New Jersey considers regional clean energy market in PJM footprint, to speed renewables

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New Jersey regulatory staff have recommended that the state develop plans for a regional clean energy market, in case a similar market being developed by regional grid operator PJM is slow to materialize.

The goal of the staff proposal is to help New Jersey meet its renewables targets “at substantially lower costs” by participating in a regional clean energy “buying pool.” Such a market could be a “potential driver of substantial clean energy deployment,” the proposal says.

Staff made the proposal to the state’s utility regulator, the New Jersey Board of Public Utilities (BPU).

The proposal says that New Jersey should continue participating in current efforts by regional grid operator PJM to develop a similar market known as Integrated Clean Capacity Market (ICCM), but cautions that “the certainty and timeframe for success of these efforts remains unclear.”

As a backup plan, the staff report says New Jersey should develop the blueprint for a forward clean energy market “within the PJM footprint” that other states could join, which could be implemented “significantly” more quickly than the proposed PJM market, although it would be “slightly less economically efficient.”

Noting that New Jersey and 10 other states in the PJM region have renewable energy targets, and that New Jersey and 11 other states jointly administer a regional emissions pricing market known as RGGI, the report says “a group of states could band together to form a market” comparable to RGGI, for clean energy.

Energy and capacity

The staff’s proposed forward clean energy market would grant credits to solar, wind and other qualified clean energy generators, and require New Jersey utilities to purchase credits “sufficient to meet the state’s clean energy demand.”

Regulatory staff also proposed that the BPU direct New Jersey utilities to purchase capacity from certified clean resources, through a market in clean capacity credits. This would help shift the reserve capacity that utilities secure to ensure reliability, in case of generator outages, from fossil capacity to clean capacity. Reserve capacity is also known as resource adequacy.

The idea for a forward clean energy market was evaluated in a 2021 report by BPU staff that was supported by The Brattle Group, a consultancy.

PJM process

PJM has launched a “good-faith investigation” into how to “most efficiently incorporate clean energy demand,” into its capacity market, the report says, after repealing “the most egregious aspects” of its 2019 minimum offer price rule (MOPR).

That rule would have excluded large-scale solar from earning revenue in the PJM capacity market. It was projected to increase consumer costs by “hundreds of millions of dollars” a year and delay achievement of state clean energy policies, says the BPU staff report.

On the basis of PJM’s new stance, BPU staff recommended that New Jersey not exit the PJM capacity market “at this time,” but advised the BPU to monitor ongoing litigation over the MOPR, as the matter “will likely be appealed to the Supreme Court over the next several years.”

New Jersey has renewables targets of 35% by 2025 and 50% by 2030. Currently NJ has 7% solar generation and an offshore wind goal of 7.5 GW by 2035.

The BPU staff report is titled “2022 progress report on New Jersey’s resource adequacy alternatives.”

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