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Small Scale CHP and Fuel Cell Incentive Program

Last Review: 2012-12-03
Incentive Type: State Grant Program
Eligible Efficiency Technologies: CHP/Cogeneration, Fuel Cells, CHP/Cogeneration, Microturbines
Applicable Sectors: Commercial
Incentive Amount: Varies by system type and size
Equipment Requirements: Equipment must be new, commercially available, and permanently installed; electric-only generation must achieve a minimum 45% electric efficiency; systems with waste heat utilization must achieve a minimum 60% annual system efficiency; systems must have a 10 year all-inclusive warranty or 10 year service contract
Website: http://www.njcleanenergy.com/commercial-industrial/programs/combined-heat-power/combined-heat-power


The New Jersey Clean Energy Program (NJCEP) offers incentives for several types of small combined heat and power (CHP) and fuel cell systems that have a generating capacity of 1 MW or less and are located behind the meter of an existing electric or natural gas customer that pays the Societal Benefits Charge (SBC). This includes customers of the states investor-owned electric and natural gas utilities, but does not include customers of municipal utilities. A variety of equipment and installation requirements exist for determining eligibility (see details above and on the program web site), but in addition to these limitations the program guidance specifically notes that the following types of systems are not eligible for incentives: renewable source-fueled systems; portable and emergency backup power systems; used, refurbished, temporary, pilot, or demonstration equipment; systems that use diesel fuel, other types of oil or coal for continuous operation. However, systems that use Class I renewable fuels (as defined under the New Jersey RPS) are eligible under the separate Renewable Energy Incentive Program (REIP). The New Jersey Economic Development Authority (EDA) administers New Jersey's Large CHP and Fuel Cell Program, which offers incentives for systems sized greater than 1 megawatt (MW). The EDA also offers low-interest financing for the small CHP program through the Energy Efficiency Revolving Loan Fund.

Projects the meet the minimum program requirements are evaluated for funding based on a variety of criteria, such as system efficiency, environmental performance, and other metrics (i.e., the program is not a first-come, first-served rebate program). The incentive available to an individual project is determined by the project type and size. Maximum incentives in reference to a percentage (%) of project cost also vary by project type. The following table summarizes the basic incentive terms (see the program web site for further details):


NJCEP Incentive ($/W), $1M maximum

P4P Bonus Incentive ($/W), $250,000 maximum

Utility Match ($/W), $1M maximum

Maximum % of Project Cost
CHP Using Nonrenewable Fuel (microturbines, internal combustion engine, combustion turbine)

up to 500 kW:  $1.00/W

501-1,000 kW: $0.50/W


up to 500 kW: $1.00/W

501-1,000 kW $0.50/W

30% (or 40% with cooling application
Heat or Mechanical Recovery From Existing Equipment Using New Electric Generation Equipment $0.50/W $0.25/W $0.50/W 30%
Fuel Cells With Waste Heat Utilization (non-renewable fuel) $2.00/W $0.25/W $2.00/W 60%
Fuel Cells Without Waste Heat Utilization (non-renewable fuel)
$1.50/W $0.25/W $1.50/W 60%














As indicated above, projects that are pursued in conjunction with energy efficiency improvements made under New Jersey's Pay for Performance (P4P) Program are eligible for a bonus incentive. Systems owned by a third-party (i.e., not the utility customer) are eligible for incentives under this program, but the term of the lease or energy purchase agreement must be at least 15 years and meet several other requirements. Incentives are distributed to participants in steps, as follows: 20% upon equipment purchase, 60% upon inspection and verification of the installation, and 20% one year after inspection and verification that the project is achieving the proposed/minimum efficiency threshold. Please see the program web site for further information and application details.


New Jersey Clean Energy Program - CHP and Fuel Cell Program
c/o TRC Energy Services
900 Route 9 North, Suite 104

Woodbridge, NJ 07095
Phone:(866) 657-6278 Ext.
Phone 2:()
Email: CHP@trcsolutions.com
Web site: http://www.njcleanenergy.com/


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