2011 New Jersey Energy Master Plan

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2011 New Jersey Energy Master Plan 2011 NEW JERSEY ENERGY MASTER PLAN December 6, 2011 Chris Christie, Governor Kim Guadagno, Lieutenant Governor Lee Solomon, President - NJ Board of Public Utilities TABLE OF CONTENTS 1 Introduction ............................................................................................................................. 1 2 Executive Summary ................................................................................................................ 3 3 Energy Master Plan Background .......................................................................................... 11 3.1 The 2011 Update Process ............................................................................................. 11 3.2 CEEEP Analysis ........................................................................................................... 12 3.3 Implementation of the EMP .......................................................................................... 13 4 New Jersey’s Electric Industry ............................................................................................. 14 4.1 The New Jersey Power System ..................................................................................... 14 4.2 The PJM Market ........................................................................................................... 16 4.2.1 Transmission System ................................................................................................ 17 4.2.2 Energy Market .......................................................................................................... 20 4.2.3 Capacity Market ........................................................................................................ 21 4.3 EDECA and Deregulation ............................................................................................ 22 4.4 New Jersey Market Dynamics ...................................................................................... 23 4.5 Load Growth ................................................................................................................. 28 4.6 Existing In-State Capacity ............................................................................................ 31 4.7 Generation Addition and Retirement ............................................................................ 34 4.7.1 Development of New Generation Facilities .............................................................. 34 4.7.2 Generator Retirements .............................................................................................. 35 4.8 Pricing Dynamics .......................................................................................................... 37 4.9 Retail Electricity Market and Customer Classes .......................................................... 38 4.9.1 Basic Generation Service Auction Process ............................................................... 39 4.9.2 Competitive Retail Supply ........................................................................................ 41 4.9.3 Renewable Portfolio Standard .................................................................................. 46 4.10 Understanding Retail Electric Costs ............................................................................. 48 4.10.1 Basic Generation Service Components ................................................................. 50 4.10.2 State and Federal Charges and Policies ................................................................ 51 4.11 EE and DR Program Evaluation ................................................................................... 55 5 Natural Gas and Other Fuels ................................................................................................. 56 5.1 New Jersey Gas Distribution Companies ..................................................................... 56 5.2 Sources of Natural Gas ................................................................................................. 56 5.3 Home Heating Oil ......................................................................................................... 58 5.4 Transportation Fuels ..................................................................................................... 59 5.5 Fuel Market Outlook ..................................................................................................... 61 5.6 Understanding Retail Natural Gas Costs ...................................................................... 63 5.6.1 Basic Gas Supply Service Components .................................................................... 64 5.6.2 Distribution Charges ................................................................................................. 65 5.6.3 State and Federal Charges and Policies .................................................................... 65 6 Recent Legislative and Regulatory Initiatives ...................................................................... 68 6.1 Initiatives to Promote a Diverse Portfolio of Efficient Generation Resources ............. 68 6.2 Initiatives to Promote Renewable Energy .................................................................... 70 6.3 Initiatives to Promote Energy Efficiency and Conservation ........................................ 73 6.4 Other New and Pending Legislation ............................................................................. 73 6.5 State Strategic Plan……………………………………………………………………74 7 2011 Plan for Action ............................................................................................................. 75 7.1 In-State Electricity Resources ....................................................................................... 77 7.1.1 Advantages of a Diverse Supply Portfolio ................................................................ 78 7.1.2 Advantages of New Baseload and Mid-Merit Generation ........................................ 78 7.1.3 Nuclear Generation to Satisfy the Global Warming Response Act .......................... 80 7.1.4 Transmission Solutions and Out-of-State Resources ................................................ 80 7.1.5 Policy Direction and Recommendations ................................................................... 81 7.2 Cost-Effective Renewable Resources ........................................................................... 86 7.2.1 Subsidies for Renewable Resources ......................................................................... 86 7.2.2 Solar PV Development ............................................................................................. 87 7.2.3 Solar RPS and Economics ........................................................................................ 91 7.2.4 Onshore and Offshore Wind Development ............................................................. 100 7.2.5 Biomass Potential in New Jersey ............................................................................ 102 7.2.6 Policy Direction and Recommendations ................................................................. 105 7.3 Cost-Effective Conservation, Energy Efficiency, and Peak Load Reduction ............ 110 7.3.1 Peak Demand and Energy Reduction Goals ........................................................... 110 7.3.2 Energy Efficiency and Conservation ...................................................................... 111 7.3.3 Peak Demand Reduction ......................................................................................... 114 7.3.4 Policy Direction and Recommendations ................................................................. 116 7.4 Innovative Energy Technologies and Businesses ....................................................... 121 7.4.1 Energy Technologies to Simulate Economic Growth ............................................. 121 7.4.2 Innovative Technology Opportunities in Transportation ........................................ 131 7.4.3 Policy Direction and Recommendations ................................................................. 134 TABLE OF FIGURES Figure 1. EDC Service Territories ............................................................................................... 15 Figure 2. Transmission System in New Jersey ............................................................................ 16 Figure 3. New Jersey, EMAAC, and MAAC .............................................................................. 17 Figure 4. Susquehanna-Roseland Transmission Project .............................................................. 18 Figure 5. New Jersey Generating Capacity (1990-2009) ............................................................. 24 Figure 6. New Jersey Electric Generation (1990-2009) .............................................................. 25 Figure 7. New Jersey Electric Imports (1990-2009) .................................................................... 26 Figure 8. PSEG and Tetco M3 (Jan 09-Sep 11) ........................................................................... 27 Figure 9. RPM Clearing Prices for New Jersey and PJM ............................................................ 28 Figure 10. New Jersey Peak Load Forecasts and Goals .............................................................. 29 Figure 11. New Jersey Energy Demand Forecasts ...................................................................... 30 Figure 12. 2010 Existing Capacity in New Jersey by Fuel Type (MW and %) .......................... 31 Figure 13. 2011 New Jersey
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