Combined Heat & Power Program
The objective of the Combined Heat and Power program is to provide financial support in the form of incentives to support CHP projects serving governmental, commercial, institutional, and industrial electricity and/or natural gas customers in New Jersey. Program objectives are aligned with those of the State's Energy Master Plan ("EMP"), which includes:
- Increasing energy efficiency to reduce energy cost and consumption for consumers, businesses and government;
- Reducing reliance on imported energy;
- Improving the reliability of electricity and fuel supply, and the delivery of energy services;
- Reducing the impacts of energy production and use on the environment;
- Developing 1,500 MW of CHP generation by 2021.
- Read all 'Terms & Conditions', including Installation Requirements and Code Requirements.
- Submit the following to the Program Manager:
- The CHP Application Workbook;
- All appendices as outlined in the 'Appendices' tab;
- Completed and signed 'Signature Page';
- Any supplementary documentation supporting the information entered into this Workbook.
- Once the Application package has been reviewed and approved, the Program Manager will forward the Applicant an Approval Letter with the committed incentive amount. To be eligible to receive a program incentive, the Applicant must receive an Approval Letter from the Program Manager prior to equipment installation. A pre-inspection will be conducted prior to issuance of the approval letter.
- Applicant must purchase a qualifying system and have it installed according to program requirements within eighteen (18) months of the date listed on the Approval Letter. Projects are expected to be designed and proposed as feasible, viable projects that can be permitted in all relevant jurisdictions. The Program, however, recognizes that some project changes may be required in order to be consistent with the results of any environmental assessment, DEP, or other local state or federal permitting requirement, or events that are unforeseen by the proposals. The Program Manager must be notified in advance of any proposed change in a project while the application is pending or active for that project. The Program Manager reserves the right to disqualify a project if changes impact Applicant eligibility. Requests for extensions may be granted by the Program Manager for up to twelve (12) months so long as applicant can demonstrate proof of significant project advancement.
- Incentives will be processed by the Program Manager and paid as follows: Thirty percent (30%) of the incentive upon proof of equipment purchase; Fifty percent (50%) upon project completion and verification of installation by Program Manager; Remaining twenty percent (20%) upon acceptance and confirmation the project is achieving the required performance thresholds based on twelve (12) months of consecutive operating data within twenty-four (24) months of operation. With projects eligible for the Class 1 renewable fuel bonus incentive, payment will be processed along with the final performance incentive.
- In order to receive the first installment of the incentive, the Applicant (or Contractor) must submit the following to the Program Manager: a) proof of purchase (invoice); b) and tax clearance certificate; c) signed copy of Customer-Developer Contract.
- In order to receive the second installment of the incentive, the Applicant (or Contractor) must submit the following to the Program Manager: a) an updated Application Workbook with post-installation data; b) proof of additional purchases (invoice); c) proof of warranty; d) a copy of the Electrical Code Inspection Certificate; e) completed Interconnection Application approved by the utility company; f) and updated tax clearance certificate. A post-inspection will be conducted at this time.
- In order to receive the final installment of the incentive, Applicant must provide to the Program Manager: a) 12 months of operational data demonstrating proposed and/or minimum efficiency was achieved and annual generated kWhs are within 20% of that stated in the approved Application. This shall be done by implementing appropriate metering as part of the system installation. Data collected should include, but is not limited to, fuel input (MMBtu), electrical output (kWh, MMBtu), recoverable and utilized thermal output (MMBtu). A detailed metering plan shall be included within the feasibility analysis; b) an updated tax clearance certificate. If the review of the twelve (12) months of operational data demonstrates the equipment is not achieving the required level of efficiency and/or generation, the applicant may submit a request to the Program Manager for an extension. Requests for extensions may be granted by the Program Manager for up to twelve (12) months (two, six (6) month extensions). These extensions are in addition to any extension granted during project construction, as discussed above. Failure to meet required performance thresholds may result in forfeit of final incentive.
- Projects eligible for the Class 1 renewable fuel 30% incentive bonus are required to submit actual fuel-mix comsumption documentation along with the required performance data as listed above. The bonus will be prorated based on actual fuel consumption. For example, if the fuel mix is 60% Class 1 renewable and 40% natural gas the bonus will be 18% (60% of 30%).
- Applicants will be encouraged to submit operational data to demonstrate system performance for each year the system is in operation. This data will aid the New Jersey Board of Public Utilities in various efforts related to supporting CHP development within the state. No additional incentives will be available for this effort.
- All submittals must be signed by a New Jersey Professional Engineer (PE) certifying that the information is accurate to the best of their knowledge (see Signature Page).
- Applicant must be a New Jersey-based commercial and industrial (C&I) customer paying into the Societal Benefits Fund.
- System must be sized to meet all or a portion of the customer’s on-site load, not to exceed 100% of most recent historical annual consumption or peak demand. For all CHP projects, any surplus power that may become available during the course of a given year may be sold to PJM. Any CHP system fueled by a Class 1 renewable source is exempted from this program requirement, provided the system is sized to match the Class 1 renewable fuel produced or available on-site.
- Natural gas CHP, biopower CHP, mixed-fuel CHP (e.g. part biogas, part natural gas), and natural gas or hydrogen Fuel Cell equipment installed on the customer side of the utility meter are eligible. Applicant should be prepared to provide information in addition to that requested within this application, including but not limited to: availability of biogas, custom calculations showing adjusted energy content of fuel, manufacturer information specific to biogas, support for any added project cost due to biogas consumption, additional grants or incentives that the system may be eligible for, and emissions information.
- Equipment must be new, commercially available, and permanently installed. Expansion of an existing system with new equipment is also eligible, however, only the incremental expansion is eligible for incentives.
- The CHP or Fuel Cell system must achieve an annual system efficiency of at least 65% (Lower Heating Value – LHV), based on total energy input and total utilized energy output. Mechanical energy may be included in the efficiency evaluation.
- Waste heat utilization systems or other mechanical recovery systems are required. Even though waste heat systems are produced with many configurations, they all perform the same task of capturing waste heat energy in the radiator or exhaust systems of a generator and delivering it to a heat load or cooling load. The captured energy is used in heating processes, such as water heating, pasteurizing, product preheating, etc. New electric generation equipment which captures waste heat or energy from existing systems is also allowed.
- In order to qualify for incentives, systems must operate a minimum of 5,000 full-load equivalent hours per year (i.e. run at least 5,000 hours per year at full rated KW output). The Office of Clean Energy (OCE) may grant exceptions to this minimum operating hours requirement for critical facilities (as defined by the Office of Emergency Management and FEMA), provided the proposed system operates a minimum of 3,500 full-load equivalent hours per year. Systems applying for the Critical Facility exemption are required to have Blackstart capability.
- Incentives are paid per project per site. CHP projects will be evaluated on a per site basis and incentives awarded accordingly. Installations of multiple systems planned for the same site within a twelve (12) month period must be combined into a single project.
- System shall have the ability to automatically disconnect from the utility in the event of substantial grid congestion, interruption, or failure to prevent back feeding to the grid. Note that systems are not required to continue to operate independent from the utility in the event of substantial grid congestion, interruption or failure.
- CHP system must have a ten (10) year all-inclusive warranty. The warranty must cover the major components of the system eligible for the incentive, to protect against breakdown or degradation in electrical output of more than ten percent from the originally rated electrical output. The warranty shall cover the full cost of repair or replacement of defective components or systems, including coverage for labor costs to remove and reinstall defective components or systems. In the event the system warranty does not meet program requirement, customer must purchase an extended warranty or a ten (10) year maintenance/service contract. The cost of the ten (10) year warranty or service contract may be considered as part of the cost of the project.
- Each CHP and WHP project must pass a project-level cost-effectiveness analysis demonstrating the simple project payback period, including any federal tax benefits and the NJCEP incentive. CHP systems installed in Critical Facilities must not exceed a payback period of 20 years, CHP systems fueled by a Class 1 renewable source must not exceed a payback period of 25 years, and all other CHP systems must not exceed a payback period of 10 years.
- Third party ownership (or leased equipment), such as those procured under Power Purchase Agreements, are permitted with the following provisions:
- Projects are subject to ten (10) year warranty requirements as stated above.
- Additionally, in order to ensure the equipment remains on site and is in operation for the term of the agreement, a binding agreement is required between the parties. A copy of this agreement shall be provided to the Program Manager prior to commitment of incentives. The agreement should state that the equipment could be transferred to new owners should the property be sold or otherwise have a buyout provision so the equipment remains on site and stays operational so the projected energy savings can accrue. The intent is to provide incentives for generating equipment, which is installed and functioning for the duration of its useful life. Under the Program, only permanently installed equipment is eligible for incentives and this must be physically demonstrable to the Program Manager, upon inspection, prior to receiving an incentive. This can be demonstrated by electrical, thermal and fuel connections in accordance with industry practices for permanently installed equipment and be secured to a permanent surface (e.g. foundation). Any indication of portability, including but not limited to temporary structures, quick disconnects, unsecured equipment, wheels, carrying handles, dolly, trailer or platform will deem the system ineligible.
- The customer/applicant will be allowed to sign over the incentive to the third party owner. A valid project cost shall be demonstrated as part of the application in order to establish an appropriate incentive level.
- All other program rules apply.
- The following criteria may also apply during review of project applications:
- Environmental performance;
- Projected system startup date;
- Annual system utilization;
- Alignment with programmatic goals;
- Project clarity;
- Facility's operation as an Emergency Management Center.
- The following types of generating systems/equipment are not eligible for the program:
- Any system that does not utilize waste heat;
- Used, refurbished, temporary, pilot, demonstration, or portable equipment/systems;
- Back-Up Generators - systems intended solely for emergency or back-up generation purposes;
- Any system/equipment that uses diesel fuel, or other types of oil and coal for continuous operation.
In addition to the Eligibility Requirements listed above, the following Installation Requirements apply:
- The Applicant must provide an expected completion date. In the event of program funding limitations, the expected completion date will be used as an award criterion. The Applicant should submit documentation from manufacturers and contractors which state the expected equipment delivery and installation dates.
- Incentives are intended to enhance the affordability of clean energy generation systems. Systems should be installed according to manufacturer's instructions. For systems installed inconsistent with such requirements, the Rated System Output may be de-rated.
- Installation must comply with the host utility's interconnection and protection requirements, which are available from the respective electric utility. These include Operation/Disconnection Procedures, Liability/Indemnity and Insurance Requirements according to the size of the project. For information on Net Metering, please contact your electric utility.
- The installation must comply with provisions of the latest edition of these standards, as appropriate: NFPA 853 – Stationary Fuel Cell, and all codes governing the installation of Combined Heat and Power equipment; NFPA 70 National Electrical Code (NEC), Power Plants, IEEE 519 – Recommended Practices and Requirements for Harmonic Control in Electrical Power Systems; ANSI Z21.83-1998 Fuel Cell Power Plants, and input and output protection functions should be in compliance with ANSI C37.2 Device Function Number specifications.
- All drawing shall be stamped and sealed by a New Jersey licensed Professional Engineer.
- The system should be equipped with the following capabilities, indicators and/or controls:
- On/off control on site;
- Operating mode setting indication - parallel vs. stand-alone;
- AC & DC overcurrent protection or equivalent;
- Operating status indication;
- Remote control and data acquisition capable;
- Electric load-following capable.
- All equipment must be UL listed/certified.
- Warning labels must be posted on the control panels and junction boxes indicating that the circuits are energized by an alternate power source independent of utility-provided power.
- All interconnecting wires must be copper. (Some provisions may be made for aluminum wiring; approval must be received from electric utility engineering departments prior to acceptance.)
- All wiring splices must be contained in UL listed junction boxes.
- Operating instructions must be posted on or near the system, or on file with the facility's operation and maintenance documents.
12) Proposed changes to the requirements will be considered, but they must be documented by the Applicant or Installation Contractor and approved by the New Jersey Board of Public Utilities' Office of Clean Energy. These requirements are not all-encompassing and are intended only to address certain minimum safety and efficiency standards.
- The installation must comply with the provisions of the latest edition of NFPA 70 National Electrical Code (NEC) and all other applicable local, state, and federal codes or practices.
- All required permits must be properly obtained and posted.
- All required inspections must be performed (i.e., Electrical/NEC, Local Building Codes Enforcement Office, etc.).
- In order to ensure compliance with provisions of the NEC, an inspection by a state-licensed electrical inspector is mandatory.
Terms and Conditions
- To receive a program incentive, Applicant must agree to an inspection by the Program Manager, or its representatives.
- The New Jersey Board of Public Utilities reserves the right to modify or withdraw this program. Program procedures and incentive levels are subject to change or cancellation without notice. Approved projects will be honored under the terms stated in the Approval Letter.
- The Program Manager and Program Administrator do not warrant the performance of installed equipment, and/or services rendered as part of this program, either expressly or implicitly. No warranties or representations of any kind, whether statutory, expressed, or implied, including, without limitations, warranties of merchantability or fitness for a particular purpose regarding equipment or services provided by a manufacturer or vendor. Contact your vendor/services provided for details regarding performance and warranties.
- The Program Manager and Program Administrator do not endorse, support or recommend any particular manufacturer, product or system design in promoting this Program.
- The Program Manager will not be responsible for any tax liability that may be imposed on any Applicant as a result of the payment of program incentives. All Applicants, or their assigned payee, must supply their Federal Tax Identification number or social security number on the application form in addition to providing a copy of their W-9 form as part of the application package in order to receive a program incentive.
- By virtue of participating in this Program, Applicants agree to waive any and all claims or damages against the Program Manager or Program Administrator, except the receipt of the program incentive. Applicants agree that the Program Manager’s and Program Administrator’s liability, in connection with this Program, is limited to paying the program incentive specified. Under no circumstances shall the Program Manager, its representatives, subcontractors, or the Program Administrator, be liable for any lost profits, special, punitive, consequential or incidental damages or for any other damages or claims connected with or resulting from participation in this Program. Further, any liability attributed to the Program Manager under this Program shall be individual, and not joint and/or several.
- All projects must be in compliance with all applicable laws. Applicants must not have any unresolved environmental violations, past due unresolved financial obligations to the State of New Jersey, and must be current in all payment of all state and local taxes at time of application submittal and through the entire duration of project funding received by Applicant.
- Approval of this application by the NJ Clean Energy Program should not be construed as an approval for interconnection. Applicant is responsible for obtaining all interconnection agreements/approvals as per local, state and federal law.
- Construction projects will be subject to prevailing wage requirements pursuant to P.L. 2009, c. 203, which amends P.L. 2009, c. 89, as well as the prevailing wage regulations promulgated by the New Jersey Department of Labor and Workforce Development pursuant to P.L. 1963 c. 150 as amended, and N.J.A.C. 17:27-1.1 et seq. and Affirmative Action rules. This law applies to contracts greater than $15,444.
- Applications received will be reviewed only by the Program Manager, Program Administrator Coordinator, New Jersey Board of Public Utilities, and by selected external reviewers. All proposals submitted will be subject to requests for disclosure, including but not limited to, a request pursuant to the Open Public Records Act ("OPRA"), N.J.S.A. 47:1A-1 et seq. If the applicant believes that information contained in its proposal merits confidential treatment pursuant to OPRA, any such purportedly confidential information submitted shall be specifically identified and marked by the Applicant and submitted to the Board’s Custodian in compliance with the Board's regulations at N.J.A.C. 14:1-12 et seq.
- Applicants will not be allowed to receive incentives for the installed generation equipment from other available SBC-funded programs or from the Energy Resilience Bank.
- BPU Board approval is required for all applications with total incentives greater than $500,000.
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