New Jersey Energy Resilience Bank Opens For Business

Water and wastewater treatment plants are eligible for the first round of support from New Jersey’s new Energy Resilience Bank.
Published: Wed 12 Nov 2014

Building resiliency into their grids is a key focus for states in the US northeast, following major storm damage such as was experienced during Superstorm Sandy in 2012 and other extreme weather events.

Some such as Massachusetts and Connecticut, have already awarded funding for projects [Engerati-Six Municipal-Led Resilient Power Projects Receive US$7.4 Million and Microgrids To Harden Connecticut’s Grid] Others, such as New Hampshire, are still considering their approach. [Engerati-State Energy Strategy Recommends Grid Modernisation and Microgrids for New Hampshire]

Energy Resiliency Bank

The approach taken in the state of New Jersey is a collaboration between the NJ Board of Public Utilities (BPU) and the Economic Development Authority (EDA) to create an Energy Resiliency Bank – the first such bank of its kind.

Utilizing $200 million through New Jersey’s second Community Development Block Grant-Disaster Recovery (CDBG-DR) allocation from the US Department of Housing and Urban Development, the Bank will support the development of distributed energy resources (DERs) at critical facilities that will enable them to remain operational during future outages.

Water and wastewater treatment plants

The first group of facilities targeted for the program is water and wastewater treatment plants, with $65 million allocated for this sector.

The significance of this sector is illustrated in that as a result of Sandy, 94 wastewater treatment plants across all twenty-one counties lost power and were flooded. Failed pumps allowed salt water intrusion into the systems, destroying electrical equipment. It is estimated that between three and five billion gallons of untreated wastewater were discharged into New Jersey waterways. Two hundred and sixty-seven of the state’s 604 water systems were without power, and thirty-seven of those systems issued boil water advisories following the storm. One month after Sandy made landfall, seven drinking water systems were still subject to boil water advisories.

“BPU and EDA have worked very closely to create workable parameters and attractive financing packages to help facilities implement resilient solutions that may previously have seemed infeasible due to their high cost,” said EDA CEO Michele Brown. “We are very excited to be moving forward with the application for water and wastewater treatment plants right on schedule, and encourage stakeholders in entities with an unmet funding need to look closely at the options that may be available to them.”

Making projects bankable

The intent of the ERB is to finance the installation or retrofitting of existing commercially available and cost effective DER technologies, including combined heat and power, fuel cells, and renewable technologies. However, new technologies are not ruled out, provided they offer the same or greater resiliency benefits as current DER technologies, and are cost effective.

The technologies also must be constructed to operate islanded from the electric utility grid, be able to blackstart when the electric grid is down, and have the capability to operate at critical load. Further, for a facility to qualify, it must have been impacted either directly or indirectly by Sandy or other eligible disasters.

The financing options available through the ERB will consist of grants and loans to address unmet funding needs. Grants and forgivable loans will be offered to address up to 40% of unmet funding needs, while low-interest, amortizing loans will be available for the remaining 60% of unmet funding needs. Grants and loans may require equity contribution, and any principal forgiveness component will require evidence of meeting minimum performance requirements as indicated in the program guide.

Priority will be placed on projects which serve low and moderate income communities or which create low or moderate income employment. Project equipment must be installed and be operational within two years of the closing of the ERB grant and loan (with possible extensions for up to two six-month terms).

ERB product development

The application period for water and wastewater treatment facilities will be followed by a similar process with the development of funding products for other critical sectors. The next is expected to cover hospitals and long-term care facilities. Others will include educational and correctional institutions and transportation.