Massachusetts’ New Clean Energy Bill: Heavy On Storage, Light On Solar

On Aug. 9, Massachusetts Gov. Charlie Baker signed H.4857, An Act to Advance Clean Energy, into law. Adopted by the bodies on the last day of session, July 31, the legislation was the compromise between the Senate’s broad, omnibus bill, S.2564, passed in mid-June, and a series of more modest proposals passed piecemeal by the House in mid-July. The bill drew mixed reactions from stakeholders and policymakers, leaving some solar advocates wanting more but other renewable advocates applauding the legislature’s push for storage development and additional offshore wind procurement.

Among other things, the bill expands energy efficiency, increases the renewable portfolio standard (RPS), establishes a clean peak standard (CPS), sets an energy storage goal, and authorizes the solicitation of an additional 1,600 MW of offshore wind by 2035. The bill also clarifies the circumstances under which a utility can impose a minimum monthly reliability contribution (MMRC) charge on a solar net metering customer.

Overall, the bill is far more modest than the sweeping proposals advanced by the Senate in S.2564. Specifically, the final version of the bill drops provisions contained in the Senate version that would have eliminated the caps on net metering, established interim CO2 emission targets, potentially expanded Section 83D procurements for additional clean energy, and established market-based mechanisms for CO2 reduction across all sectors of the economy, including, most notably, transportation.

Despite its modesty, the bill does have some important features and may ultimately offer
opportunities for solar developers. Among the most significant aspects of this bill is the provision that establishes a CPS, making Massachusetts the first state in the nation to require the delivery of “clean” resources during system “peak” demand periods. The legislation requires every retail electric supplier to provide a “minimum percentage of kilowatt-hour sales to end-use customers from clean peak resources.”

Drawing from a similar framework currently used for the deployment of RPS resources, the legislation adds a new attribute, requiring a resource not only to be “clean” but also to be delivered during a defined “peak” period. In so doing, the resource then qualifies for a “clean peak certificate.” 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.”

While there is little doubt that the legislation is primarily aimed at battery storage, solar facilities paired with battery storage may indeed qualify. The legislation does not, however, provide detailed information related to the implementation of the CPS program, with the legislature opting instead to grant the Department of Energy Resources (DOER) broad authority to develop program rules, including 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 that no precedent exists for the implementation of the CPS from which DOER can draw in developing program rules, the stakeholder process for the CPS will be robust, and it will be watched nationwide.

In addition to the storage opportunities created by the development of a CPS, the bill also calls for the creation of an energy storage target program and establishes an energy storage target of 1,000 MWh by Dec. 31, 2025. Similar to the authority and discretion granted to DOER with respect to the CPS, the legislation authorizes DOER to implement a range of policies to achieve the 1,000 MWh target and to “encourage the cost-effective deployment of energy storage systems.”

While the 2025 target of 1,000 MWh is nowhere near as aggressive as the 2,000 MW put forth in the Senate proposal, it nonetheless evidences the legislature’s view that storage will play a key role in the transformation of the regional electric grid to its renewable future; by creating this program, the legislature sets the stage and ensures additional opportunities for storage to fulfill that role.

Not insignificantly, the bill also authorizes the procurement under Section 83C for an
additional 1,600 MW of offshore wind, doubling the currently authorized amount from 1,600 MW to 3,200 MW. 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 by Dec. 31, 2035, and allows DOER to impose additional requirements for these procurements.

Importantly, however, the legislation mandates that any selection of offshore wind energy transmission “shall be the most cost-effective mechanism for procuring reliable, low-cost offshore wind energy transmission service for ratepayers in the commonwealth.” The increased procurement called for in the bill will draw attention to the regulatory proceedings related to Section 83C’s first 800 MW (of the 1,600 MW authorized) tranche of offshore wind – which are just getting underway at the Department of Public Utilities (DPU) – to see whether DOER signals its intent to exercise its additional procurement authority.

With respect to the imposition of the MMRC charge, the compromise bill once again falls short of the Senate’s more generous proposal. Instead of delaying the imposition of the charge to 2020 and requiring notice to customers before imposing the charge, the final version of the bill contains language relating only to customer notification. Specifically, the final bill authorizes utilities to impose such a charge only during peak system hours and only after utilities specify for customers the peak periods prior to imposing the charge.

While the bill neither prevents nor officially delays the imposition of the MMRC charge, the newly imposed customer notification requirements will likely require utilities to file new tariffs with the DPU before doing so, thus providing some additional, albeit brief, breathing room for net metering customers.

Though the compromise legislation may not deliver the expansive advances called for in the Senate proposal, even in its pared-down form, the legislation solidifies the commonwealth’s reputation as a leader in energy efficiency and renewable resource development. For solar advocates in search of some lifting of the net metering caps, ongoing regulatory proceedings at the DPU may provide some relief in the near future as stakeholders await decisions from DPU dockets relating to the implementation of the SMART program and on the important issue of ownership of solar facilities’ capacity rights.

In the interim, however, stakeholders will watch as the commonwealth continues to implement its clean energy policies and the regional electric grid continues its transition toward a renewable future.

Carol Holahan is counsel at Boston-based law firm Foley Hoag’s Energy & Cleantech practice. She can be reached at cholahan@foleyhoag.com.