New Jersey's New Rate Hikes - And New Battery Storage Opportunities

Since June, New Jersey businesses have faced a challenging new reality on their utility bills: major cost increases, driven by radically higher rates on peak usage. For example, customers of PSEG – the largest utility in the state – are seeing a 50% increase in their summer peak rates, and a doubling of the ‘coincident peak’ charges based on their usage during times of peak demand on the entire grid.

If you’re in charge of your company’s electricity supply, you’re probably asking three questions: What’s driving this sudden rate hike? Are there more rate hikes coming? And, what can I do about it? Scale recently hosted a webinar to answer all of these questions – check out the video here, or read on for a recap. 

The New Ratemaking Environment

These increased peak usage charges are driven by increasing tightness of electricity supplies, which is pushing grids to their limits during increasingly-frequent, increasingly-long, and increasingly-severe summer heatwaves. This supply crunch resulted in record-breaking capacity auction prices last year for the regional PJM electricity grid that serves New Jersey and other mid-Atlantic states. 

(For more on what this auction is and why it matters, check out our blog from last fall.)

These auction prices are just starting to hit electricity bills across the region, and, unfortunately, it’s just the beginning. The most recent auction, which will impact prices starting in the summer of 2026, resulted in even higher prices. With demand surging from data centers and other new large customers, this tightness in the market could take years to resolve, potentially making big annual rate hikes the new normal. 

Batteries, Backed by Incentives, to the Rescue

The good news is, businesses in New Jersey now have a way to fight back: battery storage installations. By providing a flexible store of on-site power, batteries allow businesses to limit their use of the grid during monthly peak hours for their facility (which determines demand charges) and during the annual peak hour for the grid as a whole (which determines coincident peak charges) that are driving the majority of these cost increases. 

Drawing on an on-site battery system instead of the grid during these peak hours doesn’t change business operations at all, but it can add up to hundreds of thousands of dollars in annual savings for a large facility. Pairing the battery with a rooftop solar installation to provide a cheaper source of on-site generation can boost those savings even further. 

And, when a battery is configured as a microgrid – that is, a system that can continue powering the facility independently if the utility grid goes down – these batteries also offer a valuable source of backup power. That means that they’ll enhance operational resilience against severe weather-induced outages, as well as cost resilience against utility rate turbulence. 

In both cases, batteries are becoming a powerful solution for addressing two major energy challenges for New Jersey businesses that are both getting only more serious. 

The even better news is, New Jersey’s government understands the value that batteries can provide to businesses in the state, and the Board of Public Utilities is preparing to roll out a new incentive program to encourage their adoption. While details are still being finalized, we expect this program to significantly reduce the up-front cost of battery systems, while also providing ongoing incentives for helping to support the grid during hours of peak demand. 

A New Energy Partner for New Jersey Businesses

At Scale, we’ve got plenty of experience helping companies save money with battery storage while maximizing their upside with these types of state-level incentive programs. We’ve secured over $47 million in incentives to build battery storage projects for customers in New York, Connecticut, and California, managing the administrative requirements of applying to these programs and meeting the design and operational requirements needed to take full advantage of them. 

It’s all part of our microgrid-as-a-service business model, which is ultimately based on the all-around value we deliver as long-term energy partners for our customers. We leverage industry-leading expertise in the design, construction, and operation of these often-complex systems to offer fully-financed, turnkey on-site energy solutions tailored to customer needs that offer day-one energy savings and resilience – all for $0 down.

To learn more about how Scale can help your company manage these new rate hikes, check out our webinar – or just reach out to ahughes@scalemicrogrids.com for more information.