The proposal targets a 3% reduction in peak electricity demand by 2027 and preliminarily estimates about $60 million in annual avoided capacity costs, but the program and savings are not final.
TRENTON, NJ – New Jersey utility regulators have proposed coordinating home batteries, smart thermostats, electric-vehicle chargers and other connected devices into a statewide “virtual power plant” intended to reduce electricity demand when the grid is under the most stress.
The New Jersey Board of Public Utilities proposal, announced July 27, is a draft rather than an approved program. Regulators will gather public and industry comments before determining the final structure, costs and customer payments.
Unlike a conventional power plant, a virtual power plant does not generate electricity at one location. Software instead coordinates thousands of smaller devices, allowing them to reduce consumption, shift when electricity is used or, in some cases, send stored power back to the grid.
During a period of high demand, the system could temporarily adjust participating thermostats, delay vehicle charging or draw electricity from enrolled batteries. Customers could receive bill credits, discounts or direct payments in return.
Proposed demand target and savings
The 94-page draft proposes an interim program beginning no later than July 1, 2027, with a goal of reducing peak demand by at least 3% in each of the state’s four electric utility territories.
Using 2026 peak-demand figures, the board estimates that a 3% reduction would equal approximately:
- 307 megawatts in PSE&G territory
- 188 megawatts in JCP&L territory
- 81 megawatts in Atlantic City Electric territory
- 13 megawatts in Rockland Electric territory
That would amount to approximately 589 megawatts statewide.
Board staff preliminarily estimated that meeting the target could avoid about $60 million in annual capacity costs. The figure is not a guaranteed reduction in customer bills. It depends on actual participation, device performance, future electricity-market prices and whether savings flow through utility rates.
The proposal also argues that coordinated devices could delay or eliminate some conventional transmission and distribution projects. Those potential savings are not included in the $60 million estimate.
Customer consent and control
The draft would require customers to affirmatively consent before a company could control an enrolled device or receive detailed meter data.
Customers would generally receive at least two hours’ notice before a standard demand-reduction event and 10 minutes before an emergency event. They could opt out of individual events, although repeated opt-outs could reduce incentive payments.
The draft proposes multiple data-security levels. Fifteen-minute smart-meter information would require customer authorization, while real-time device controls would be subject to stronger security requirements and a direct agreement between the customer and program operator.
Regulators are also seeking comment on how to extend participation to renters, multifamily buildings, low- and moderate-income households and communities that may not have widespread access to home batteries or other qualifying devices.
Public comment remains open
The Board of Public Utilities will hold a public meeting from 8:30 a.m. to 4 p.m. Thursday, July 30, at the Conference Center at Mercer County Community College in West Windsor.
The meeting will also be livestreamed through the board’s YouTube channel. Written comments may be submitted under Docket No. QO26030099 until 5 p.m. Monday, Aug. 17.
A longer-term, open-access virtual power plant market would follow in 2029 or later if regulators approve the framework and the interim program produces reliable results.