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Massachusetts’s New Energy Bill: Insider Insights

Written by David O’Connor and Raj Dhaliwal

While political gridlock at the federal level threatens crucial incentives for renewable power and some states seem to be slowing or at least re-evaluating their policies, a few states are still pressing forward aggressively. One such state is Massachusetts, which recently enacted legislation that expands incentives for developing wind, solar, hydro and other forms of renewable power generation, many of which can support projects throughout the New England states, New York and the nearest three Canadian provinces.  The new law includes more than 50 sections, many of which aim to moderate energy prices. 

Earlier this month, ML Strategies hosted the joint Northeast Energy & Commerce Association and Environmental Business Council event, New Opportunities for Renewable Energy Projects, which brought together key legislators, project developers, utility managers and financiers. The well-attended seminar, moderated by former DOER Commissioner and ML Strategies’ David O’Connor, offered diverse insight as to the details of the new legislation and its impact on the regional marketplace for renewable energy.

State Senator Ben Downing, Co-Chair of the legislative committee that devised the bill said, “We wanted to take stock of what was working well and what needed improving. In the end, I think we were able to fashion solutions that strengthen our commitment to clean energy in a cost-effective way.” His fellow Co-Chairman, State Representative John Keenan added, “Overall, we felt things were going in the right direction but I believe we were able to find ways to improve the value proposition for ratepayers.”

The legislation’s provisions that significantly expand the opportunities and incentives for renewable energy development include:

  • more than doubling of  the amount of power and renewable credits that must be purchased under long term contracts by electric distribution companies;
  • increases in the size of hydroelectric projects eligible for financial incentives under the state’s Renewable Portfolio Standard (RPS);
  • a significant expansion of the opportunities for owners of distributed renewable energy facilities to sell their excess power to other consumers at favorable rates.

The legislature may have expanded the long term contracting obligation to reduce risk for renewable developers, investors and lenders. This would be expected to the lower costs of compliance with renewable mandates for utility ratepayers. Peter Rothstein, President of the New England Clean Energy Council, and a strong advocate for this provision during the legislative process, said, “Long-term contracts let you develop a project at a lower cost and sell the power and the renewable credits at a lower price; rate payers benefit from a cost-effective public policy.”

Prior legislation in Massachusetts allowed retail electricity customers who own solar and other types of distributed power generating equipment to be paid retail rates by their electric distribution utility for electricity they produce in excess of what they consume. Known as “net metering, this policy had been limited  to 3% of each distribution company’s historic peak energy consumption, with 1% reserved for privately owned and 2% for publicly owned installations.” The new legislation raises the overall limit to 6% of peak demand, 3 percent each for privately and publicly owned net metering installations, doubling the amount of consumer generation that will qualify for the retail pricing incentive. Tim Roughan, Director of Energy and Environmental Policy at National Grid, said, “We were at the limit, and without this legislative expansion, we were going to have to turn down a lot of proposals and leave a lot of customers unhappy.” Dan Berwick, Director of Policy and Business Development for Borrego Solar, said that the net metering revenue has already fostered significant solar development by his company and many others, “This expansion creates the potential for that development activity to continue, though we are equally encouraged by the state’s recent announcement that it will increase demand for solar energy in 2013 and beyond.”

If you have questions about Massachusetts’s new energy legislations, or how it will affect your business, please feel free to contact David O’Connor at [email protected].

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