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Massachusetts State Energy Plan Envisions More Renewable Energy Procurements, Other Mandates

Says Policymakers Should, "Explore Options," To Mitigate Price Volatility

December 13, 2018

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Copyright 2010-17
Reporting by Paul Ring •

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The administration of Massachusetts Gov. Charlie Baker released a Comprehensive Energy Plan which envisions more clean energy procurements, and other mandates for the electricity supply sector.

The plan also recommends that policymakers should, "Explore options for ensuring reliability and mitigating price volatility in the winter months."

The plan does not address the entities which would be responsible for the renewable energy procurements or other mandates (e.g. utilities or all LSEs), and does not address cost recovery, or disposition of any procured supply, under the recommendations.

To date, certain Massachusetts long-term renewable procurements have been conducted by utilities with costs recovered from all customers on a nonbypassable basis, with products sold into the wholesale market and not used for basic service. However, the EDCs, prior to applying for cost recovery, typically had the discretion to propose either recovery via nonbypassable charge (with products sold at wholesale), or allocation of the procured supply to basic service.

The Comprehensive Energy Plan supports greater Time of Use rates, storage, and microgrid development, but does not opine on which entities should offer such services.

The plan recommends, among other things, the following strategies:

Continue to increase cost-effective renewable energy supply

• Investigate policies and programs that support cost-effective clean resources that are available in winter to provide both cost and emission benefits to customers. These additional policies may include continued clean energy procurements, especially if strategic electrification policies are successful and total demand for electricity increases. Modeling aggressive renewable energy in the High Renewables and Aggressive Conservation and Fuel Switching scenarios included approximately 16,000,000 MWh of clean energy to approximate an outcome with significant emissions reductions by 2030. The exact amount of additional clean resources needed will depend on the 2030 GHG emission reduction limit selected and the extent of other complementary policies.

• Consider policies to support distributed resources, including distributed solar development in the Commonwealth after the SMART program concludes, to continue lowering costs while providing benefits to ratepayers. As DOER continues to implement the SMART program, it will periodically evaluate the impact of the program on development of solar generation and ratepayer costs. Potential policies could include extending the SMART program beyond 1600 MW by adding additional declining incentive blocks to the program.

Prioritize electric energy efficiency and peak demand reductions

• Implement policies and programs, including the Clean Peak Standard, that incentivize energy conservation during peak periods. Reducing energy demand at times of peak use creates the most value for consumers because it reduces reliance on the highest cost, less efficient generating resources. Also, by creating more level demand on the electric grid across all hours, transmission and distribution infrastructure can be utilized more efficiently, mitigating the need for additional new investment.

• Develop policies to align new demand from the charging of EVs and heating/cooling with the production of clean, low-cost energy. Review options including a Time-of-Use Rate for EV charging so charging aligns with periods when electricity prices are lowest and mitigates any added strain on the system from additional electric demand. Investigate incentives for the pairing of air source heat pumps with distributed solar and/or energy storage.

• Include cost-effective demand reduction and additional energy efficiency initiatives in our nation-leading energy efficiency programs and plans. As demand for electricity grows, programs to mitigate this demand provide large savings to consumers. Expanding Massachusetts’ nation-leading energy efficiency programs to encourage efficiency and demand reduction initiatives at customers’ homes and businesses in a cost-effective manner will deliver significant benefits to consumers.

Support grid modernization and advanced technologies

• Promote cost effective microgrids to provide greater overall grid resiliency and reduce transmission and distribution costs from building out the grid to meet new demand.

• Review existing and possible new policies to support new technologies, including energy storage, that can align supply and demand and provide grid flexibility. The electric sector is a just-in-time supply chain, where supply and demand must always be balanced. Historically, in order to assure the ability to meet that balance, we have built infrastructure to meet peak demand. Policies which align supply and demand enable the shift away from substantial overbuild of infrastructure while enabling flexibility to continue to adopt intermittent resources.

Examine potential strategies to lower the price of natural gas and mitigate natural gas constraints

The plan says that, "Even with aggressive investment in new clean electricity sources, demand reduction and energy efficiency measures, there remain reliability and price volatility risks in the winter for the electric sector."

Mitigating natural gas constraints would eliminate the need to turn to high cost, "carbon-intensive" oil to satisfy demand during an extended cold weather event. The report says that strategies could include (among others):

• Encourage contracting with LNG supply ahead of the winter to ensure LNG supplies are available to be used by gas-fired generators. LNG requires substantial logistical planning ahead of winter deliveries. While firm long-term LNG contracts may increase costs in mild winters, the combination of cost savings and fuel security may offset those costs in an extreme cold event winter. The terms of the contract would determine the magnitude and the impact of the associated cost allocation.

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