New Jersey looked like the promised land for energy storage.

The state already has the seventh-largest U.S. installed solar capacity, ahead of nearby New York and Massachusetts. Gov. Phil Murphy campaigned in 2017 on a clean energy platform that pushed for a 100 percent clean grid by 2050. When Murphy won and took office, he signed sweeping clean energy legislation in May 2018 that turned his goals into law.

Murphy's campaign platform, and the law, included something quite radical at the time: the goal of 600 megawatts of energy storage by 2021 and 2,000 megawatts by 2030. At a moment when all but a handful of states lacked any storage policy whatsoever, that target promised to transform the state into a leading East Coast outpost for a rapidly growing high-tech industry. 

2021 is less than eight months away, but instead of gearing up for its energy storage glory days, New Jersey has hardly any progress to show. That's all the more striking considering that energy storage nationally has been growing faster than wind or solar deployments.

New York and Massachusetts have made storage policy a central pillar of their clean grid overhauls, and projects and jobs have already materialized. In New Jersey, efforts to comply with the law's 2021 deadline seem to have vanished, like a spirit in the night.

"Hitting a target with an arrow is hard, and it's even harder without a bow," said Daniel Finn-Foley, energy storage director at energy research firm Wood Mackenzie. "Without some form of mechanical advantage or, in this case, policy leverage, a target remains a far-away goal with no clear mechanism to reach it."

A number of factors appear to have hampered New Jersey's progress. After adopting the storage target, a state analysis found few economic uses for battery storage in the near term. The New Jersey Board of Public Utilities (BPU) was supposed to launch a storage proceeding six months after the study came out, but it didn't — and the board has recently been focused on responding to COVID-19.

Another opportunity to craft storage policy came and went when New Jersey issued a straw proposal on how to tackle peak demand reduction. Northeastern states including New York, Massachusetts, Vermont and New Hampshire use batteries to reduce peak demand, a major driver of grid costs. But New Jersey's peak reduction plan does not include the phrase “energy storage” once. 

The 2021 goal still stands, but the pathway to achieving it slips further out of reach with each passing day. If New Jersey’s foray into storage stands for anything, it’s how little a target alone can do.

Who’s the Boss?

New Jersey is famously home to rock legend Bruce Springsteen, known as the Boss. But it's hard to identify who's the Boss of New Jersey's energy storage effort. The wording of the law fails to specify who is supposed to fulfill it and what specific action is required. 

It could mean 600 megawatts should be built between the law’s passage and 2021, or simply procured — or simply exist, which would include the 420-megawatt pumped hydro facility at Yards Creek, completed in 1965. It's also unclear what happens if these conditions are not met by whoever is supposed to meet them. 

Greentech Media reached out to multiple members of the Murphy administration, multiple times, to clarify their understanding of the target, but none responded. 

Typically, states delegate the execution of such a target to utilities, since they are the ones already responsible for building grid infrastructure. Distribution utility PSE&G serves 2.2 million customers, making it the largest in New Jersey. If the state were making the kind of storage push the governor proposed, PSE&G would be a natural pick for quarterbacking the push, which could help with resilience, solar integration, non-wires alternatives to expensive capital investments, and more.

PSE&G has built a few batteries, such as five solar-paired battery backup systems at critical municipal buildings. They total nearly 3 megawatts of capacity. The company also asked regulators for permission to spend $180 million on 35 megawatts of energy storage. The company has described that as “a significant step toward realizing Governor Murphy’s target of 2,000 megawatts of energy storage by 2030.” It would single-handedly get the state 1.75 percent closer to the finish line.

But the utility is still waiting on approval from the BPU for its Clean Energy Future filing, a centerpiece of its decarbonization strategy. Energy storage is the smallest component of the package in terms of funding, after energy efficiency, smart meters and electric vehicle chargers.

“Our focus is primarily on the immediate and significant benefits around energy efficiency,” PSE&G spokesperson Marijke Shugrue said in an email.

The law does assign a specific task to the BPU: “Initiate a proceeding to establish a process and mechanism for achieving the goal of 600 megawatts of energy storage by 2021 and 2,000 megawatts of energy storage by 2030.” That was supposed to happen within six months of the storage study's publication on May 23, 2019.

But the governor’s “Energy Master Plan,” released in January 2020, simply noted that the BPU “is preparing to establish a process and mechanisms to achieve the state’s energy storage goals.”

BPU spokesperson Peter Peretzman emailed Greentech Media a statement in response to questions about the status of its storage policy work. He noted that COVID-19 response has taken the top priority at the moment.

“We are committed to achieving our energy storage goals and will be developing a plan to meet the long-term goal of 2,000 MW by 2030,” he wrote, without reference to the interim 2021 goal. “Our immediate focus is on the sectors of the clean energy economy, particularly energy efficiency, solar, offshore wind and electric vehicle infrastructure that will bring immediate economic impact to the state during this crisis.”

Rutgers' value of storage study leaves value a mystery

The apparent abandonment of the law's 2021 goal would be harder to justify if the state had a clear calculus for its energy storage goal in the first place. But its effort to define that value found little near-term economic benefit to be gained from battery deployment.

Energy storage already competes economically with incumbent technologies in certain parts of the country. In many places, though, it suffers from a problem of being able to do useful tasks that power-sector rules don't allow it to get paid for. Other states have hired energy consulting firms to crunch the numbers on what energy storage would be worth if it could get paid for its benefits. From there, they calculate justifiable short-term incentives to make up for the missing revenue, as a way to jump-start activity while the laborious but necessary rules updates unfold.

New Jersey looked within its borders, to regional powerhouse Rutgers University, to conduct its own study. The report crunches many numbers but declines to endorse a particular value of storage that could justify policy intervention. In response to a specific query from the legislature about the “optimal” storage capacity New Jersey should build in the next five years, the authors wrote, “Performing this task requires a clear definition of the word ‘optimal.’” 

After surveying the full spectrum of storage technologies, the report concludes that of the bunch, pumped hydro and thermal storage “are currently cost-effective and do not face financial barriers to increased deployment.” That's a curious view at a time when batteries account for 99 percent of new storage installations and new pumped hydro construction is marginally more common than nuclear fusion.

“Energy storage shows value at this moment if you put the economics plus other factors and measures together,” said Rutgers engineering professor Mohsen Jafari, the principal investigator for the study, in an interview. In other words, batteries are generally too expensive for an economic payback, but if you factor in the benefits of resilience or renewables integration, that can justify investment.

That describes the present moment, but the report does not examine what lies further on up the road. By 2030, Murphy's goal of 3.5 gigawatts of offshore wind plants will fundamentally reshape the flow of power through the grid. Jafari said the team kept long-term power price forecasts out of the report due to their uncertainty. That kept the analysis rooted in the near term, when battery prices are still in the process of rapid decline.

Other potential uses for storage were left out due to a lack of data. For instance, the authors turn to case studies to "illustrate" the benefits of bulk storage for New Jersey's grid, citing "the absence of granular interconnectivity, power generation and load data."

“Whatever we did was based on the data that we had available to us," Jafari said. "We couldn't go beyond that.”

The study suggests in its executive summary that meeting the 600-megawatt goal would require incentives of up to $650 million. But that figure is based on a scenario in which every last megawatt was built for small-scale, solar-paired backup power.

No state has ever attempted to force all its storage projects to serve a unitary purpose. And resilience is one of the most difficult battery use cases to monetize, because the system generates no revenue while waiting around to possibly keep a building powered up if an outage happens.

"Looking at battery systems for pure backup is a way to set the upper end of the cost for meeting the target," said Brett Simon, a behind-the-meter storage analyst at WoodMac. "It's counterintuitive to build out such a large storage program with resilience as the only focus."

Meeting across the river

The upshot of this policy stasis is that storage developers have begun investing in New Jersey's neighbors to the north — but not in New Jersey.

New York launched a $280 million "bridge incentive" last year that analysts predicted would spur 1.8 gigawatts of storage installation by 2025. Massachusetts determined that 1,766 megawatts of storage would optimize ratepayer benefits, and added an incentive for solar systems paired with batteries, a credit for batteries that shift clean power to peak hours, and customer-oriented programs to reduce usage at home.

When Massachusetts quantified the system benefits of energy storage, it found they considerably outweighed the costs (graphic from State of Charge report).

Both states are beginning to see the emergence of the “good-paying green jobs” that New Jersey's governor was looking for.

“New York has already created the programs to incentivize storage development in the state, and those programs have yielded results," said Derek Oosterman, SVP of strategic projects at storage developer Convergent Energy + Power.

The New Jersey BPU is soliciting feedback on how to translate the storage goal into policy, he added, and "Convergent is looking forward to contributing our expertise in developing utility-scale storage to support NJ BPU in bringing more storage online in New Jersey.”

Strata Solar, which is developing a portfolio of battery projects in New York state, is similarly excited to see the BPU's guidance for storage deployment in New Jersey.

"Strata is looking forward to investing in battery storage in New Jersey," said Joshua Rogol, SVP of energy storage at the developer. "The headline number is terrific, but no substance as of yet, which makes it difficult to begin storage development."

It is theoretically possible that storage is radically less useful in New Jersey than in its immediate surroundings. The Rutgers study describes it as “a medium-sized state within the very large PJM electrical region.” It doesn’t have the kind of policymaking clout that New York carries in its statewide ISO or that Massachusetts wields as the center of gravity in the New England ISO. And PJM's capacity market infamously requires 10 hours of battery duration, a significant barrier to project economics.

But other states within PJM territory, including Virginia, see value in compelling the installation of batteries within their borders. Meanwhile, the New Jersey BPU is exploring an exit from PJM's capacity market to avoid policies that would hinder clean energy expansion. Such a move could make local storage capacity all the more salient.

More conclusively, the simple fact that New Jersey lawmakers created a nationally prominent energy storage target suggests that they think the resource has value in the state.

“The drivers that we see in other states for more storage also exist in New Jersey,” said Ted Ko, VP for policy and regulatory affairs at storage company Stem. 

Even without a new capacity paradigm, New Jersey grapples with peak demand reduction, offsetting expensive grid upgrades, building resilience, balancing the bulk renewables procurements and getting the most out of small-scale solar, to name a few challenges. Nearby states have enacted policies to put storage to work for all of those objectives.

That means, at least, New Jersey can pick from a roster of previously vetted policies if it decides to act upon the target it set two years ago.

“You don't have to reinvent the wheel here,” Ko said. “We have examples of programs that work.”