential customers to install batteries in their homes. One utility, ACE, will offer a time-of-use pilot and a Flexible Load Management program, both shifting peak usage to off-peak periods. In return for reducing or shifting consumption, customers receive compensation.
Utilities are Working Together to Create a One-Stop-Shop
A one-stop-shop is a statewide platform where customers can learn more about rebates and find local contractors. This streamlines program offerings and aligns utility efforts across the state. A single touchpoint can ensure the same programs are offered statewide, provide an opportunity for customers to find contractors, and enable contractors and customers to find educational materials. Creating a platform can lay a foundation for coordination of future programs. Massachusetts and Connecticut, for example, have core energy efficiency and electrification programs that are offered on a statewide platform where customers can find information on their rebates and to find local contractors. This platform can be expanded to include tools that help customers understand the costs of upgrades, such as a heat pump calculator.
The utilities have taken the first step. One of the stipulations of the Board Orders approving the Triennium 2 plans is that all companies agree to “contribute to the design, and coordinate on the scope, of a one-stop shop website, a platform to provide customers and contractors with a simple and easy-to-understand application process to participate in utility and State EE [energy efficiency], BD [building decarbonization], and DR [demand response] programs.” Funding for this initiative is limited to 1 percent of utility administrative budgets. The project plan and timeline should be set by mid-2025, with the platform set to launch during this Triennium.
What’s Next
There's a lot to be excited about for advancing energy efficiency in New Jersey, from these newly-approved Triennium 2 plans, to the state-led 2024 update for the Energy Master Plan, to the federal funds coming in through the Inflation Reduction Act for home efficiency and electrification rebates. As New Jersey continues to develop and implement energy efficiency programs, we look forward to supporting the work to tackle issues of energy affordability, equity, workforce development, and decarbonization.