New Jersey Governor Signs Several Clean Energy Initiatives

Includes Subsidies for Continued Operation of Nuclear Power Plants

On May 23, 2018, New Jersey Governor Phil Murphy signed several legislative initiatives that are designed to advance the state’s clean energy goals, including a bill that would subsidize the continued operation of nuclear power plants.  The cost for the new law to subsidize nuclear power plants is estimated to be approximately $300 million a year.

Overview of New Jersey Legislation

The new law establishes a Zero Emissions Certificate (ZEC) program in an effort to maintain New Jersey’s nuclear energy supply, which is the state’s largest source of carbon free energy and contributes almost 40 percent of the state’s electric capacity.  Under the law’s provisions, plants seeking to participate in the program would be required, among other things, to demonstrate that they make a significant contribution to New Jersey air quality and are at risk of closure within three years.

There are currently four reactors operating in New Jersey with generating capacity over 4,100 megawatts (MW) of electricity.  Three of the reactors are located at the Salem-Hope Creek nuclear plant and are operated by a unit of Public Service Enterprise Group (PSEG), which is the state’s biggest power company.  The other reactor, Oyster Creek, is owned by Exelon Corporation, which also owns part of the Salem reactors.

In addition to the nuclear subsidy law, Governor Murphy also signed legislation to require that 50 percent of the state’s power come from renewable sources by 2030, as well as to establish plans to build 3,500 MW of offshore wind by 2030; implement energy efficiency programs to reduce electric and gas usage; and, achieve 2,000 MW of energy storage by 2030.  The governor also signed an Executive Order directing state agencies to develop an Energy Master Plan by June 1, 2019 that provides a path to 100 percent clean energy by 2050.

Potential Action by Other States and DOE

Passage of the new legislation makes New Jersey the fourth state to adopt a program that is intended to provide a new revenue stream to assist nuclear reactors that are in service in an effort to meet the states’ greenhouse gas reduction goals.  Other states that have passed such laws include New York, Illinois and Connecticut.

States with reactors set to retire over the next few years for economic reasons (including Pennsylvania and Ohio) and officials at the U.S. Energy Department (DOE) are reportedly also looking at programs designed to keep nuclear plants operating.


Exelon has announced plans to shut the Oyster Creek reactor in October 2018 pursuant to a long-standing agreement with the state.  In addition, PSEG has warned that it could shut its reactors if they do not receive some sort of federal or state assistance.

By the end of 2021, twenty-four of the operating nuclear power plants in the United States are either set to close or will no longer be profitable according to a report by Bloomberg New Energy Finance (BNEF) that was issued on May 15, 2018.  In addition, the report cautions that more plants are likely to close.