On July 16, 2025, the New Jersey Board of Public Utilities (BPU) released information regarding the Direct Install Energy Efficiency Program offered by many electric and gas utilities throughout the State. The BPU established procedures to ensure that local governments, boards of education, and county colleges can participate. NJ Department of Community Affairs, Division of Local Government Services (DLGS) provided Local Finance Notice 2025-11 explaining the process a contracting unit must follow in utilizing a Direct Install Program.
The Direct Install Program implements a “turnkey” energy savings program for lighting, refrigeration, and HVAC that would be eligible for substantial incentives and repayment options with 0% interest. The program is open to small and mid-size non-residential facilities with an average annual energy demand of less than 300 kilowatts/40,000.
There are two different models through which a utility can implement Direct Install; “open network” and “closed network.” Under the “open network” model, a contracting unit procures a contractor that will perform the work recommended in the energy assessment. The contracting unit must procure the contractor through competitive bidding if the dollar value of the contract exceeds the contracting unit’s bid threshold, with the contract awarded to the lowest responsible, responsive bidder. The Program provides for additional requirements depending on the project. Under the “close network” the utility itself serves as the general contractor, preselecting through competitive solicitation the subcontractors perform work according to standard pricing schedules. Please note that while a utility could meet the exceptions to competitive bidding under the laws, no utilities have been approved by BPU in accordance with this exception.
Prior to procuring a contractor for an “open network” Direct Install project the contracting unit must obtain an energy audit through either the BPU’s Local Government Energy Audit program or by separately contracting for an ASHRAE Level 1 or 2 audit.
After the completion of the energy audit, the estimated dollar value of the project is used to determine procurement. If the estimated dollar value exceeds the contracting unit’s bid threshold competitive bid solicitation is open to all interested bidders including the energy utility’s trade allies. A contractor that performed the contracting unit’s energy audit is not eligible to respond to the bid solicitation for the project. The LFN encourages eligible bidders to participate in pre-bid conference and walk-through to inspect areas covered within the audit.
For additional requirements and information, please consult LFN 2025-11 or contact the DLGS at dlgs@dca.nj.gov.
Contact: Erin Knoedler, Legislative Analyst, eknoedler@njlm.org, 609-695-3481, x116.