The delay in the development of the state’s energy master plan probably into 2026 provides the opportunity to reconsider the existing outlook. The recent announcement by Shell to depart the NJ offshore wind project is another economic sign that a revision in the course of a plan is needed.
Governor Murphy’s objectives contained in both the 2019 New Jersey Energy Master Plan and the pending revision certainly has met the public’s sentiments about moving to cleaner energy and lower carbon emissions. His leadership on this complicated and important matter is not at issue. Meeting energy objectives has never been easy and now has become even more challenging. Fossil fuel fired generation in 2024 remained above 50% of the region’s energy mix, while renewable energy, while increasing somewhat since 2019, remained below 10% in 2024. And without new investment in the state’s nuclear generation units, the fossil fuel-fired electricity dominance will only grow.
A major issue with the new energy master plan now being considered is nowhere in the announcement for public comment on the draft New Jersey Energy Master Plan (EMP) was there mention of the importance of affordability and reliability. The state BPU states the review of the state energy master plan will include assessment of the (7) strategies enumerated in the 2019 EMP, as well as provide an overview of the State’s progress toward achieving 100% clean energy by 2035, and an 80% reduction in greenhouse gas (“GHG”) emissions, by 2050. I am sure the BPU didn’t intend to downplay the importance of affordability and resiliency but they were not listed as major strategies.
The BPU could have stated the objectives have to be met with affordability and reliability in mind. New Jersey already ranks high in the US on electricity prices customers now pay and, while much has been done to protect customers from storms, assuring reliability during the transition of the industry is critical as severe weather remains a concern. In the past I have advocated that the state BPU not be the lead agency in the development of clean energy because it takes away from its role as the advocate for affordability and reliability. That historically has been the BPU’s role.
The competitive power markets prove the point how difficult it will be to meet the higher cleaner energy standards. The PJM is the regional transmission system operator that operates the PJM region’s (Pennsylvania, New Jersey and Maryland and several other state’s) electricity market. Despite the many efforts to introduce renewables, still they make up a small amount of the region’s energy mix. Fossil fuel dominance remains because a major factor in its dominance is economic price in the regional marketplace. it has. Add to this expectation of reliability challenges as electricity sector demand will expand as it may soon take on the electrification of the state’s transportation and building sectors. And the growth in demand in the region due to AI and new data centers is forecasted to cause energy capacity shortfalls and increased electricity prices.
The state should consider the following as a new plan is developed:
(1) New nuclear energy needs to be in the mix of the future New Jersey energy supply. While the cost per new MW constructed is expensive, clean energy from a facility that could run 90% of the time for the next 60 years makes the nuclear case more compelling. Nuclear energy generation has been the bedrock of the reliability of the New Jersey electric utility industry for several decades. A proposal to relicense the existing three operating nuclear units for 20-years should be considered. Additionally, the siting of small modular nuclear reactors (SMR) units should be considered onsite or at a former plant site. Such round-the-clock energy is needed to manage the introduction of renewables and their intermittent energy production.
(2) The state’s energy efficiency programs should be managed by the state’s local governments in the same fashion done by municipal Community Choice Aggregators in California. Local control would help to eliminate the natural corporate objection of investor-owned utilities to demand reduction which cuts profits and the implementation of a more aggressive state energy efficiency program. As a former Mayor of Cranford, New Jersey I observed that municipal governments took on the responsibility of recycling and the record has been a positive record. A new enhanced local requirement of ensuring certain energy efficiency standards are met through building codes, incentive programs, and other strategies could yield enough energy saved to reduce pressure on the need to build new fossil fuel powered resources.
(3) A full-scale re-evaluation of the current offshore wind plans needs to be done. After Orsted left New Jersey with a $5 billion loss due to the uneconomic plan put forward by the state’s Board of Public Utilities, without a full public assessment, new bids were advertised and accepted to continue the effort. Now Shell has departed, which sets the plan up for failure. There remain many unanswered questions such as : *Will the PJM market accept the above market offshore wind capacity and energy and displace the existing fossil fuel generation? Could we have stranded ocean assets? *Since wind has a below 40% capacity factor and has minute to minute intermittency, how will the region’s transmission network handle this without $billions of transmission investment or new natural gas fired capacity built in the already- crowded New Jersey mainland? *Would a more diverse power resource mix of nuclear, renewable, including some level of off-shore wind; increased energy efficiency, residential solar and batteries meet the reliability and resiliency needs of the state better than a massive industrialization of the shore? Natural gas would have to be included as an important flexible fuel until technology such as longer duration batteries are economic.
(4) Reform of the New Jersey Board of Public Utilities. Rather than fulfilling the role of regulator and consumer advocate, the BPU has become a full public advocate for the political objective of offshore wind energy, regardless of its cost or other questions raised. The question is is this the role that the state regulator should play? PSE&G for example departed its role in the offshore wind development well before Orsted the wind developer left the state. Yet the BPU continued to advocate for the uneconomic project.
(5) If PSE&G is not willing to step-up to guide the state to a cleaner energy future with less greenhouse gas emissions, then a new state agency should be formed called the New Jersey State Power Authority, with an independent board made up of energy industry professionals with clear accountability guidelines. Such an agency modeled after the New York State Power Authority, could be a powerful force to negotiate with PJM, New York, and other neighboring states. With its use of lower cost tax-exempt debt, IRA funding access, no corporate earnings or profit motive, and a public process for input. And the state BPU could revert back to its regulator role and not advocacy role.
Absent such a change, BPU needs to refocus and make reliability and affordability, main objectives in the transition to cleaner energy.
Dan Aschenbach President AGVP Advisory
