Massachusetts' 1997 electric-utility restructuring legislation created the framework for a renewable portfolio standard (RPS). In April 2002, the Massachusetts Department of Energy Resources (DOER) adopted RPS regulations. The RPS was significantly expanded by legislation enacted in July 2008 (Green Communities Act, S.B. 2768), which established two separate renewable standards -- a standard for “Class I” renewables, and a standard for “Class II” renewables -- as well as an Alternative Energy Portfolio Standard.
Class I Requirements (New Resources)
Under the Class I Renewable Portfolio Standard, all retail electricity suppliers must provide a minimum percentage of kilowatt-hour (kWh) sales to end-use customers in Massachusetts from eligible renewable energy resources installed after December 31, 1997, according to the following schedule:
1.0% of sales by 12/31/2003
1.5% of sales by 12/31/2004
2.0% of sales by 12/31/2005
2.5% of sales by 12/31/2006
3.0% of sales by 12/31/2007
3.5% of sales by 12/31/2008
4.0% of sales by 12/31/2009
5.0% of sales by 12/31/2010 *
6.0% of sales by 12/31/2011
7.0% of sales by 12/31/2012
8.0% of sales by 12/31/2013
9.0% of sales by 12/31/2014
10.0% of sales by 12/31/2015
11.0% of sales by 12/31/2016
12.0% of sales by 12/31/2017
13.0% of sales by 12/31/2018
14.0% of sales by 12/31/2019
15.0% of sales by 12/31/2020, and an additional 1% of sales each year thereafter, with no stated expiration date
Eligible Class I resources include: solar photovoltaics (PV); solar thermal electric energy; wind energy; ocean thermal, wave, or tidal energy; fuel cells utilizing renewable fuels; landfill gas; energy generated by certain new hydroelectric facilities, or certain incremental new energy from increased capacity or efficiency improvements at existing hydroelectric facilities; low-emission advanced biomass power conversion technologies using fuels such as wood, by-products or waste from agricultural crops, food or vegetative material, energy crops, algae, biogas, or liquid biofuels; marine or hydrokinetic energy; and geothermal energy.
Solar Carve-Out and Solar Carve-Out II
Starting in 2010, retail suppliers must provide a portion of the required renewable energy under the Class I Standard from qualified in-state, interconnected solar facilities. The original Solar Carve-Out requirement was 400 MW. Applications for facilities seeking qualification under the Solar Carve-Out stopped being accepted in April 2014 when the Solar Carve-Out II Program came into effect. The Solar Carve-Out II requires 1,600 MW of solar by 2020.
Qualifying solar facilities (officially known as “Solar Carve-Out II Renewable Generation Units” in the regulations) must be 6 MW (direct current DC) or less, and must have become operational after December 31, 2012. Solar Carve-Out facilities cannot also qualify as Solar Carve-Out II facilities. The Solar Carve-Out II Minimum Standard for compliance year 2015 is 0.3288%; for compliance year 2016, it is 0.7851%.*** The Solar Minimum Standard is calculated by dividing the annual solar compliance obligation in megawatt-hours (MWh) by the total RPS load obligation from the previous two years. The solar compliance obligation in turn is based on the difference in the Solar Renewable Energy Certificates (SRECs) generated during the past two years (see the DOER regulations for calculations and additional guidance). When 1,600 MW (DC) of qualifying solar facilities have been installed under both the Solar Carve-Out and Solar Carve-Out II programs, no additional solar facilities will be qualified for the Solar Carve-Out II, although they would be eligible to qualify as a RPS Class I Renewable Facility and continue to satisfy the overall Class I Standard.
DOER is in the process of implementing a new solar incentive program to succeed the SREC II program. This program will not be an SREC program or tied to the state's RPS.
Class II Requirements (Existing Resources)
The Class II RPS requires all retail electricity suppliers to provide annually a percentage of kWh sales to end-use customers in Massachusetts from Class II renewables, starting in 2009. Eligible Class II renewables include systems operating before January 1, 1998, that generate electricity using solar PV; solar thermal electric energy; wind energy; ocean thermal, wave or tidal energy; fuel cells utilizing renewable fuels; landfill gas; energy generated by certain existing hydroelectric facilities up to 7.5 megawatts (MW) in capacity; low-emission advanced biomass power conversion technologies using fuels such as wood, by-products or waste from agricultural crops, food or vegetative waste, energy crops, biogas, or liquid biofuels; marine or hydrokinetic energy; or geothermal energy. The Minimum Standard in 2014 is 1.8% and increases to 2.0% in 2015. Beyond 2015, it is calculated per a formula established in regulation.
Class II Waste Energy Requirements
In addition, there is a separate Class II Waste Energy Minimum Standard that requires all retail electricity suppliers to provide annually 3.5% of kWh sales to end-use customers in Massachusetts from waste energy** starting in 2009. Eligible waste energy generation units must have and maintain a state-approved recycling program, must comply with Massachusetts Department of Environmental Protection’s air pollution and solid waste management regulations, and must allocate at least 50% of any revenue received from the sale of renewable energy certificates (RECs) generated to its recycling programs.
Retail electricity suppliers demonstrate compliance by submitting, in an annual compliance filing to the DOER, documentation that Class I RECs, Solar Carve-Out Renewable Energy Certificates (SRECs), Solar Carve-Out II Renewable Energy Certificates (SREC IIs), Class II RECs, and Class II Waste Energy Certificates have been secured.*** These certificates represent the environmental attributes of one megawatt-hour (MWh) of generation from an eligible facility under each class category. RECs generated in one year may be banked and used for compliance in either or both of the two subsequent years. In order to facilitate robust SREC I and SREC II markets that not only respond to market conditions but also provide price support, the DOER has created the Solar Credit Clearinghouse, which exists under each program.
Alternative Compliance Payments
Retail suppliers may pay the alternative compliance payment (ACP) if they are unable to procure enough renewable energy attributes, however the ACP rates are designed to be higher than the market price of RECs, SRECs, and SREC IIs. The DOER determined the initial ACP rate for each resource category. The ACP rates for Class I, Class II, and Class II Waste Energy increase (or decrease) annually based on the Consumer Price Index of the previous year. The Solar Carve-Out and Solar Carve-Out II ACP rates decrease annually per 10-year schedules. The following table provides the base year ACP rate and current ACP rates: