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Massachusetts Legislation Spurs Offshore Wind Power Development

On August 8, 2016, Massachusetts Governor Charlie Baker signed into law a major energy bill aimed at putting Massachusetts at the forefront of states developing offshore wind power. The law, An Act Relative to Energy Diversity (H. 4568), requires Massachusetts electricity distribution companies to procure 1,600 megawatts (MW) of offshore wind energy by June 30, 2027. The United States currently has no offshore wind generation, but Rhode Island wind developer Deepwater Wind is nearing completion of a 30 MW offshore wind farm, which will be the first of its kind in the country. In a statement, Governor Baker’s office said the bill “spurs the development of an emerging offshore wind industry…and represent[s] the largest commitment by any state in the nation to offshore wind.”

The new law requires Massachusetts distribution companies and the Department of Energy Resources (DOER) to jointly develop a competitive bidding process for offshore wind energy generation resources by June 30, 2017. The bidding process will be subject to review by the Massachusetts Department of Public Utilities (DPU). The law permits one solicitation or multiple staggered rounds of solicitation that must result in at least 1,600 MW of aggregate nameplate capacity of offshore wind energy. If the solicitation is staggered, each round must seek proposals for at least 400 MW of capacity, and the costs in each subsequent round must decrease or the proposal will be rejected by the DPU. All proposals received during the solicitation process are subject to review by DOER.

Each distribution company will enter into a contract with the solicitation’s winning bidders for the distribution company’s apportioned market share, calculated based on the total energy demand for all distribution companies, compared to demand in an individual distribution company’s service territory. Distribution companies may use the long-term contracts to purchase renewable energy certificates, energy, or a combination. All proposed long-term contracts executed with distribution companies will be filed with the DPU and subject to DPU approval. Specifics on the solicitation, contracting, and approval processes will come when the DPU and DOER promulgate regulations carrying out the new legislative mandate for offshore wind.

The legislation represents a new chapter in offshore wind for Massachusetts. The infamous Cape Wind project—a proposed 468 MW wind farm—has been held up in the planning stages for years and its current status is uncertain. The new law is a definite step towards Massachusetts’ development of offshore wind energy generation resources. Several wind development companies already hold leases in Massachusetts waters.

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Massachusetts DPU Adopts Procedures for Relaxing Eligibility for Net Metering Renewable Energy Facilities

by William Friedman

The Massachusetts Department of Public Utilities (DPU) recently issued an order giving greater flexibility to renewable energy projects seeking to qualify for Massachusetts’ net metering program. Net metering allows the owner of a renewable energy project (such as wind or solar) to receive a retail credit for at least a portion of electricity it generates and feeds back into the grid. In a previous order, the DPU defined the terms facility and unit in order to provide guidance as to which projects can qualify for net metering in Massachusetts.  

The recent order confers on the DPU and local distribution companies flexibility to relax certain eligibility requirements for net metering.  In a previous order, the DPU made eligibility contingent on the generating facility being located on a single parcel of land, with a single point of interconnection, behind a single meter.  While these eligibility criteria offer clear, easily verifiable parameters for net metering projects, they can also inhibit the development of certain net metering projects, such as large public net metering facilities up to 10 MW, which may be safer and more reliable and efficient if interconnected to the electric grid at multiple points.

The DPU’s recent order declines to grant any blanket exemptions from the eligibility criteria, but it does allow individual exceptions to be granted when required for optimal interconnection.  A petition for an exception to the single parcel rule may now be filed with the DPU, and an exception to the single meter or single point of interconnection may now be sought from the local distribution company.  The DPU explained that local distribution companies are best situated to determine what constitutes optimal interconnection on their distribution system.  The order directs the distribution companies to apply a consistent standard in granting exceptions, but it declines to establish additional documentation requirements that must be submitted to the distribution companies. 

Along with their new authority to grant exceptions, the distribution companies have the responsibility to ensure that net metering services are provided only to eligible customers.  The DPU is requiring distribution companies to develop a means of evaluating all customers’ and facilities’ eligibility for net metering services at an early stage of project design.  The distribution companies must submit a joint proposal addressing how they will evaluate eligibility for net metering services and when they will communicate with customers about eligibility.

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Massachusetts Net Metering Projects Face Suboptimal Interconnection Designs

by William M. Friedman

Massachusetts’ net metering program went into full effect in February, but the Massachusetts Department of Public Utilities (DPU) may have inadvertently stymied the program’s growth by issuing an order that prohibits or impedes optimal interconnection of larger projects. The Massachusetts DPU is now considering reversing course.

Under the Massachusetts’ net metering program, local utilities provide billing credit to customers with interconnected renewable energy projects that feed power into the grid. The customer that hosts the project can either use the credit against its own account or assign the credit to another account with the same utility. The amount of interconnected and net metered generation permitted under the program is subject to two separate caps, one for private entities and one for municipalities and other governmental entities. Each cap is at 3 percent of the utility’s highest historical peak load, but the rules that apply to each cap differ slightly.

A net metering facility under the private cap may have a generating capacity up to 2 MW, while a facility under the public cap may have a generating capacity up to 10 MW (each municipality may not exceed 10 MW for all of its departments or subdivisions combined), but is limited to 2 MW per unit. Last year, the Massachusetts DPU issued guidance defining a “unit” as a single turbine for wind facilities, a single piece of generating equipment (e.g., an engine or turbine) for agricultural net metering facilities, or a single inverter for solar net metering facilities. 

The Massachusetts DPU defined “facility” for both the public and private caps as “energy generating equipment associated with a single parcel of land, interconnected with the electric distribution system at a single point, behind a single meter.” This three-part test, however, poses problems for larger capacity projects, particularly those under the public cap, which can potentially have a capacity of up to 10 MW. For larger projects, the distribution company that performs the System Impact Study and designs the interconnect might conclude that a design using multiple points of interconnection is best for safety, electrical reliability and electrical efficiency. While a design with two points of interconnection and two meters might be more appropriate, a facility with more than one point of interconnection will not qualify for net metering credit. The Massachusetts DPU’s definition thereby encourages suboptimal interconnection configurations.

The Massachusetts DPU has recognized the problem its definition caused and is currently considering a fix. In October 2012, the Massachusetts DPU sought comments on whether to allow an exception on the basis of optimizing facility interconnection and how such an exception might work. In response, the local distribution companies tepidly supported an exception to the DPU’s three-part test, emphasizing a clear and workable definition of “facility,” while other commenters were more enthusiastic about an exception. There is no set timeline for the Massachusetts DPU to make a final decision on whether to grant an exception. Since the definitional order was issued, a number of petitions have been filed seeking exemptions from various aspects of the DPU’s rule, and some petitions have [...]

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