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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) and Fuel Cell (FC) installations.
Is a CHP system right for me?
A CHP Feasibility Study can evaluate if this solution is right for you. Learn more about how to get started with a feasibility study here.
Eligibility
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 Fuel Cell (FC) systems must achieve an annual electric system efficiency of at least 40% (HHV) based on Net Useful Electric Power plus Net Useful Thermal Production (if any) divided by the Total Fuel Input at HHV.
Please see the Application Form or Program Guide for full list of eligibility requirements.
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 866-657-6278.
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
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CHP-FC Incentive Structure
| Eligible Technology | Size (Installed Rated Capacity) | Incentive ($/Watt)5 | % of Total Cost Cap per Project | $ Cap per Project |
| CHPs powered by non-renewable or renewable fuel source, or a combination:4 - Gas Internal Combustion Engine - Gas Combustion Turbine - Microturbine
Fuel Cells ≥60%
|
<500 kW1 | $2.00 | 30-40%2 | $2 million |
| >500 kW - 1 MW1 |
$1.00 | |||
| > 1 MW - 3 MW1 | $0.55 | 30% | $3 million | |
| >3 MW1 | $0.35 | |||
| Fuel Cells ≥40% | Same as above1 | Applicable amount above | 30% | $1 million |
| <1MW1 | ||||
| Waste Heat to Power (WHP)3 Powered by non-renewable fuel source. Heat recovery or other mechanical recovery from existing equipment utilizing new electric generation equipment (e.g. steam turbine) |
$1.00 | 30% |
$2 million
$3 million |
|
| > 1MW1 | $.50 | 30% | ||
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. For CHP projects up to 1 MW, 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 or FC with WHP will be eligible for incentive shown above, not to exceed the lesser caps of the CHP or FC incentive. 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 a 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. Incentive bonus is not limited by project cap, but applied to the base incentive which is calculated in accordance with the project caps.
5 CHP-FC systems located at Critical Facility and incorporating blackstart and islanding technology are eligible for a 25% incentive bonus. This bonus incentive will be paid with the second/Installation incentive payment. Incentive bonus is not limited by project cap, but applied to the base incentive which is calculated in accordance with the project caps above.
Tax Credits Available through the IRA Direct Pay Program
The Inflation Reduction Act (IRA) aims to promote consumer savings and provides opportunities for commercial entities to benefit from energy and financial savings for investing in energy efficiency technologies.
Tax-exempt organizations can use the IRA’s Direct Pay Program to take advantage of tax credits by implementing clean energy projects. These projects include electric vehicles (EV), EV chargers, renewables, and other similar initiatives. This program is a valuable opportunity for municipalities, schools, and non-profits to kickstart their efforts toward achieving clean energy goals.
To file for Direct Pay, the organization must pre-register and submit the required documents to the IRS. For additional details and resources, visit Sustainable Jersey.