New Jersey’s 100% Clean Energy Goal Imperils Gas Generation

Through a series of incentives and mandates, New Jersey is planning to produce 100% of its power from carbon-neutral sources, electrify its vehicle fleet and building sectors, and set mandatory efficiency standards for electric utilities by 2050, an energy blueprint released by the Board of Public Utilities (BPU) suggests. 

The June 10-released “Draft 2019 Energy Master Plan” (EMP) provides a preliminary roadmap and outlines seven strategies for how the state will transform its energy sector. The draft, which was required by an executive order signed by Gov. Phil Murphy (D) in May 2018, is markedly broader than previous EMPs. It was developed as an inter-agency collaboration through a lengthy process, which included six public hearings and deliberations by several working groups, the plan notes. 

The reason the state has embarked on the transformation is stated starkly in the plan’s opening sentences: “There is near unanimous scientific consensus that the global threat of climate change is grave and that it demands swift local action and focused state leadership. However, there is also evidence that New Jersey’s current trajectory and efforts will be insufficient to reach the goals we have established to address climate change, including Governor Murphy’s goal of 100% clean energy by 2050 and the Global Warming Response Act (GWRA) state greenhouse gas emissions reductions of 80% below 2006 levels by 2050. Despite the state’s successes since 2006 in reducing its carbon emissions, this is our current reality and our challenge.” 

The BPU plans to issue the final 2019 EMP in December 2019, but first it must complete an integrated energy plan study that will model several scenarios and identify the “least-cost” pathways to achieve the goals. The final EMP—which the plan notes is a “living document that will guide New Jersey through the next 30 years”—will also specify dates and metrics to reach its goals. 

Incentives and Mandates on the Horizon 

The strategies outlined in the draft EMP are ambitious, and though they suggest the state will use several incentives to encourage rapid adoption of clean energy technologies, they also clearly note it will employ a number of mandates to achieve its goals. The draft EMP’s strategies include: 

1. Slashing energy consumption and emissions from the transportation sector. The state’s transportation sector currently accounts for 46% of its net greenhouse gas (GHGs) emissions—more than the power sector. This strategy urges entirely electrifying its vehicle fleet, with an “early focus” on passenger vehicles. The state will encourage deployment of electric vehicle (EV) charging infrastructure, but it will also explore alternative fuel technologies.   

2. Accelerating deployment of renewables and distributed energy resources (DERs). The state wants to “maximize” development of offshore wind, distributed energy, and energy storage, and it calls for a transition to a “successor solar incentive program,” which would encourage development of renewables in low-income communities. The state has already established carve-outs for in-state solar and offshore wind through 2030, but it now wants to develop an “incentive delivery system … using a competitive approach to simulating competition and investment.”

Notably, it also calls for a “non-wires” approach, which involves mandating that state-funded projects use more anaerobic digestion for power or for natural gas pipeline injections. As significantly, BPU will also work “to open” electric distribution circuits that are now restricted from accepting new requests for DER interconnection. 

3. Energy efficiency mandates and reducing peak demand. Among other things, the state calls for requiring that electric and gas utilities reduce consumption by at least 2% and 0.75% respectively. 

4. Reducing energy use and emissions from the building sector. Buildings, which are responsible for 61.7% of the state’s total end-use energy consumption, “should be largely decarbonized and electrified by 2050.” 

5. Modernizing the grid and utility infrastructure. To handle increased electrification and DER integration, and to support bi-directional power flows, the grid must be upgraded. The state also said it would “assess” integration of voltage optimization (or Volt/Var Control) and actively engage in transmission planning and siting. To do this, it will require utilities to establish Integrated Distribution Plans (IDPs) to allow for DER growth on the distributed grid. “Utilities will act as the ‘air traffic controllers’ in this new distributed marketplace, and should propose and adopt tariffs to implement a distributed marketplace that encourages non-wires solutions using private sector investment,” it says. 
6. Supporting community energy planning and action in low- and moderate-income and environmental justice communities. “We will support and incentivize local, clean power generation, especially rooftop solar and community solar, and prioritize clean transportation options in low-and moderate-income and environmental justice communities,” it says. 

7. Expanding the “clean energy innovation economy.” Jobs will be a major focus, and New Jersey will work to expand its existing 52,000 clean energy jobs. It will also explore establishing a New Jersey Green Bank.

Doom for Natural Gas Power?

The state’s 100% clean energy goals are notable because in 2016 it produced 43.6% of its primary energy from petroleum, mostly for transportation fuel, and 35.8% from natural gas, primarily for building heat and power generation. However, New Jersey already has one of the lowest carbon generating power fleets in the U.S. In 2018, the state generated 75.3 TWh, the bulk which was produced by a combination of natural gas (51.6%) and nuclear (42.5%) power sources, with renewable energy generation approaching 5%, and coal taking a 1.6% share. The state’s last two coal plants are combined heat and power industrial plants that have power purchase agreements through 2024, it noted. 

New Jersey’s total generation by source, with percent total generation of imported power. Source: BPU

In May 2018, meanwhile, Gov. Murphy signed a bill that establishes a zero-emissions certificate (ZEC) program aimed at keeping Public Service Enterprise Group’s Salem and Hope Creek nuclear plants online over the long term, despite stiff opposition from independent power producers that operate in PJM Interconnect, the competitive wholesale electricity market that serves New Jersey. On April 18, the BPU awarded ZECs to the two nuclear plants. As the draft EMP noted that “with the recent closing of New Jersey’s oldest nuclear plant [Oyster Creek], the state has lost over 600 MW of zero-emission generation capacity,” and that means nuclear’s share has now fallen to about 32%. 

The draft EMP also seems comfortable with natural gas’s current dominant share of its power portfolio. It suggests that the recent proliferation of new natural gas plants in the state both nudged coal out of the market and made it a  net exporter of electricity; in 2004, by comparison, the state imported about 40% of its power from PJM. “New generation capacity coming online in New Jersey … is more efficient and economic than older simple cycle turbines and coal boilers,” it adds.  

The “hard-fought” transition from coal to natural gas over the past few decades and made possible was made possible through the work of [BPU] and the New Jersey Department of Environmental Protection’s (NJDEP) authority under the Federal Clean Air Act and the New Jersey Air Pollution Control Act,” it says. “In 2005 NJDEP classified carbon dioxide (CO2) as an air contaminant, which encouraged the state to look critically at the harmful effects that polluting coal was having on air quality. Further driving the shift away from coal, market economics and the fracking boom drove more of the state’s electricity fuel mix to natural gas.” 

But now, gas power may have a limited future under the state’s plan. New Jersey’s power sector accounts for 20% of state net GHGs—“which is almost entirely attributable to natural gas. It is also a significant source of local air pollution,” the plan says. 

“Given current economic conditions, natural gas is expected to remain the predominant electricity fuel source in the near future without a change in state, regional, or federal policies. In order to achieve a 100% clean energy future and reach the 80×50 target, the state must also model, assess, and implement ways to minimize reliance on natural gas as the state transitions to a clean energy economy.”  

—Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)