Massachusetts Passes “Minibus” Clean Energy Bill

On July 31, the Massachusetts Legislature passed H.4857, An Act to Advance Clean Energy.” The bill, released late on July 30, was the result of a compromise between the Senate’s broad, omnibus bill passed in early June and the House’s more modest proposals, passed piecemeal in mid-July. Among other things, the bill:

  • increases opportunities for energy efficiency by expanding the definition of qualifying programs;
  • increases the Renewable Portfolio Standards (“RPS”) from 1% to 2% annually from 2020 through 2029, bringing the overall RPS to 35% by 2030;
  • establishes a Clean Peak Standard (“CPS”);
  • sets a storage target goal of 1,000 megawatt hours (“MWh”) by 2025;
  • creates a path for the solicitation of an additional 1,600 megawatts (MW) of off-shore wind;
  • clarifies what information distribution companies must provide to solar net metering customers prior to imposing demand charges;
  • allows distribution companies to consider and solicit for non-wire alternatives for the resiliency of their distribution systems; and
  • requires the Department of Energy Resources (DOER) to study the feasibility of mobile battery storage systems.

While the bill touches upon many issues of interest for stakeholders in the energy arena, the most significant aspects of this bill are the provisions that establish a CPS, create the energy storage target program, and create a path for additional procurements under Section 83C that would double the currently authorized amount of off-shore wind procurements from 1,600 MW to 3,200 MW.

In adopting the CPS, the legislation requires that every retail electric supplier shall provide a “minimum percentage of kilowatt-hours sales to end use customers from clean peak resources.” The concept is similar to the framework currently used for RPS purposes, but in addition to the “clean” requirement, the resource must also be delivered during a defined peak period.  The legislation defines a clean peak resource as “a qualified RPS resource, a qualified energy storage system or a demand response resource that generates, dispatches or discharges energy to the electric distribution system during seasonal peak periods, or alternatively, reduces load on said system.” Details related to the implementation of the CPS program are not well developed in the legislation itself; instead, the Legislature granted broad authority to DOER to promulgate rules to implement the program, including but not limited to the methodology for determining clean peak values, the process by which distribution companies procure clean peak certificates, and alternative compliance mechanisms for retail suppliers. Given the broad discretion afforded DOER in the development of these program rules, and the relatively short time-frame in which to accomplish the task, the stakeholder process around CPS will likely be robust.

In addition to the storage opportunities created by the CPS, the bill also establishes an energy storage target of 1,000 MWh by December 31, 2025. The bill again grants DOER discretion to implement a range of policies to achieve the 1,000 MWh target and to “encourage the cost-effective deployment of energy storage systems.” It also requires distribution companies to report annually, beginning in February 2019, on energy storage installations in their service territories. It is evident from the bill that the Legislature sees storage as a major player on the road to a renewable future, and this program affords storage another opportunity to fulfill that role.

With respect to the authorization to solicit an additional procurement of off-shore wind, the bill directs the DOER to investigate “the necessity, benefits, and costs” of requiring the electric distribution companies to procure an aggregate of 1,600 MW of offshore wind, “in addition to the solicitations and procurements required by section 83C…and may require said additional solicitations…by December 31, 2035.” This section of the legislation also allows DOER to impose additional requirements for these procurements, and expressly mandates that any selection of off-shore wind energy transmission “shall be the most cost-effective mechanism for procuring reliable, low-cost off-shore wind energy transmission service for ratepayers in the commonwealth.” With the regulatory proceedings related to the first 1,600 MW tranche of off-shore wind just getting underway at the Department of Public Utilities, stakeholders will likely be watching and waiting for a sign from DOER of its intent to seek additional procurements under this newly enacted law.

Overall, the bill developed by the House and Senate conferees and ultimately passed by the bodies, is far more modest than that proposed by the Senate in S.2545; the final legislation drops provisions in the Senate version that would have:  eliminated the caps on net metering; established interim CO2 emission targets; potentially expanded the Section 83D procurements; and established market-based mechanisms for CO2 reduction across all sectors, including transportation. Even in its pared down version, the legislation ultimately adopted by the bodies still cements the Commonwealth’s reputation as a leader in energy efficiency and renewable resource development. There can be no doubt, however, that the cumulative effect of increases to the RPS, the creation of the CPS and the potential for doubling the off-shore wind procurements will affect the competitive wholesale electricity markets. The next few years will be interesting as the Commonwealth continues to implement its clean energy policies and the regional electric grid transitions toward a renewable future.

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