Towards Clean Power: A Quantitative Analysis of New Jersey’s Clean Energy Policy Alternatives

Abstract

New Jersey has set ambitious targets to achieve a carbon-free electricity system but now faces increasing pressure to limit energy system cost increases, requiring policymakers to navigate a tradeoff between emissions reductions and affordability within the broader PJM regional electricity market. This thesis uses the GenX capacity expansion model to evaluate how different policy mechanisms shape system costs, emissions, and investment decisions under a range of plausible future conditions. We model New Jersey and the surrounding region across three planning periods through 2045, considering multiple policy designs – including a Clean Energy Standard (CES), Clean Capacity Standard (CCS), and technology-specific procurement mandates – over uncertainties in demand patterns, fuel prices, technology costs, and regional policy ambitions. We find that least-cost decarbonization requires a diversified portfolio of resources: while wind and solar provide low-cost energy, nuclear energy plays a critical role as a dispatchable, carbon-free source of reliable capacity. In an extension scenario, long-duration storage partially substitutes, but doesn’t fully replace, clean firm generation. Policy design is a primary driver of system outcomes. A standalone CES is often ineffective in shifting emissions or capacity expansion outputs, while CCS and procurement policies drive substantial clean resource investment and emissions reduction but increase system costs. An incremental CCS emerges as a promising compromise, capturing about half the emissions reductions associated with a full CCS with about half the cost increase. Fossil fuel retirement policies provide an effective complement, further reducing emissions without large cost increases. While absolute outcomes vary across futures, the relative performance of policy mechanisms remains consistent. These results underscore that careful policy design, market structuring, and regional coordination are essential to achieving deep decarbonization, and that a balanced, flexible policy portfolio offers the most effective pathway for New Jersey to meet its climate goals while managing costs.