New Jersey regulators voted unanimously Thursday to launch an interim virtual power plant program and the next phase of the state's energy storage initiative, opening the door for residents and businesses to get paid for sharing batteries, smart devices and solar power with the electric grid. The programs target a 3% reduction in peak energy use at each of the state's four regulated utilities, part of a broader push to ease the strain that drives up electricity costs during the hottest and coldest hours of the year.
Board of Public Utilities Greenlights Two-Pronged Energy Push
The vote, approved by the New Jersey Board of Public Utilities, covers both an interim virtual power plant program and the first block of the second phase of the state's energy storage program, according to New Jersey Monitor. Together, the initiatives fall under PowerUp New Jersey, which aims to reduce peak-demand effects on power prices by paying customers for reduced power use or for stored energy sent back to the grid. Gov. Mikie Sherrill said residents and businesses can provide power from smart devices, batteries, solar panels and other energy sources, and receive payment in return.
Virtual power plants work by remotely reducing the power draw of enrolled devices during the hours when demand peaks, compensating ratepayers for the electricity they free up for the broader grid. Participants can receive payment either directly through their utility or through a distributed energy resource manager, the outlet's report notes. State regulators are betting that this approach, paired with battery storage incentives, can chip away at demand spikes without building new power plants.
Utilities Face an October 2027 Deadline
Under the BPU's order, the four regulated utilities must establish their own interim virtual power plant programs by October 1, 2027, with those programs running through September 30, 2029, before being replaced by more permanent versions. New Jersey is seeking a total reduction of 547.1 megawatts across the four electric distribution companies covered by the plan, per the same account. If 75% of eligible devices enroll, state-supported existing devices alone could meet up to 82% of the sought-after reductions at each utility.
Emma Rebhorn said the year's most expensive hours have driven unsustainable increases in utility and electricity bills in recent years, a dynamic regulators are hoping the new programs can blunt. New Jersey's electricity costs have also faced spikes driven by high power demand from artificial intelligence data centers, adding urgency to efforts that spread out when and how power gets used.
Battery Storage Payments Scale With Grid Contribution
The newly approved storage block will pay $200 per kilowatt for new residential or small-scale commercial storage capacity and $100 per kilowatt for existing storage capacity that gets enrolled, with payments adjusted based on how much power the batteries actually send back to the grid. The first block of this second phase seeks 150 megawatts of new storage and 100 megawatts of existing storage, aiming to expand residential battery storage and add capacity across the state. Distributed battery program participants will receive their payments through a distributed energy resource manager.
New Jersey's energy storage program overall aims to build 2,000 megawatts of capacity by 2030. That target sits inside a larger state framework requiring 2 gigawatts of bulk and distributed storage capacity by the same year, with the BPU having already procured 1 gigawatt of transmission-connected storage in the program's first phase, according to Utility Dive. An earlier straw proposal published in August 2026 had floated a similar structure, suggesting eligible customers could receive up to $200 per kilowatt annually for a 10-year term to dispatch energy from small-scale batteries.
New Jersey Joins a Growing National Movement
New Jersey isn't alone in turning to batteries and smart devices to manage grid stress. The Clean Energy States Alliance reports that the number of battery-based virtual power plants nationwide has grown from a handful of small pilots to dozens of programs over the past decade, some enrolling thousands of participants, with battery owners or leasers in more than half of U.S. states now able to enroll and get paid for grid services.
Comparable programs elsewhere show the range of what's on offer. Tucson Electric Power's Energy Storage Rewards pays residential battery customers for letting the utility tap stored energy during peak periods, with its initial participation period running through the end of 2026. In Delaware, customers in a Delmarva Power bring-your-own-battery pilot were expected to receive an estimated $1,080 in annual performance payments by direct deposit, while Arizona's Salt River Project runs a five-year Battery Partner pilot capped at 5,000 customers through April 2030.
Executive Order 2 had directed the board to commence development of a virtual power plant program within 180 days, according to a notice from the New Jersey Board of Public Utilities. With Thursday's approval, the state has now put both the virtual power plant framework and the next storage funding block into motion, setting the stage for utilities to build out their own programs ahead of the 2027 deadline.
