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Combined Heat and Power Partnership

Small Scale CHP and Fuel Cell Incentive Program

Date Last Updated7/15/2013
Incentive TypeGrant
State/FederalNJ
Incentive Administrator/Contact OfficeNew Jersey Board of Public Utilities
Incentive Initiation Date6/14/2012
Incentive Size and Funding SourceThe New Jersey Board of Public Utilities offers incentives for CHP and Fuel Cell systems. Incentives below represent a combination of NJCEP and Utility incentives. Utilities offer incentives for CHP and Fuel Cells ranging from $0 up to $1,000,000 and NJCEP will provide an incentive that meets the combined incentive shown below, up to a maximum of $2,000,000. The percent of project cost caps listed below will be maintained.

Incentive ($/Watt)
  • For CHP Powered by Non-Renewable Fuel Sources:
    a. Systems less than or equal to 500 kW = $2.00/Watt.
    b. Systems 501-1,000 kW = $1.00/Watt.
  • For CHP Powered by Class 1 Renewable Fuel Source (all renewable fueled projects must apply through the REIP Program under the NJCEP):
    a. Systems less than or equal to 500 kW = $3.00/Watt (rebates are tiered).
    b. Systems 501-1,000 kW = $2.00/Watt.
  • Heat Recovery or Other Mechanical Recovery (from existing equipment utilizing new electric generation equipment): $1.00/Watt.
  • Fuel cells with waste heat utilization (not fueled by Class 1 renewable fuel): $4.00/Watt.
  • Fuel cells without waste heat utilization (not fueled by Class 1 renewable fuel): $3.00/Watt.
Maximum Percent of Project Cost
  • For CHP Powered by Non-Renewable Fuel Sources: 30% (40% when a cooling application is used).
  • For CHP Powered by Class 1 Renewable Fuel Source: 40% (Includes all capital equipment costs associated with producing and refining biomass feedstock, generating electricity and heat recovery. All renewable fueled projects must apply through the REIP Program under the NJCEP).
  • Heat Recovery or Other Mechanical Recovery (from existing equipment utilizing new electric generation equipment: 30%.
  • Fuel cells with waste heat utilization (not fueled by Class 1 renewable fuel): 60%.
  • Fuel cells without waste heat utilization (not fueled by Class 1 renewable fuel): 60%.
NJCEP Pay for Performance Bonus
Any facilities that participated in Pay for Performance prior to applying for CHP or fuel cell incentives will be eligible for an additional $0.25 per Watt (up to $250,000) from NJCEP, not to exceed the percentage project cost caps listed above, or a combined utility plus NJCEP incentive of $2.25 million, whichever is less. CHP systems powered by Class 1 Renewable Fuel Sources are not eligible to Pay for Performance Bonuses.
Eligible RecipientOwners of CHP and fuel cell systems with recovery and productive use of waste heat that are located on-site and installed in New Jersey are eligible. Applicants must be contributors to the Societal Benefits Charge fund.
Eligible FuelDoes Not Specify
Eligible Project Size (MW)Less than or equal to 1.0 MW.
Minimum Efficiency Required (%)CHP or Fuel Cell systems with waste heat utilization must achieve annual system efficiency of at least 60%; electric only generation must achieve 45% electrical efficiency.
Other Selected Eligibility CriteriaAdditional Requirements:
  • CHP or Fuel Cell system warranty, service contract, or equivalent must be all-inclusive for at least 10 years.
  • CHP or Fuel Cell equipment must be stationary and installed on the customer side of the meter.
  • Equipment must be sized to serve all or a portion of the electrical load at the customer site, but no more than 100% of the customers electric load.
  • Equipment must be new, commercially available and permanently installed.
  • Expansion of an existing facility with new equipment is also eligible for incentives, however only the incremental expansion would be eligible for the incentive. The combined capacity of the proposed expansion and existing generators are held to sizing requirements listed above.
The following are not eligible for incentives: renewable source-fueled systems (Renewable fueled projects must be submitted to the Renewable Energy Market Manager through the REIP Program under the NJCEP); 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.
Application Form(s)CHP Application Package
Other Incentive DetailsFor systems greater than 1 MW and seeking larger incentives, please refer to the BPU Large Scale CHP/Fuel Cells Program. CHP systems powered by Class 1 renewables must apply through the REIP Program under the NJCEP

Incentives will be paid as follows: 20% of the incentive upon proof of equipment purchase; 60% upon project completion and verification of installation; 20% one year after project inspection and confirmation the project is achieving the proposed and/or minimum efficiency threshold.
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