New Jersey proposes program to pay residents, businesses for reducing electricity use during peak demand
NEW JERSEY — New Jersey residents and businesses could soon receive payments for helping reduce electricity demand during peak usage periods under a new program being developed by the New Jersey Board of Public Utilities.
The board announced Thursday, Nov. 12, that it has taken the first step toward establishing PowerUp NJ, a voluntary statewide program that would compensate customers for using smart devices and other energy resources to help reduce strain on the electric grid.
The initiative would allow participating residents to use devices such as smart thermostats, home batteries, electric vehicle chargers and smart water heaters to temporarily reduce or shift electricity consumption during periods of high demand.
The action follows Gov. Mikie Sherrill’s Executive Orders No. 1 and 2, which declared an energy affordability emergency and directed the board to develop a virtual power plant program aimed at lowering electricity costs.
“New Jersey has always been on the cutting edge, and today we’re launching the process to build PowerUp NJ, a first-of-its-kind statewide virtual power plant program that will give ratepayers more control to drive down their own energy costs,” Governor Sherrill said. “Through this voluntary community energy program, residents and businesses can lend power from their homes – through smart devices, in-house batteries, solar panels, and other energy sources – to help support the grid when they are not using them, and we will pay you for that energy. That means more money in your pockets, less strain on the grid, and lower energy costs across our state. My Administration looks forward to working with the industry, utility companies, and public stakeholders as we build this innovative program.”
According to the NJBPU, PowerUp NJ would function as a virtual power plant, coordinating customer-owned energy devices to reduce electricity demand when the grid is under the greatest strain.
For example, a home battery could discharge stored electricity during peak hours, or an electric vehicle charger could temporarily pause charging until later in the evening. Smart thermostats could also adjust temperatures by a few degrees to reduce electricity consumption.
Most adjustments would occur automatically, although participants would be able to select which devices and events they want to include.
Businesses would also be eligible to participate and receive compensation for reducing electricity consumption during peak periods using methods of their choice.
“Today’s Order marks the start of a transformation in how New Jersey’s grid operates, with customers and affordability at the center,” NJBPU President Ben Hertz-Shargel said. “PowerUp NJ turns the smart devices customers already own into powerful tools to reduce grid costs, drive down energy bills, and empower customers. We will develop this program carefully, learn from real-world results, and expand it over time, growing the earnings opportunities for residential and business customers.”
A preliminary analysis by NJBPU staff estimates that reducing peak electricity demand by 3% could avoid approximately $60 million annually in system capacity costs, potentially lowering electricity bills for customers statewide.
The board also said reducing peak demand could decrease reliance on fossil fuel-powered generating facilities, including plants used primarily during periods of high electricity demand, helping reduce greenhouse gas emissions and other air pollutants.
Under the board’s order, Atlantic City Electric, Jersey Central Power & Light, Public Service Electric & Gas and Rockland Electric must implement interim versions of PowerUp NJ for their customers by Oct. 1, 2027.
The interim programs will operate for two years and build on existing utility technologies and demand-response initiatives.
During that period, utilities will measure reductions in peak electricity demand, evaluate potential cost savings and collect data to help establish a long-term statewide program.
The NJBPU said the goal is to improve grid reliability, reduce energy costs and provide participating customers with opportunities to earn money for adjusting their electricity use.
Additional information about the proposed program is available at cleanenergy.nj.gov/powerupnj.
