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Understanding the Massachusetts Clean Peak Standard

by | Nov 20, 2019 | Industry News, Massachusetts

About the Author:

Buddy Wilt, NABCEP-Certified Master Electrician at Independent Power Systems

Buddy Wilt

Buddy Wilt is a Massachusetts-based, NABCEP-Certified Master Electrician with more than eight years of experience in the solar PV industry as a project manager and operations manager.  Now he is focused on the development of the power storage and microgrid industry as it relates to solar PV. With his construction background, knowledge of the NEC, and business sense, he is able to understand and provide insight and solutions for the challenges in the storage and microgrid industry as it grows.

Massachusetts has utilized legislative policies successfully to bolster its solar industry. Tax exemptions, state-funded loans, and programs like the Solar Massachusetts Renewable Target (SMART) have propelled the state to the 10th most solar installations in the country in the first quarter of 2019. The Massachusetts Clean Peak Standard will soon join these programs by adding a policy motivation specifically for renewable generation and energy storage projects that contribute to the grid when the demand for electricity is highest.

These times of high electricity demand are called peak demand and they usually occur in the morning and/or later afternoon, depending on the season. Renewable energy generators, such as solar, are often not producing at full capacity during these peak demand periods. This is the challenge the Massachusetts Clean Peak Standard is taking on. Through new requirements on electricity suppliers and incentives for renewable generation and clean storage, the Clean Peak Standard hopes to provide more clean energy when the grid needs it most.

History of Massachusetts Clean Peak Standard

The concept of a Clean Peak Standard is relatively new, first gaining attention in a 2016 white paper for the Arizona Residential Utility Consumer Office. A Clean Peak Standard is an evolution of the widely adopted renewable portfolio standards (RPS), which require a certain amount of a state’s energy to come from renewables. The Clean Peak Standard builds on this concept by setting clean energy requirements specifically for peak demand periods.

The conventional strategy for meeting peak demand is to use “peaker plants”— natural gas plants that fire up only for high demand periods. There are currently 20 such plants operating in Massachusetts. Natural gas peaker plants became the standard because they are quickly dispatchable, meaning they can rapidly provide on-demand power to the grid. However, the power from peaker plants is significantly more expensive than regular baseload plants and typically more polluting. By reducing the use of peaker plants, the Massachusetts Clean Peak Standard hopes to create major cost savings and emissions reductions.

Massachusetts is the first state to enact a Clean Peak Standard, though other states may soon follow. Arizona is evaluating an energy modernization plan that includes a Clean Peak Standard. California passed SB 338 in 2017 which has objectives that could be met via a Clean Peak Standard but does not mandate one. New York and New Jersey have also shown interest and will certainly be watching Massachusetts closely in 2020.

The Massachusetts Clean Peak Standard was signed into law in August of 2018 as one of several renewable energy strategies in the “minibus” bill An Act to Advance Clean Energy. This bill was a more modest compromise of the original Senate proposal, but the nation-leading Clean Peak Standard was preserved. The Massachusetts Department of Energy Resources (DOER) was charged with developing the Clean Peak Standard and the finalized regulations are expected in the first quarter of 2020. The current draft of the regulations can be viewed here.

How does a Clean Peak Standard Work?

It starts with Clean Peak Resources (CPRs), which are resources that meet certain requirements set by DOER. CPRs can include new renewables, new energy storage primarily charged from renewables, existing renewable paired with energy storage, and demand response resources. When qualifying CPRs generate or discharge during peak demand periods, they earn Clean Peak Energy Certificates (CPECs).

Massachusetts has utilized legislative policies successfully to bolster its solar industry. Tax exemptions, state-funded loans, and programs like the Solar Massachusetts Renewable Target (SMART) have propelled the state to the 10th most solar installations in the country in the first quarter of 2019. The Massachusetts Clean Peak Standard will soon join these programs by adding a policy motivation specifically for renewable generation and energy storage projects that contribute to the grid when the demand for electricity is highest.

These times of high electricity demand are called peak demand and they usually occur in the morning and/or later afternoon, depending on the season. Renewable energy generators, such as solar, are often not producing at full capacity during these peak demand periods. This is the challenge the Massachusetts Clean Peak Standard is taking on. Through new requirements on electricity suppliers and incentives for renewable generation and clean storage, the Clean Peak Standard hopes to provide more clean energy when the grid needs it most.

History of Massachusetts Clean Peak Standard

The concept of a Clean Peak Standard is relatively new, first gaining attention in a 2016 white paper for the Arizona Residential Utility Consumer Office. A Clean Peak Standard is an evolution of the widely adopted renewable portfolio standards (RPS), which require a certain amount of a state’s energy to come from renewables. The Clean Peak Standard builds on this concept by setting clean energy requirements specifically for peak demand periods.

The conventional strategy for meeting peak demand is to use “peaker plants”— natural gas plants that fire up only for high demand periods. There are currently 20 such plants operating in Massachusetts. Natural gas peaker plants became the standard because they are quickly dispatchable, meaning they can rapidly provide on-demand power to the grid. However, the power from peaker plants is significantly more expensive than regular baseload plants and typically more polluting. By reducing the use of peaker plants, the Massachusetts Clean Peak Standard hopes to create major cost savings and emissions reductions.

Massachusetts is the first state to enact a Clean Peak Standard, though other states may soon follow. Arizona is evaluating an energy modernization plan that includes a Clean Peak Standard. California passed SB 338 in 2017 which has objectives that could be met via a Clean Peak Standard but does not mandate one. New York and New Jersey have also shown interest and will certainly be watching Massachusetts closely in 2020.

The Massachusetts Clean Peak Standard was signed into law in August of 2018 as one of several renewable energy strategies in the “minibus” bill An Act to Advance Clean Energy. This bill was a more modest compromise of the original Senate proposal, but the nation-leading Clean Peak Standard was preserved. The Massachusetts Department of Energy Resources (DOER) was charged with developing the Clean Peak Standard and the finalized regulations are expected in the first quarter of 2020. The current draft of the regulations can be viewed here.

How does a Clean Peak Standard Work?

It starts with Clean Peak Resources (CPRs), which are resources that meet certain requirements set by DOER. CPRs can include new renewables, new energy storage primarily charged from renewables, existing renewable paired with energy storage, and demand response resources. When qualifying CPRs generate or discharge during peak demand periods, they earn Clean Peak Energy Certificates (CPECs).

These CPECs can then be sold to retail electricity suppliers, who must meet a minimum purchase requirement based on their total retail sales. This process is akin to Massachusetts’ successful Solar Renewable Energy Credit (SREC) program, which is a market for solar owners to sell SRECs to utilities to help them meet their renewable energy requirements.

DOER establishes the exact timing of these peak periods each year, with slight adjustments made for each season. The current draft regulations have each seasonal peak period running for a 4-hour span on weekday evenings, starting the earliest in the summer and latest in spring. There is also a multiplier component in the Clean Peak Standard that awards more CPECs for resources that have a larger impact. For example, the peak demand in summer and winter is significantly higher than the rest of the year so there is a 3X multiplier for CPECs earned during those seasons.

What’s Next for the Massachusetts Clean Peak Standard?

There are high hopes for the Massachusetts Clean Peak Standard and many will be watching in 2020 for the final version of the policy. A cost-benefit analysis for the Massachusetts Clean Peak Standard showed that in 10 years, ratepayers could see a net savings of $710 million while reducing 560,000 metric tons of CO2 emissions. Such huge economic and environmental returns hinge on how much the need for peaker plants is lowered. Peaker plants have already been facing a growing challenge from renewables and battery storage and the Clean Peak Standard only strengthens that challenge. A recent study shows that since 2008, Massachusetts increased its annual solar generation 170-fold while adding 9 megawatts of energy storage. Once finalized, the Massachusetts Clean Peak Standard looks to apply those resources for maximum effect.

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Understanding the Massachusetts Clean Peak Standard

The Massachusetts Clean Peak Standard builds on renewable energy development in the state by setting clean energy requirements specifically for peak demand periods.

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