LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
ASSEMBLY SUBSTITUTE FOR
ASSEMBLY, No. 5267
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: JULY 7, 2025
SUMMARY
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Synopsis: |
Requires BPU to procure and incentivize transmission-scale energy storage. |
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Type of Impact: |
Annual State expenditure increase. Annual State revenue reallocation. Potential annual State revenue increase. |
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Agencies Affected: |
Board of Public Utilities. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
FY 2026 and Beyond |
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State Expenditure Increase |
Indeterminate |
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State Revenue Reallocation |
At Least $60 million |
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· The Office of Legislative Services (OLS) concludes that this bill will result in an indeterminate annual State expenditure increase for the Board of Public Utilities to establish a program for procuring and incentivizing transmission-scale energy storage systems. Additionally, the OLS anticipates that this bill will result in a State revenue reallocation of at least $60 million from FY 2026 until the end of all award periods for incentives issued under the bill.
· The bill will result in an annual reallocation of at least $60 million from the existing societal benefits charge revenues to the new Energy Storage Fund, beginning in FY 2026 through the conclusion of all 15-year incentive award periods for approved projects under the bill. These funds will be used exclusively to fund incentive awards for eligible energy storage projects, as well as to support the Garden State Energy Storage Program, which is currently in development by the board.
· Additional administrative costs may be incurred by the board to establish the program. These cost increases are indeterminate. However, the OLS anticipates that the increased expenditures may be absorbed within existing resources or offset by application and participation fees authorized under the bill.
BILL DESCRIPTION
This bill requires the Board of Public Utilities 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. Under the bill, “transmission-scale energy storage system” means an energy storage system, with an installed capacity of at least five megawatts of alternating current (MW AC), that is interconnected with the PJM Transmission Network and situated inside a Transmission Zone in New Jersey or is otherwise located in New Jersey and qualified to provide energy, capacity, or ancillary services in the wholesale markets established by PJM Interconnection, L.L.C.
The bill requires the board to procure at least 1,000 MW AC of installed capacity by June 30, 2026 with a minimum of 350 MW AC procured by December 31, 2025. The program will be funded through the newly created Energy Storage Fund, which will receive a minimum of $60 million annually from societal benefits charge revenues and other sources.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS concludes that this bill will result in an indeterminate annual State expenditure increase for the Board of Public Utilities to establish a program for procuring and incentivizing transmission-scale energy storage systems. Additionally, the OLS anticipates that this bill will result in a State revenue reallocation of at least $60 million from FY 2026 until the end of all award periods for incentives issued under the bill.
The bill will result in an annual reallocation of at least $60 million from the existing societal benefits charge revenues to the new Energy Storage Fund, beginning in FY 2026 through the conclusion of all 15-year incentive award periods for approved projects. These funds will be used exclusively to fund incentive awards for eligible energy storage projects under the bill, as well as to support the Garden State Energy Storage Program, which is currently in development by the board. Additionally, the board will appropriate and allocate sufficient monies to fully fund incentive awards under the bill, which awards will be in an indeterminate number and of an indeterminate amount. Notably, the $60 million annual floor may be supplemented by federal funding or other board-determined revenue sources.
Additional administrative costs may be incurred by the board to establish the program. These cost increases are indeterminate. However, the OLS anticipates that the increased expenditures may be absorbed within existing resources or offset by application and participation fees authorized under the bill.
The long-term fiscal impact may be influenced by: developer participation and cost of storage development, federal funding availability, and any changes in the PJM interconnection process or capacity market. The funding for incentive awards issued under Tranche 1, Tranche 2, or subsequent tranches may be sourced from the societal benefits charge, which is collected through electric public utility and gas public utility rates. If the board requires additional funding for energy storage procurement under the bill and has not identified any additional supplementary funding sources, it may elect to increase the societal benefits charge assessed to electric and gas public utility customers in an attempt to offset program expenditure increases.
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Section: |
Authorities, Utilities, Transportation and Communications |
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Analyst: |
Associate Research Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).