Frequently asked questions about clean energy policies.
#1 What is the Renewable Portfolio Standard and why do we need to increase it?
The Renewable Portfolio Standard (RPS) is the foundation for clean energy markets and a proven policy tool to support successful, cost-effective renewable energy development (see fact sheet on how the RPS works). The Massachusetts RPS requires that retail electricity suppliers provide customers with a minimum percentage of electricity from renewable energy. This percentage currently increases by one percent each year. In 2018, the Massachusetts RPS requires suppliers to purchase enough renewable energy to cover 13 percent of their customers’ retail load; under the existing policy, this number will reach 25 percent by 2030. The current one percent a year increase will not be enough to achieve the state’s clean energy and climate goals.
According to An Analysis of the Massachusetts RPS, if the Massachusetts RPS is not increased, the Commonwealth’s renewable energy market growth will be hampered. Not only will Massachusetts be unable to meet its clean energy and climate goals, but it will not reap the benefits of increased jobs and lower wholesale electric rates that come with increased renewable energy. Specifically, the report finds that increasing the RPS by two to three percent per year will:
Encourage new investment in and deployment of renewable resources in a cost-effective and sustainable manner
Reduce and stabilize wholesale energy prices
Help the Commonwealth fulfill its obligations under the Massachusetts Global Warming Solutions Act to reduce greenhouse gas emissions 25 percent by 2020 and 80 percent by 2050
Create up to 43,000 jobs across New England—and not just in the renewable energy field, but across the entire economy
#2 Why do we need additional legislation following passage of the 2016 Energy Diversity Act to support offshore wind, hydro, and other clean energy resources?
The 2016 Energy Diversity Act created valuable procurement mechanisms to increase clean energy supply. Without an increase in the RPS to balance demand and supply in the market, REC prices will be too low to drive additional renewable energy development in a cost-effective and sustainable manner. Because the RPS increase was left out of the 2016 Energy Diversity Act, the Legislature should pass legislation to increase the RPS in 2018 in order to ensure continued renewable energy development and cost-effective procurements.
How does the Massachusetts Department of Environmental Protection’s (DEP) Clean Energy Standard (CES) affect the RPS and our renewable goals?
In 2017, DEP implemented a policy known as a Clean Energy Standard (CES). The CES covers additional zero- and low-carbon resource types not eligible for the RPS, such as large hydropower from Canada. The CES is a positive policy, but it is not a replacement for or alternative to increasing the RPS to drive development of emerging renewable energy technologies. Moreover, with the likelihood of substantial hydropower procurements, the CES itself will be fully subscribed until well after 2030, and therefore will not drive additional emissions reductions in that timeframe. We need a more ambitious RPS to fully align renewable energy demand with supply and meet the Commonwealth’s climate and public health requirements. An RPS increase would drive development of in-region projects, such as solar, onshore wind, offshore wind, and other Class I renewables, such as anaerobic digestion, small hydro, and geothermal.
#3 Why do the decisions by the Department of Public Utilities (DPU) in the Eversource rate case need to be addressed by the Legislature?
The DPU’s approval of Eversource’s Monthly Minimum Reliability Contribution(MMRC), which includes a mandatory demand charges for new residential net metering customers starting December 31, 2018, will significantly harm residential solar growth in Massachusetts and prevent customers and residents from using solar as a way to effectively manage their energy costs. The approved residential demand charge, which is based on a customer’s highest hour of consumption at anytime during the billing month, is too complex and unmanageable for small customers. With current metering, these customers cannot know when they reach their monthly peak and, as a result, cannot be fairly expected to manage their own peak demand.
The Legislature should pass legislation to clarify that mandatory demand charges are not appropriate for residential customers, particularly without advanced metering and communications that might allow customers to respond to them. In addition, the DPU approved Eversource’s proposal to eliminate opt-in residential time-of-use rates, which represents a clear step away from modern and efficient electricity rates. The Legislature should require utilities to offer opt-in time-of-use rates that are simple to sign up for and easy to understand.
#4 What is a Clean Peak Standard, such as the one proposed by the Baker Administration in the Environmental Bond Bill? How does it relate to the Renewable Portfolio Standard (RPS)?
To begin, it is important to understand that a Clean Peak Standard (CPS) is not a substitute for increasing the RPS. It also is not a substitute for significant energy storage requirements and incentives, and/or a transition to time varying rates for electricity consumers.
A Clean Peak Standard (CPS) has not yet been implemented in any state in the United States. As proposed, it would create a new “clean peak credit” similar to the renewable energy credits (RECs) used in a renewable portfolio standard (RPS). It would require electricity suppliers, including the utilities and competitive electricity suppliers, to purchase a certain percentage of these clean peak credits during a specific set of time periods when energy use is at its peak. As drafted, the Baker Administration’s proposal for a CPS in the environmental bond bill would give the Department of Energy Resources (DOER) flexibility to define what resources would be eligible, what time periods would be defined as peak, and the annual percentage of clean peak resources that suppliers would be required to purchase.
While intended to promote energy storage and better incentives for renewables to produce on peak, there are a number of important concerns that need to be resolved about a CPS:
A narrower definition of eligible resources must be adopted, limited to renewable energy resources, advanced storage, demand response, and energy efficiency. DOER could be given the authority to designate other advanced clean energy technologies that do not use fossil fuels or otherwise adversely impact public health and the environment.
The concept of “peak” has several different potential meanings (overall yearly peak load, transmission peaks, distribution peaks, high emissions periods, and high price periods), and the timing of these peaks (time of day and season) is dynamic and has shifted significantly over time in New England.
There needs to be significant discussion about the implementation and practical impacts of a CPS, including whether small-scale resources such as customer-sited storage and solar can participate, how an annual compliance requirement would contribute to meeting peak needs, and the interaction of the CPS with wholesale electricity markets.
#5 Why does the Legislature need to raise the net metering caps this year?
Massachusetts has again hit the net metering caps in many areas of the state. This means businesses and communities cannot take advantage of the benefits solar can provide, which stalls renewable energy progress and economic growth--as evidenced by the recent loss in jobs in Massachusetts’ solar sector. In 2016, the legislature adjusted the caps by three percent, a short-term solution, which addressed a backlog of stalled solar projects at that time. However, customers continue to demand solar as an effective tool to manage their energy use and reduce their carbon footprint, and there is yet again another backlog of projects.
The Legislature should raise the net metering caps by at least five percent each for public and private projects in 2018 to enable the market to grow. Based on analysis from the Solar Energy Industry Association, five percent cap increases will support another 1,600 megawatts (MW) of solar development and is consistent with Governor Baker’s solar development goals and the new SMART program which will be rolled out in 2018. This increase also provides solar developers the business certainty needed to keep building solar projects and creating jobs in Massachusetts. Among the backlog of stalled projects are many that benefit low-income communities, enabling them to take advantage of the increasingly economic option of solar energy.
#6 Will the new SMART program be a replacement for net metering?
No. The SMART program is not a replacement for net metering, but rather a successor to the Solar Renewable Energy Credit II (SREC II) program. It aims to reduce costs to ratepayers while allowing for sustainable solar development. While DOER envisions having a mechanism through SMART that provides an alternative to net metering through the creation of an “alternative on-bill crediting mechanism,” this mechanism is far from settled. This proposal is now under review at the DPU (DPU 17-140), and a number of critical improvements need to be made to for it to work as intended.
(For additional background, SMART is a new incentive program being developed by DOER that will establish a 1,600 MW declining block incentive program that will apply to all electric distribution companies. Base compensation rates will decline by four percent in each block of capacity. A key feature of the program is that it will include additional incentives known as “adders” for certain types of projects, such as solar projects developed on landfills and brownfields or projects that serve low income customers. SMART is unlikely to be fully implemented until sometime in the third quarter of 2018.)
#7 Why does Massachusetts need legislation on energy storage given the programs launched and announcements made in the last year?
While the 2016 Energy Diversity Act directed DOER to devise a 2020 energy storage procurement target, the Baker Administration ultimately opted for a purely voluntary and relatively conservative goal--the goal selected was lower than what Massachusetts utilities themselves had proposed. In place of an ambitious target, the Administration has awarded grants for demonstration projects and included an incentive in the proposed SMART solar tariff. While positive, these efforts do not demonstrate the long-term commitment to storage that companies need to justify significant investments and hiring in Massachusetts, nor are those efforts likely to result in significant energy storage deployment to support the state in meeting Global Warming Solution Act requirements, integrating renewable energy, and optimizing the electricity system. Massachusetts needs to fulfill its prior legislative intent and create accountability for a longer-term energy storage target.
#8 Why do we need legislation to modernize the electric grid?
Our energy system is evolving rapidly. New technologies could enable a cleaner, more flexible and consumer-centered grid that empowers customer to more effectively manage their energy use and costs. However, regulatory policy is still largely based on a model of large utility distribution and transmission infrastructure connecting centralized power stations. Grid modernization legislation would enable Massachusetts to shift to to a 21st century energy system that takes full advantage of smart appliances, electric vehicles, energy storage, and solar and gives customers more choice in how they manage and use energy. Proposed grid modernization legislation would:
Improve planning for a future of clean local energy resources
Facilitate needed investments in local infrastructure with better stakeholder review
Promote local energy jobs and support the green economy
Protect consumers and use smarter pricing to improve incentives for energy management
Enhance reliability and resiliency
Favor local energy resources when cheaper than traditional transmission for reliability
Lower overall costs to ratepayers while moving away from polluting fuel sources
Offer customers time-of-use pricing options to help manage their consumption and costs
#9 What is Community Empowerment?
Community Empowerment is an enabling piece of legislation that pairs developers of renewable energy projects with communities that want to stabilize energy prices and purchase more renewable energy. The current Massachusetts legislative framework has a gap in long-term financing for renewable energy projects. Community Empowerment looks to bridge this gap by adding another tool to the project financing toolbox through long-term (10-15 year) financeable contracts between town and renewable project developers. These contracts enable necessary financing to develop projects and bring more renewable energy and benefits to the region and local communities. Read more about Community Empowerment.
#10 Why does Massachusetts need carbon pricing?
The Regional Greenhouse Gas Initiative (RGGI) has successfully utilized carbon pricing to reduce climate pollution from power plants. Extending carbon pricing to other pollution sources will help Massachusetts meet its climate commitments and reduce fossil fuel imports, while stimulating clean energy job growth. The transportation sector is the largest contributor to climate pollution in the Commonwealth, and carbon pricing would guide consumers to clean alternatives while raising revenue for rebates and/or reinvestment in a modern transportation system and other green infrastructure. Additionally, a carbon fee provides clean energy developers more confidence in future markets for their products and workforce. Carbon pricing policies can be designed to offset cost and competitiveness impacts through strategic rebates to businesses and consumers who pay high energy costs, and through investment in complementary programs to reduce emissions and energy costs.
Massachusetts has some of the nation’s most ambitious climate and energy policies—and one of the strongest economies in the country. Since 1990, Massachusetts’ economy has grown by 70 percent, even as greenhouse gas emissions declined 21 percent. The clean energy industry now supports nearly 110,000 jobs and has expanded by 81 percent since 2010, and a price could drive additional clean energy sector and overall economic growth.
#11 How could home energy ratings or labeling help advance clean energy in buildings?
Massachusetts has made progress improving the energy performance of buildings through the nation-leading MassSave efficiency programs and programs that support rooftop solar. However, consumers still lack basic information on building energy usage, which could easily be provided through building energy labeling. Barriers to deployment of clean heating and cooling technologies also need to be addressed in order to enhance consumer choice and reduce fossil fuel dependence.
#12 What role does financing play in advancing clean energy in buildings?
Financing can play an important role enabling commercial and residential consumers to make efficiency upgrades and add renewable energy to their buildings. Massachusetts has a number of programs to enable financing, such as the HEAT Loan, but new financing tools could address gaps such as combined energy efficiency and renewable energy retrofits. Transparent disclosure of financing terms and strong consumer protections must accompany any financing mechanisms.
#13 Why is legislation required for electric vehicles (EVs)?
Massachusetts has committed to put 300,000 EVs on the road by 2025. A number of policies are needed to support this large-scale deployment. Reduced electric rates for charging at night will improve the economic appeal of EVs and reduce impacts on the grid. Building code reforms, rebates for charging stations, and grants to municipalities will help deploy infrastructure needed to charge EVs. Incorporating EVs into electricity demand projections and grid planning will ensure that the Commonwealth’s grid is prepared for impacts of widespread EV deployment and can utilize flexible EV charging and discharging to balance renewable energy.
#14 Does Massachusetts have high electricity costs?
Electric bills for Massachusetts households are below national averages. In fact, electric bills for Massachusetts homeowners rank between 30th and 40th in the country. Although rates, or the cost per unit of power, are higher in Massachusetts than in other states, our residents tend to use less energy overall than those in other states. That’s in large part because of our state’s award-winning efficiency programs, which have also created tens of thousands of jobs. Overall, for every $1 we invest in efficiency, we get nearly $5 in benefits.
#15 How do ACES’ legislative priorities relate to calls to power Massachusetts with 100 percent renewable energy?
Achieving a 100 percent renewable energy-based energy system will require coordinated action across Massachusetts and the region. The policies supported by ACES, such as an increase in the state’s RPS requirements to 50 percent by 2030 will ensure that we continue the current momentum toward a modern, renewable energy economy.