New Jersey Creates Energy Resilience Bank to Develop and Harden Energy Assets of Critical Facilities

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One of the most important and sobering lessons learned in the wake of Superstorm Sandy was how susceptible New Jersey’s critical facilities, such as water and wastewater treatment centers, transportation centers, emergency shelters, and health care facilities are to major storm events and resulting energy disruptions. In order to combat similar widespread power losses and disruptions in critical services in the future, New Jersey is in the process of establishing the New Jersey Energy Resilience Bank (ERB) to encourage the development of distributed energy resources.

As a result of the widespread and prolonged power outages following Sandy, water and wastewater treatment plants across the state were unable to continue operations. Hundreds of millions of gallons of raw sewage spilled into, and polluted, New Jersey’s waterways. Power outages to transportation centers left New Jerseyans unable to access regional transportation services and certain hospitals, nursing homes, other health care facilities, and emergency shelters running on diesel backup generators were forced to contemplate evacuations when diesel fuel supplies began to approach precariously low levels.

However, critical facilities with access to distributed energy resources, which are capable of supplying power independent of the grid, were for the most part able to continue operations. The ERB, which will be jointly administered by the New Jersey Board of Public Utilities (BPU) and the New Jersey Economic Development Authority (EDA), will supply capital, through low interest loans and grants, to develop more distributed energy resources throughout New Jersey, such as combined heat and power (CHP) facilities, fuel cells and solar systems. These distributed energy resources will provide New Jersey’s critical facilities with resilient power supplies, greatly reducing the likelihood of prolonged outages of critical services in the event of a Sandy-like disaster in the future.

The ERB will initially be funded with $200 million that the state received from a federal grant, and will target developing distributed energy resources for water and wastewater treatment plants and hospitals. In order to qualify for grants and loans from the ERB, it is likely that proposed projects will need to be capable of operating in “island mode” while supplying such facilities with their required critical load of energy. Subsequent funding rounds will likely aim to develop similar projects for transportation networks, emergency response facilities, and facilities that can be utilized as shelters during emergency situations.

Although the ERB has not released the formal guidelines that will be used to evaluate applications for funding, it is expected that projects will be ranked and prioritized based upon technical feasibility (technical specifications, size and scale, feasibility), criticality and resiliency (ability to operate in island mode and the potential to benefit vulnerable populations while decreasing dependency on diesel fuel resources), and credit/economics (credit worthiness of the project sponsor and cost effectiveness of the proposed distributed energy facility).

It is anticipated that the ERB will release further funding guidelines regarding the application process for funding later this summer.

Topics:  Critical Infrastructure Sectors, Electricity, Emergency Generators, Emergency Management Plans, Energy, Infrastructure, Waste Treatment Facilities, Wastewater, Water

Published In: Energy & Utilities Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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