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New Jersey

New Jersey

Incentives/Policies for Renewables & Efficiency

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New Jersey SmartStart Buildings - Pay for Performance Program   

Last DSIRE Review: 06/13/2012
Program Overview:
State: New Jersey
Incentive Type: State Rebate Program
Eligible Efficiency Technologies: Lighting, Chillers , Furnaces , Boilers, Central Air conditioners, Energy Mgmt. Systems/Building Controls, Motors, Comprehensive Measures/Whole Building, Custom/Others pending approval
Applicable Sectors: Commercial, Industrial, Nonprofit, Schools, Local Government, State Government, Fed. Government, Multi-Family Residential, Institutional
Amount:$/kWh, $/therm, and $/sq. ft. incentives, vary based on expected energy savings
Electric (existing buildings): $0.18 - $0.22 per projected kWh saved
Gas (existing buildings): $1.80 - $2.50 per projected therm saved
New Construction: $1.35 - $1.65 per gross heated sq. ft.
Energy Reduction Plans: $0.10 per gross heated square foot
Maximum Incentive:Varies for each program milestone
$1 M per utility account (gas and electric) per year
$2 M per project
$4 M per entity per year
Eligible System Size:Minimum electric demand of 100 kW for existing buildings; minimum 50,000 square feet of heated space for new construction.
Installation Requirements:Existing building projects must achieve a minimum 15% source energy reduction target; new construction must have an energy cost reduction of 15% from ASHRAE 90.1-2007.
Funding Source:New Jersey Societal Benefits Charge (public benefits fund); ARRA
Program Budget:Existing Buildings: $60.6 million (2012)
New Construction: $10 million (2012)
Web Site:

The New Jersey Clean Energy Program (NJCEP) offers the Pay for Performance incentive program for energy efficiency improvements in industrial, commercial, and multi-family residential buildings. Existing buildings must have an annual peak electricity demand greater than 100 kilowatts (kW) in order to qualify. Prior to September 2009 the program was only available for existing buildings, but has since been expanded to include new construction projects with a minimum of 50,000 square feet of conditioned space. With certain exceptions, new construction projects must be located with a New Jersey Smart Growth Area* in order to qualify for incentives.

The program is funded by the state Societal Benefits Charge (SBC), hence it is only available to retail electric and/or gas service customers of the following New Jersey utilities that collect the SBC: Atlantic City Electric, Jersey Central Power & Light, Rockland Electric Company, New Jersey Natural Gas, Elizabethtown Gas, PSE&G, and South Jersey Gas.** Customers that purchase only natural gas from a participating utility are only eligible to receive incentives for natural gas measures. The program requires participants to use an approved Program Partner (see website for a list of approved partners) in order to receive incentives. Participants in the Pay for Performance program may also be eligible for low-interest financing through the Clean Energy Solutions Energy Efficiency Revolving Loan Fund (EERLF) operated by the New Jersey Economic Development Authority.

Rather than offering specific rebate levels for specific equipment types, the Pay for Performance program calculates the performance incentive (Payments II and III below) as a variable $/kWh, $/therm, or $/sq. ft. incentive based on projected energy savings. Three separate payments exist based on the achievement of program milestones (described below). Incentive amounts are arrived at differently for existing buildings and new construction projects.

Existing Buildings

Incentive I: Completion of an approved Energy Reduction Plan that provides for a minimum source energy reduction of 15%. The incentive amount will equal $0.10/square foot of the project with a minimum incentive of $5,000 and a maximum incentive of $50,000, capped at 50% of the building's annual energy expenses. Participants must complete installation of the measures identified in the approved plan within 18 months or the incentive must be repaid.

Incentive II: Installation of measures identified in the approved Energy Reduction Plan. The incentive amount for achievement of this milestone is $0.09-$0.11 per projected kWh savings and $0.90-$1.25 per projected therm savings. For each 1% of energy reduction beyond the 15% minimum, the incentive increases by $0.005/kWh and $0.05/therm. This portion of the incentive is capped at 25% of the total project cost.

Incentive III: Verification of realized energy savings as a result of the installed measures. Achieving this milestone entitles the participant to collect an incentive of $0.09-$0.11 per kWh of electricity savings and $0.90-$1.25 per therm of natural gas savings. For each 1% of energy reduction beyond the 15% minimum, the incentive increases by $0.005/kWh and $0.05/therm. This portion of the incentive is capped at 25% of the total project cost.

New Construction or Substantial Renovations

Incentive I: The approval of a complete Draft Energy Reduction Plan that provides for a minimum energy cost reduction of 15% compared to ASHRAE 90.1-2007 entitles the customer to an incentive equal to $0.10/gross heated square foot of the project with a maximum incentive of $50,000. The incentive is contingent upon the project moving forward with construction.

Incentive II: The approval of a complete As-Built Energy Reduction Plan based on actual energy efficiency equipment installation entitles the customer to an incentive of $1.00 per gross heated square foot.

Incentive III: The approval of a complete Commissioning Report which verifies that the building equipment meets the minimum criteria entitles the customer to an incentive of $0.35 - $0.65 per heated square foot, depending on the actual expected energy cost savings. Incentives II and III combined may not exceed 75% of total project incremental cost.

Program participants may not receive incentives for improvements made prior to their enrollment in the program. Incentives are capped at $1 million per electric and gas account per year and $4 million per entity per year. Projects involving combined heat and power (CHP) were formerly included under this program but are now addressed under separate programs for large and small CHP/fuel cell installations. Please see the program website or contact the program administrator for additional information on how this program works. The total 2012 budget (including already committed expenses) contains roughly $10 million for new construction and $60.6 million for existing building retrofits.

*Click here to use the New Jersey Housing and Mortgage Finance Agency Smart Growth Locator tool.

**Funding from the American Recovery and Reinvestment Act (ARRA) allowed the program to be made available for a limited time to customers of non-regulated utilities, such as municipal electric, oil, and propane providers. However, this funding has been exhausted and eligibility is once again limited to customers that pay the SBC.


  New Jersey Clean Energy Program - Pay For Performance
c/o TRC Energy Services
900 Route 9 North, Suite 104
Woodbridge, NJ 07095
Phone: (866) 657-6278
Fax: (732) 855-0422
Web Site:
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Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

While the DSIRE staff strives to provide the best information possible, the DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. make no representations or warranties, either express or implied, concerning the accuracy, completeness, reliability or suitability of the information. The DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. disclaim all liability of any kind arising out of your use or misuse of the information contained or referenced on DSIRE Web pages.

Copyright 2013 - 2014 North Carolina State University, under NREL Subcontract No. XEU-0-99515-01. Permission granted only for personal or educational use, or for use by or on behalf of the U.S. government. North Carolina State University prohibits the unauthorized display, reproduction, sale, and/or distribution of all or portions of the content of the Database of State Incentives for Renewables and Efficiency (DSIRE) without prior, written consent.