Governor Baker signed the climate bill (H.5060), titled An Act Driving Clean Energy and Offshore Wind, into law on Thursday August 11, 2022. The act combines and modifies provisions from the House’s proposed offshore wind bill (H.4524) and the Senate’s proposed omnibus climate bill (S.2819). The legislation covers a wide range of policy changes focused on electrifying vehicles and transit, reducing fossil fuel connections in new construction, and revamping policy related to solar, offshore wind, and other carbon-free energy sources.
The legislation will require the creation of several funds to support its policies. The initial funding will likely be sourced from state surplus funds and federal aid. The exact amounts allocated for funding will be determined primarily by an economic development bill that is still in progress.
See our related blog post covering the transportation policies implemented by this climate act.
The legislation shifts control of offshore wind procurement to DOER. The utilities will still be the contracting counterparty and receive a remuneration fee of 2.25% (a decrease from the current 2.75%) as compensation for the acceptance of the long-term financial obligation. However, DOER will lead the solicitation and award process, while DPU will review and approve the final contract with the utility. DPU is directed to promulgate updated regulations in accordance with the legislation.
The law keeps the required procurement total at 5.6 GW by 2027. The strict price cap requiring each subsequent procurement to be at a lower price than the previous one will be removed. The legislation is intended to attract additional bidders in this way and takes into consideration increased raw material and supply chain costs.
Reduction of Fossil Fuels
Notably, the legislation provides for a DOER demonstration project, allowing up to ten municipalities to ban fossil fuel hookups in new construction, excluding certain research laboratories, hospitals, and medical offices. Municipalities must meet the state’s 10% affordable housing target and allow for multi-family housing to qualify for the project. Governor Baker has expressed some significant concerns over this provision, so it will be worth keeping an eye on how this policy is implemented.
Other provisions include a ban on incentives and rebates from Mass Save related to fossil fuel powered systems, except as backup for electric heat pumps. DPU is instructed to study how to make it easier for communities to adopt geothermal heating and cooling systems. The legislation targets buildings over 20,000 square feet and school buildings, requiring annual emissions reporting from building owners and a plan from the state to on ways to increase electrification, energy efficiency, and air quality in such buildings. The new climate act gives the public a larger role in the planning process for natural gas utilities and seeks to ensure that plans for line replacements are in line with the state’s decarbonization goals.
Each electric distribution company will be directed to develop an electric-sector modernization plan to enable increased adoption of renewable energy and create a more reliable and resilient grid. A Clean Energy Transmission Working Group will be established to analyze major transmission upgrades needed to deliver clean energy to the commonwealth, including from offshore wind projects.
The legislation expands the role of the Massachusetts Clean Energy Center (“MassCEC”) and establishes several new programs and funds within MassCEC to help meet the commonwealth’s goals, including a workforce and market development program, a Clean Energy Investment Fund, and an Offshore Wind Investment Program. One of the primary goals is to support offshore wind manufacturing and supply chain activities to expand employment opportunities and economic development in Massachusetts. The Offshore Wind Investment Program will provide funding and support to municipalities seeking to implement aggregation plans to enter into long-term contracts with offshore wind developers, often referred to as “community empowerment.” The MassCEC funds will also be used to advance and deploy carbon-free energy, including the development of nuclear fusion, networked geothermal and deep geothermal technologies. MassCEC and the Department of Revenue are able to authorize up to $35 million in offshore wind tax incentives per year. Lastly, the MassCEC’s board will also be reworked and expanded.
The law excludes biomass from the definition of renewable energy, meaning it is no longer an eligible resource under the Renewable Portfolio Standard. Biomass remains eligible for credits under the Alternative Portfolio Standard.
The legislation removes some restrictions that are currently limiting solar in the commonwealth, including permitting renewable energy to be sited on land primarily used for agricultural or horticultural purpose, allowing farmers to take advantage of dual-use solar advancements. It removes the restriction that limits each property to only one net metering solar facility, as well as increases the amount of net-metered capacity a homeowner can qualify for from 10 to 25 kilowatts.
Regarding energy storage, the legislation directs DOER and MassCEC to work together in studying how to deploy mid- and long-duration energy storage systems. The agencies are directed to analyze the costs and benefits of procuring up to 4,800 gigawatt hours of stored energy from renewable sources annually. If the study has positive results, DOER is instructed to move forward with such procurements, while promoting the integration of offshore wind and other renewables.