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Combined Heat & Power

One of the goals of the State of New Jersey is to enhance energy efficiency through on-site power generation with recovery and productive use of waste heat, and to reduce existing and new demands to the electric power grid. The Board of Public Utilities seeks to accomplish this goal by providing generous financial incentives for Combined Heat & Power (CHP) installations.

The following changes to the CHP Program were effective on July 1, 2018:

  • 10% incentive bonus for Critical Facilities installing new CHP equipment with blackstart and islanding capability
  • Changed the minimum system efficiency from 65% Lower Heating Value to 60% Higher Heating Value
    • This change does not reduce the effective efficiency requirements for the program, but is aimed at making the application consistent with manufacturer specification sheets

Eligible CHP or Waste Heat to Power (WHP) projects must achieve an annual system efficiency of at least 60% (Higher Heating Value - HHV), based on total energy input and total utilized energy output. Mechanical energy may be included in the efficiency evaluation.

Eligible Technologies Size (Installed Rated Capacity)1 Incentive ($/kW) % of Total Cost Cap per Project3 $ Cap per Project3
Powered by non-renewable or renewable fuel source4 <500 kW $2,000 30-40%2 $2 million
Gas Internal Combustion Engine >500 kW -
1 MW
$1,000
Gas Combustion Turbine > 1 MW - 3 MW $550 30% $3 million
Microturbine >3 MW $350  
Fuel Cells with Heat Recovery
 
Waste Heat to Power* <1 MW $1,000 30% $2 million
> 1MW $500 $3 million

*Waste Heat to Power: Powered by non-renewable fuel source, heat recovery or other mechanical recovery from existing equipment utilizing new electric generation equipment (e.g. steam turbine).

Footnotes:
(1) Incentives are tiered, which means the incentive levels vary based upon the installed rated capacity, as listed in the chart above. For example, a 4 MW CHP system would receive $2.00/watt for the first 500 kW, $1.00/watt for the second 500 KW, $0.55/watt for the next 2 MW and $0.35/watt for the last 1 MW (up to the caps listed).
(2) The maximum incentive will be limited to 30% of total project cost. For CHP systems
< 1MW this cap will be increased to 40% where a cooling application is used or included with the CHP system (e.g. absorption chiller).
(3) Projects will be eligible for incentives shown above, not to exceed the lesser of % of total project cost per project cap or maximum $ per project cap. Projects installing CHP with WHP will be eligible for incentives shown above, not to exceed the lesser caps of the CHP. Minimum efficiency will be calculated based on annual total electricity generated, utilized waste heat at the host site (i.e. not lost/rejected), and energy input.

(4) Systems fueled by a Class 1 Renewable Fuel Source, as defined by N.J.A.C. 14:8-2.5, are eligible for a 30% incentive bonus. If the fuel is mixed, the bonus will be prorated accordingly. For example, if the mix is 60/40 (60% being Class 1 renewable), the bonus will be 18%. This bonus will be included in the final/performance incentive payment, based on system performance and fuel mix consumption data. Total incentive, inclusive of bonus, shall not exceed above stipulated caps.
(5) CHP systems located at a Critical Facility and incorporating blackstart and islanding technology are eligible for a 10% incentive bonus. For this program, a Critical Facility is defined as any (a) public facility, including any federal, state, county or municipal facility, (b) non-profit and/or private facility, including any hospital, police station, fire station, water/wastewater treatment facility, school, multifamily building, or similar facility that (A) is determined to be either Tier 1 or critical infrastructure by the New Jersey State Office of Emergency Management or the State Office of Homeland Security and Preparedness or (B) could serve as a Shelter during a power outage. A Shelter is a facility able to provide food, sleeping arrangements, and other amenities to its residents and the community. This bonus will be paid with the second/installation incentive payment. Total incentive, inclusive of bonus, shall not exceed above stipulated caps.

Application Process

New application submissions must be emailed to CHP@NJCleanEnergy.com. Hard copy submissions will not be accepted. A copy of the Application can be downloaded from the link below and includes comprehensive information on project eligibility, submittal instructions, and program terms and conditions.

Any questions may be emailed to CHP@NJCleanEnergy.com. Note: If you have submitted a question or application to this email address and have not received a response within five business days, please contact our office at 732-855-0033 extension 0.

Applications will be reviewed for completeness for all program requirements and incomplete applications will be removed from the application queue.  Applicants with incomplete applications will be notified of the deficiencies and given the opportunity to remedy the deficiencies and submit a revised application.  Revised applications will be inserted at the end of the application queue. 

The NJBPU requires that customer-generators have interconnection agreements in place with their EDCs. These agreements govern connection to the electric grid and specify the terms and conditions, technical requirements, and safety and testing requirements needed.  Utility contact information and utility specific website pages with forms are available for each of the NJ BPU regulated electric utilities.

Useful Links

  • A list of trade allies that can support a CHP installation can be found here.
  • The FY19 CHP Program Guide can help you understand what to expect during the application process.
  • A list of program participants is available for reference.

 

Program Status*
  Incentives ($000) Active Projects
Energy Capacity (MW)
FY18 CHP Incentive Budget 29,094    
Incentives Paid Fiscal YTD 5,209    
Outstanding Commitments 17,474 45 22.3
Under Review  2,128  4  2.3
Total 24,811
49
24.6
FY18 Remaining CHP Budget 4,283    

*as of June 30, 2018

 

 

 

 


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