Massachusetts Lawmakers Pass Bill that Opens New Prospects for Microgrids
Energy insiders see the emergence of new microgrid opportunities in Massachusetts from clean energy legislation passed last week and now awaiting the signature of Gov. Charlie Baker.
An Act to Advance Clean Energy (H.4857) won unanimous Senate support and near-unanimous House support, with only one nay vote.
The legislation opens up prospects for microgrids via several pro-distributed energy initiatives.
“HR 4857 is a positive for microgrids, storage, combined heat and power, and cogenerated district energy,” said Jack Griffin, vice president and general manager of Boston-based SourceOne, an energy consulting arm of Veolia, an international energy, water, and environmental services company.
Griffin noted in particular the bill’s energy storage target, its utility resiliency heat maps, and its potential solicitations for non-wires alternatives (NWAs), which are distributed energy projects undertaken in lieu of traditional utility infrastructure.
Some of the programs were borrowed from another energy bill, H.4739, which focused on grid resiliency and won House approval July 12.
Among them is a requirement that utilities create annual resiliency reports with heat maps. In doing so, utilities would indicate peak energy usage times and congested areas of the distribution grid. The maps also would note places subject to outages due to high demand, lack of local energy, or severe weather. The information could help developers determine where best to propose non-wires alternative projects, such as microgrids.
The reports and maps dovetail with another provision in the bill that gives utilities the option to seek out third parties via competitive solicitations to develop the non-wires alternatives .
In selecting bid winners, utilities would consider both monetary and non-monetary benefits of the non-wires alternatives. These might include improving resiliency, reducing greenhouse gas emissions, lowering peak demand, easing congestion in stressed areas of the grid, and serving low-income areas.
“The legislation includes a number of innovative provisions that promote microgrid development. Utility resiliency reports will spotlight valuable locations for microgrid development, and authorized procurements of non-wires alternatives take the novel approach of accounting for resiliency improvements in addition to monetary benefits,” said Peter Shattuck, vice president, special situations for Anbaric, a Massachusetts-based developer of microgrids and transmission.
Devil in the details
While the bill appears promising for microgrids, the devil is in the details as regulators, policymakers and utilities enact the new programs. For example, the non-wires alternatives solicitations will only be effective if they fairly stack the bids against conventional energy infrastructure.
“It will be curious to see if an apples to apples comparison unfolds in Massachusetts,” said Steve Pullins, vice president, development of Boston-based Dynamic Energy Networks, a microgrid developer, owner and operator. “In other states who are piloting NWA approaches, we often see the cost benefit analysis for the traditional ‘wires’ solution using a 50-year asset life, while in the NWA RFP the solution is limited to a 10-yr asset life. Providing a NWA solution for 50-years is doable by providers, but not allowed in the NWA RFP. Because of this, most NWA RFPs are set to fail the comparison.”
The legislation also puts the state on the path to install 1,000 MWh of energy storage by December 31, 2025. It envisions the Division of Energy Resources (DOER) using several strategies to meet the target, including incorporating storage in existing energy portfolio standards and providing funds for pilot programs.
Beginning in February, utilities will be required to file annual reports documenting energy storage projects within their service territories.
Mobile energy storage also gains some stature in the state, with the bill requiring the DOER to examine its use during periods of extreme weather and power outages. During non-emergencies, the mobile storage would be available to shave peak demand.
The legislation makes changes to the state’s renewable portfolio standard, increasing to two percent annually the amount of energy utilities and retail suppliers must procure from renewables. The two percent standard is in effect until December 31, 2029, when it falls to one percent annually. The new requirement is expected to make renewables 35 percent of Massachusetts electric sales by 2030, up from the previous target of 25 percent.
New clean peak certificates
Notably, the legislation also adds to the RPS a new tradable product, known as clean peak certificates, created from energy storage or demand response resources that offsets peak energy use. Each certificate represents a megawatt hour of energy use avoided. Beginning next year, utilities and competitive retail suppliers must make 0.25 percent of their sales with the certificates.
Last, offshore wind is a winner in the bill, which requires utilities to add up to 1,600 MW via competitive solicitation. Large wind farms may open the door for more microgrids to provide balancing for the grid. The microgrids absorb or eject electricity depending on whether or not the wind is blowing to keep supply and demand in balance.
Gov. Baker has yet to sign the legislation; however, sources say they have heard of no opposition from his administration, so expect his signature.
What are your thoughts on the microgrid opportunity in Massachusetts? What more can the state do? Post your thoughts below or on our LinkedIn Group, Microgrid Knowledge.
