Gov. Charlie Baker has introduced a bill to use more clean energy during Massachusetts’ hours of peak grid demand.
The governor included language in a proposed bill to allocate $1.4 billion toward climate adaptation and environmental stewardship. The so-called Clean Peak Standard would require a minimum level of clean energy to supply the most expensive 10 percent of grid hours each year.
The policy would compliment the state’s broader renewable generation goals and ensure that clean energy goes to work at the times when capacity is most valuable. It would likely require the addition of energy storage to make intermittent wind and solar dispatchable on demand.
The Massachusetts proposal echoes a law in California and a proposed clean energy overhaul in Arizona. It tackles the key cost driver for utilities in the coming decades: creeping peak power demand, which would traditionally drive buildout of natural gas plants.
In Massachusetts, the challenge is particularly pronounced: 10 percent of hours in the year contribute around 40 percent of the energy costs that ratepayers must cover, said Patrick Woodcock, assistant secretary of energy.
“We’ve had a long history with the renewable portfolio standard in Massachusetts and that has worked well in encouraging and providing incentives to increase renewables,” he said. “Increasingly, it is very important when we dispatch these resources.”
The bill empowers the Department of Energy Resources to identify which time periods to consider for the clean peak and how much energy during those hours must come from clean sources. The hours in question must contribute “a significant increase in greenhouse gas emissions, or an increase in electrical prices or transmission and distribution costs to end-use electricity customers of the commonwealth.”
Now that the governor has proposed the legislation, it must work its way through the House and Senate, which have been working on their own climate adaptation and energy bills.
“When designed correctly, clean peak standards can have real benefits in meeting energy demand with clean energy,” said Michael Green, executive director of Boston-based Climate Action Business Association.
Green added that he wants to see language that won't lead to additional natural gas consumption, but will drive investment toward clean technologies like storage and microgrids. The text currently leaves it up to DOER to define what qualifies as a clean peak resource, “including, but not limited to” renewables, storage and demand response.
State clean energy policy historically focused on total megawatt-hours produced in a year by wind and solar resources. Markets that increased their share of renewable generation have had to turn to flexible resources to keep the grid balanced when renewables drop off.
That usually means gas plants, but in the last two years energy storage technology has proven itself competitive.
When the Aliso Canyon gas leak left southern California without reliable peak capacity, the state fast-tracked a storage procurement that delivered close to 100 megawatts in 2016 across several dense, urban communities. Storage developers responded with speed that would be impossible with new gas plants.
More recently, bids for Xcel Energy's all-source solicitation shattered records for cheap projects combining renewable generation and storage.
Last month, Arizona Public Service contracted with First Solar for peak power delivery from a joint solar and battery facility. This bid beat out gas plants and standalone solar in an all-source competition, establishing a new model for firm renewable power.
“We need to get our policies caught up to where technology is,” said Lon Huber, head of consulting at Strategen, who developed the clean peak concept on behalf of Arizona’s ratepayer advocate. “States are starting to wake up to the fact that clean technology can do way more they thought it could.”
The Baker Administration has a history of supporting storage growth. It awarded $20 million to a group of storage projects in December. Last summer, DOER set an energy storage target of 200 megawatt-hours by 2020.
A state analysis from 2016 found that 1,766 megawatts would optimize system benefits for ratepayers, but concluded that 600 by 2025 was more feasible and would save residents $800 million in system costs. That level of storage would equate to roughly 5 percent of the state's peak load.
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