DOER Releases Proposed Procurement Process for Clean Peak Energy Certificates

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Foley Hoag LLP - Energy and Cleantech Counsel

On January 22, 2021, the Massachusetts Department of Energy Resources (“DOER”) released a proposed procurement process for clean peak energy certificates. See our former posts on the clean peak standard final regulations and implementation for more information on the program. DOER is accepting comments on the proposed procurement process until February 19, 2021, and a DOER summarized Questions and Answers document is available here.

The stated procurement objectives are to spur new and incremental clean peak resource development, provide revenue certainty for clean peak resources to enable financing, and provide cost-effective clean peak energy credit supply (“CPEC”).

DOER proposes that EDCs issue requests for proposals (“RFP”) twice-per-year to select winning bids from resources that produce CPECs. Awarded bids will be enrolled in a tariff for payment. That tariff will provide $/CPEC as awarded for a 6-year term. DOER intends to exclude new projects receiving SMART incentives, 83C contracted offshore wind resources, new energy storage projects receiving a SMART adder incentive for energy storage, and connected solutions Energy Storage Systems (“ESS”) because these projects already receive long-term revenue from other state programs. DOER proposes that, initially, only 30% of the EDCs’ procurement target will be met through the RFP and tariff process. DOER plans to count CPECs from EDC owned CPS resources, SMART Solar Tariff Generation Units, and Section 83C offshore wind towards the remaining procurement requirements but will not include these resources in the procurement or compensate them through the tariff.

Pursuant to 225 CMR 21.05(8), CPEC “procurements shall be designed to achieve an initial target of 30% of the total market obligation of Retail Electricity Suppliers in a given Compliance Year.” DOER proposes using the following formula to determine the number of CPECs in each RFP to comply with the 30% requirement.

Targeted Annual # of CPECS in tariff = target – met with other procured CPECs [self-owned (limited), SMART, offshore wind]]
DOER further clarified this formula in the Q&A document as follows:
• “Target” refers to the percentage of total (including outside of the tariff) market obligation of Retail Electricity Suppliers in each compliance year; and “met with other procured CPECs” refers to    CPECs produced by other EDC resources such as SMART Solar Tariff Generation Units and offshore wind that are excluded from the tariff.

DOER is authorized to adjust the tariff size of 30% of the total EDC procurement target up or down depending on whether the CPEC market is oversupplied or undersupplied. An undersupplied market will see the 30% procurement target increase while an oversupplied market will see this number decrease.

DOER hopes to have the EDCs file its tariffs and draft the initial RFPs, in consultation with DOER, in Q2 of this year, and release the first RFPs by the end of 2021.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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