New Jersey Clean Energy Program (NJCEP): Combined Heat and Power

Combined Heat & Power

One of the goals of the State of New Jersey is to enhance energy efficiency through on-site power generation with recovery and productive use of waste heat, and to reduce existing and new demands to the electric power grid. The Board of Public Utilities seeks to accomplish this goal by providing generous financial incentives for Combined Heat & Power (CHP) installations.

The following changes to the CHP Program were effective on July 1, 2017:

  • CHP systems fueled by a Class 1 renewable fuel source: 

    • are eligible for a 30% incentive bonus
    • must demonstrate a simple payback of 25 years or less
    • are limited in size to the available Class 1 renewable fuel


  • CHP systems for Critical Facilities:

    • are required to have a Blackstart capability
    • must demonstrate a simple payback of 20 years or less


Eligible CHP or Waste Heat to Power (WHP) projects must achieve an annual system efficiency of at least 65% (Lower Heating Value - LHV), based on total energy input and total utilized energy output. Mechanical energy may be included in the efficiency evaluation.

Eligible Technologies Size (Installed Rated Capacity) Incentive ($/kW) % of Total Cost Cap per project $ Cap per project
Powered by non-renewable or renewable fuel source <500 kW $2,000 30-40% $2 million
Gas Internal Combustion Engine >500 kW - 
1 MW
$1,000 30% $3 million
Gas Combustion Turbine > 1 MW - 3 MW $550
Microturbine >3 MW $350
Fuel Cells with Heat Recovery
Waste Heat to Power* <1 MW $1,000 30% $2 million
> 1MW $500 $3 million

*Waste Heat to Power: Powered by non-renewable fuel source, heat recovery or other mechanical recovery from existing equipment utilizing new electric generation equipment (e.g. steam turbine).

(1) Incentives are tiered, which means the incentive levels vary based upon the installed rated capacity, as listed in the chart above. For example, a 4 MW CHP system would receive $2.00/watt for the first 500 kW, $1,00/watt for the second 500 KW, $0.55/watt for the next 2 MW and $0.35/watt for the last 1 MW (up to the caps listed).
(2) The maximum incentive will be limited to 30% of total project. This cap will be increased to 40% where a cooling application is used or included with the CHP system (e.g. absorption chiller).
(3) Projects installing CHP or WHP will be eligible for incentives shown above, not to exceed the lesser % per project cap or $ per project cap. Minimum efficiency will be calculated based on annual total electricity generated, utilized waste heat at the host site (i.e. not lost/rejected), and energy input.

Application Process

Applications must be submitted through the online portalHard copy or email submissions will not be accepted.  A comprehensive version of the application is available for reference, which shows the information applicants will be required to submit as well as providing an outline of the eligibility requirements, submission instructions, and Program terms & conditions.

Please note, within the comprehensive application form the blue-colored tabs are for informational purposes, the yellow-colored tabs will be completed by the applicant on-line, and the green-colored tabs will need to be completed and uploaded as an EXCEL workbook.  Any questions may be emailed to

Applications will be reviewed for completeness for all program requirements and incomplete applications will be removed from the application queue.  Applicants with incomplete applications will be notified of the deficiencies and given the opportunity to remedy the deficiencies and submit a revised application.  Revised applications will be inserted at the end of the application queue.  Applications will be accepted on a first-come, first-served basis until the program’s F18 budget is exhausted.

The NJBPU requires that customer-generators have interconnection agreements in place with their EDCs. These agreements govern connection to the electric grid and specify the terms and conditions, technical requirements, and safety and testing requirements needed. Utility contact information and utility specific website pages with forms are available (links directly to the utility Interconnection forms page) for each of the NJ BPU regulated electric utilities.

A list of trade allies that can support a CHP installation can be found here.

Program Status*
  Incentives ($000) Active Projects Energy Capacity (MW)
FY18 CHP Incentive Budget 33,404    
Incentives Paid Fiscal YTD 0    
Outstanding Commitments 21,504 48 22.2
Under Review  3,722 11  2.5
Total 25,226
FY18 Remaining CHP Budget 8,178    

*as of July 18, 2017

Program Participants

New Jersey's Clean Energy Program
Rolling Submission
BPU, NJCEP, Combined Heat and Power, Energy, Energy Upgrades, Energy Efficiency


  • Municipal Government
  • County Government
  • Educational
  • Non-Profit
  • Business
  • Commercial Energy Efficiency Outreach *NEW*
  • Energy Efficiency for Municipal Facilities
Not Specified