A new wave of virtual power plant programs pays owners a fixed amount for letting their onsite battery discharge or curtail load when the grid is stressed. New Jersey just proposed paying up to $200 per kilowatt per year over 10 years for behind-the-meter storage, and the capital funding these systems is still flowing in by the billions. For a commercial owner, the significance is control: a battery that already protects the building during an outage can now also lower demand charges and earn a contracted payment, making onsite storage one of the few energy moves with a defined return rather than a hope.
Key Facts at a Glance
New Jersey proposed paying up to $200 per kilowatt per year, over a 10-year term, for behind-the-meter storage that discharges during grid dispatch events.
The program is the first distributed block of the state’s larger effort to reach 2 gigawatts of storage by 2030, and it transitions to a market-based VPP tariff in 2029.
A virtual power plant (VPP) aggregates many onsite batteries and flexible loads into a single resource the grid pays to dispatch.
Capital for these systems remains abundant: IPX Power alone closed $4.95 billion in solar-and-storage financing this period.
Onsite storage earns three ways at once: lower demand charges, VPP or capacity payments, and resilience during outages.
What New Jersey Just Put a Price On
The clearest signal came from New Jersey. The state’s Board of Public Utilities proposed procuring up to 150 megawatts of behind-the-meter storage that can discharge when the grid needs it, paying up to $200 per kilowatt per year over a 10-year term. The program starts as a transitional virtual power plant and moves to a market-based, open-access tariff in 2029, part of the state’s goal to reach 2 gigawatts of storage by 2030. The number matters more than the state. A published, multiyear price on flexibility is what lets an owner underwrite a battery the way they would any other income-producing asset.
New Jersey is not alone. Utilities and regulators across the country are standing up programs that compensate distributed storage, from California and Illinois to Colorado, where state law requires a performance-based VPP tariff. The direction is consistent: the grid increasingly needs flexible capacity it does not have to build, and it is willing to pay building owners for theirs.
How a Building Earns From Storage
Onsite storage produces value on three separate lines, and a sound project counts all of them. The first is demand-charge reduction. A battery discharged during the building’s peak lowers the coincident peak that sets the monthly demand charge, often the largest and least understood item on a commercial electric bill. The second is grid revenue. Through a VPP or capacity program, the owner is paid to dispatch the battery or curtail load during grid stress, a contracted payment like New Jersey’s $200 per kilowatt. The third is resilience. When the grid fails, the battery keeps critical systems running, avoiding the cost of an outage entirely.
The three streams stack, but they also compete for the same battery capacity. A system optimized purely for grid revenue may not be sized for backup, and one sized only for resilience may sit idle most of the year. The strongest projects are designed around all three from the start, with the control software to arbitrate between them.
Why This Is the Control Play
Most of what drives a building’s energy cost is outside an owner’s hands: interest rates, oil prices, capacity auctions. Onsite storage is the exception. It is an asset the owner installs, controls and monetizes, and the capital to fund it is available even as traditional financing tightens. IPX Power closed $4.95 billion in solar-and-storage financing in this period alone, and third-party ownership structures let owners host a system with no upfront capital. The combination, a paid grid program on one side and available capital on the other, is what moves storage from a resilience nice-to-have to a financeable asset with a return.
What Owners Should Do Now
The first step is to find the programs in the building’s own market. VPP and storage-compensation programs are utility and state specific, so an owner in New Jersey, Colorado or California faces different published prices than one in a market without a program yet. The second step is to size the system to the building’s actual peak and load profile, not a generic template, so the demand-charge savings are real. The third is to decide the ownership structure, direct ownership to capture the tax credits and the full revenue, or a third-party agreement to avoid the capital outlay. The owners capturing this value are the ones treating storage as an income asset with a contract behind it, not a backup generator that happens to have a battery.
Frequently Asked Questions
Is the New Jersey price available to commercial buildings?
The proposed transitional program centers on residential and small commercial systems, with a market-based tariff opening access more broadly in 2029. The significance for larger owners is the signal: a regulator has put a firm, multiyear price on flexibility, and comparable programs in other states already compensate commercial storage directly.
Do I need solar to earn VPP revenue?
No. A battery alone can participate by discharging or shifting load during grid events. Pairing storage with solar increases how much a building can offer and when, but the VPP payment is for flexibility, which a standalone battery provides.
How certain is the revenue?
Program payments like New Jersey’s are contracted over a set term, which makes a baseline predictable. Market-based dispatch revenue varies with grid conditions. A conservative underwriting treats the contracted payment and demand-charge savings as the foundation and any market upside as a bonus.
Sources
Utility Dive, New Jersey seeks 150 MW of behind-the-meter storage to support VPP: https://www.utilitydive.com/news/new-jersey-seeks-150-mw-of-behind-the-meter-storage-to-support-vpp/828727/
Mercom Capital, IPX Power closes $4.95 billion solar-and-storage financing: https://mercomcapital.com/ipx-power-closes-4-95b-financing-solar-storage-projects/
Energy-Storage.News, US VPP programs advance with new partnerships and investment: https://www.energy-storage.news/us-virtual-power-plant-programmes-advance-with-new-partnerships-and-investment/
U.S. Department of Energy, Virtual Power Plants projects: https://www.energy.gov/edf/virtual-power-plants-projects