This bill mandates the Board of Public Utilities (BPU) to create a virtual power plant program aimed at reducing peak electric energy demand and enhancing grid reliability. Virtual power plants, defined as aggregations of distributed energy resources (DERs) such as residential solar systems and energy storage, will be coordinated to provide various grid services. The program is designed to achieve a peak demand reduction target of 500 megawatts by 2030, while also increasing resource adequacy and deferring costly infrastructure upgrades. The BPU will set minimum requirements for the program, which will be implemented by electric public utilities, ensuring that any direct control over customer energy usage remains with third-party DER aggregators.

Additionally, the bill outlines specific requirements for the demand optimization program, including the allocation of peak demand reduction targets among utilities, the types of grid flexibility services to be provided, and the inclusion of low- and moderate-income customers. Electric public utilities will be required to submit implementation and reporting plans to the BPU, which will review these plans for cost-effectiveness and compliance with program requirements. Annual reports will also be mandated to demonstrate compliance with the program's goals, with penalties for utilities that fail to meet established metrics.