Massachusetts

On June 8, 2010 the Massachusetts Department of Energy Resources (DOER) filed its final rules for the renewable portfolio standard. There are several notable changes from the emergency rules filed in January 2010. The DOER has prepared a concise memo regarding these changes. In addition, see the DOER's final filed rules 225 CMR 14.00 (red line version) for more detailed information. This record will be updated after final rules have gone through the final review process (which by law may take up to 60 days) and are officially accepted by the Massachusetts Secretary of State.  
 
Massachusetts' 1997 electric-utility restructuring legislation created the framework for a renewable portfolio standard (RPS). In April 2002, the Massachusetts Department of Energy Resources (DOER) adopted RPS regulations that required all retail electricity providers in the state to utilize new renewable-energy sources for at least 1% of their power supply in 2003, increasing to 4% by 2009. The RPS was significantly expanded by legislation enacted in July 2008 (Green Communities Act S.B. 2768); this legislation established two separate renewable standards -- a standard for “Class I” renewables, and a standard for “Class II” renewables.  
 
Under the Class I RPS, all retail electricity suppliers must provide a minimum percentage of kilowatt-hours (kWh) sales to end-use customers in Massachusetts from eligible renewable energy resources installed after December 31, 1997, according to the following schedule:

• 1.0% of sales by 12/31/2003  
  
• 1.5% of sales by 12/31/2004  
  
• 2.0% of sales by 12/31/2005  
  
• 2.5% of sales by 12/31/2006  
  
• 3.0% of sales by 12/31/2007  
  
• 3.5% of sales by 12/31/2008  
  
• 4.0% of sales by 12/31/2009  
  
• 5.0% of sales by 12/31/2010 *  
  
• 6.0% of sales by 12/31/2011  
  
• 7.0% of sales by 12/31/2012  
  
• 8.0% of sales by 12/31/2013  
  
• 9.0% of sales by 12/31/2014  
  
• 10.0% of sales by 12/31/2015  
  
• 11.0% of sales by 12/31/2016  
  
• 12.0% of sales by 12/31/2017  
  
• 13.0% of sales by 12/31/2018  
  
• 14.0% of sales by 12/31/2019  
  
• 15.0% of sales by 12/31/2020, and an additional 1% of sales each year thereafter, with no stated expiration date

Eligible Class I resources include: photovoltaics (PV); solar thermal-electric energy; wind energy; ocean thermal, wave or tidal energy; fuel cells utilizing renewable fuels; landfill gas; energy generated by certain new hydroelectric facilities, or certain incremental new energy from increased capacity or efficiency improvements at existing hydroelectric facilities; low-emission advanced biomass power conversion technologies using fuels such as wood, by-products or waste from agricultural crops, food or vegetative material, energy crops, algae, biogas, liquid biofuels;** marine or hydrokinetic energy; and geothermal energy.  
 
Starting in 2010, retail suppliers must provide a portion of the required renewable energy under the Class I Standard from qualified in-state, interconnected solar facilities. The DOER carried out a stakeholder process during the second quarter of 2009 to determine the details of this requirement, called the Class I Solar Carve-Out, and emergency regulations were issued in January 2010. Qualifying solar facilities (officially known as “Solar Carve-Out Renewable Generation Units” in the regulations) must be 2 MW (DC) or less,*** and must have become operational January 1, 2008 or later. Facilities that received funding prior to 1/1/2010 from the Massachusetts Renewable Energy Trust or more than 67% funding from the American Recovery and Reinvestment Act (except the federal grant in lieu of tax credit) are ineligible. For 2010, the Solar Carve-Out compliance obligation has been set at 30 megawatts (MW) direct current (DC). The Solar Carve-Out Minimum Standard in turn is calculated by dividing the annual compliance obligation in megawatt hours (MWh) by the total RPS load obligation from the previous year. For 2010, the final Solar Carve-Out Minimum Standard is 0.0679%. In subsequent years, the Solar Carve-Out Minimum Standard is scheduled to increase 30% plus or minus the under- or oversupply of solar generation experienced during the year. For 2011, the Minimum Standard is estimated to increase to 0.1627%. The Solar Carve-Out Minimum Standard will be at least equal to the standard from the previous year. When 400 MW (DC) of qualifying solar facilities have been installed, no additional solar facilities will be qualified for the Solar Carve-Out, although they would be eligible to qualify as a RPS Class I Renewable facility and continue to satisfy the overall Class I Standard.  
 
The DOER has established the qualification process for RPS Class I Renewable and Solar Carve-Out Renewable Generation Facilities in its regulations and provides forms and instructions on its website. The DOER will issue the Statement of Qualification (SQ) and once issued, the developer has four years to put the generation facility into operation. The regulations allow DOER to grant extensions, however the petitioner must submit a new SQ application.  
 
The Class II RPS requires all retail electricity suppliers to provide annually 3.6% of kWh sales to end-use customers in Massachusetts from Class II renewables, starting in 2009. Eligible Class II renewables include systems operating before December 31, 1997, that generate electricity using PV; solar thermal-electric energy; wind energy; ocean thermal, wave or tidal energy; fuel cells utilizing renewable fuels; landfill gas; energy generated by certain existing hydroelectric facilities up to five megawatts (MW) in capacity; low-emission advanced biomass power conversion technologies using fuels such as wood, by-products or waste from agricultural crops, food or vegetative waste, energy crops, biogas, liquid biofuels; marine or hydrokinetic energy; or geothermal energy.  
 
In addition, there is a separate Class II Waste Energy Minimum Standard that requires all retail electricity suppliers to provide annually 3.5% of kWh sales to end-use customers in Massachusetts from waste energy**** starting in 2009. Eligible waste energy generation units must have and maintain a state approved recycling program, must comply with Massachusetts Department of Environmental Protection’s air pollution and solid waste management regulations, and must allocate at least 50% of any revenue received from the sale of renewable energy certificates generated to its recycling programs.  
 
Retail electricity suppliers demonstrate compliance by submitting, in an annual compliance filing to the DOER, documentation that Class I Renewable Energy Certificates (RECs), Solar Carve-Out Generation Certificates (SRECs) Class II RECs, and Class II Waste Energy Certificates have been secured.***** These certificates represent the environmental attributes of one megawatt-hour (MWh) of generation from an eligible facility under each class category. In order to facilitate a robust SREC market, that not only responds to market conditions but also provides price support, the DOER has created the Solar Credit Clearinghouse program.  
 
Retail suppliers may pay the alternative compliance payment (ACP) if they are unable to procure enough renewable energy attributes, however the ACP rates are designed to be higher than the market price of RECs and SRECs. The DOER determined the initial ACP rate for each resource category. The ACP for Class I, Class II, and Class II Waste Energy increase (or decrease) annually based on the Consumer Price Index of the previous year. The Solar ACP will decrease only if DOER determines it is needed based on market conditions; they will not reduce it more than 10% in any given year. The following table provides the base year ACP rate and current ACP rates:  
 
 
 
 
Massachusetts RPS compliance reports are available on the DOER website:  
2008 Comliance Report  
2007 Compliance Report  
 
 
S.B. 2768 also requires DOER to establish an alternative energy portfolio standard (APS). The APS, which took effect January 1, 2009, requires all retail electricity suppliers to provide annually a minimum percentage of kWh sales to end-use customers in Massachusetts from “alternative energy generating sources.” In 2009 the goal is 1% and increases to 5% by 2020 (DOER provides the yearly schedule of increments). Alternative energy generating resources include: gasification with capture and permanent sequestration of carbon dioxide; combined heat and power (CHP); flywheel energy storage; any facility which substitutes any portion of its fossil fuel source with an equal to or greater portion of an approved alternative, paper-derived fuel source; energy efficient steam technology; and any other alternative energy technology approved by the DOER. Furthermore, S.B. 2768 established several overarching state energy goals. Among these goals are: (1) meeting at least 25% of the state's electric load, including both capacity and energy, by 2020 with demand-side resources including energy efficiency, load management, demand response and generation located behind a customer's meter; and (2) meeting at least 20% of the state's electric load by 2020 through new renewable and alternative energy generation. For more information on this standard, see DOER's website.  
 
S.B. 2768 also requires electric distribution companies to solicit long-term contracts (defined as 10-15 years) for renewable energy (electricity, RECs, or both) two times between July 1, 2009 and June 30, 2014. Originally, the legislation required the renewable energy to be from within Massachusetts, however, in June 2010 the Department of Public Utilities issued emergency regulations (220 C.M.R. 17.00 Emergency) striking the in-state requirement, thereby allowing out-of-state renewable energy resources to submit bids.  
 
*The Solar Carve-Out Minimum Standard is 0.0680% (e) of sales by 12/31/2010. This standard is a portion of the Class I standard, not an addition to the standard.  
 
**In November, the DOER suspended consideration of biomass plants utilizing new wood under the RPS. A study was commissioned that analyzed this resource's "sustainability". The Biomass Sustainability and Carbon Policy study was completed in June 2010; DOER will begin the process to amend the RPS based on these results and additional stakeholder input. Additional information regarding the original suspension is available on DOER's Questions & Answers document.  
 
***S.B. 2582 signed in August 2010 amended the eligible system size from 2 MW to 6 MW. The rules will have to be adjusted to incorporate this change.  
 
**** Waste energy is defined as the electrical energy created from combustion of municipal solid waste.  
 
*****The respective renewable energy certificates (RECs) are issued by the New England Power Pool Generation Information System (NEPOOL-GIS) and are technically called GIS Certificates.