• Demand Response
  • Renewable Energy Resources
  • Energy Storage
  • solar PV

Massachusetts Clean Peak Standard Could Drive New Electrification Opportunities

Feb 20, 2019

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In 2018, Massachusetts passed a Clean Peak Standard (CPS) that requires the state’s Department of Energy Resources to designate a baseline minimum percentage of retail electricity sales that must be met with clean generation resources or load reductions during seasonal peak periods. Under the law, clean peak resources are defined as demand response (DR) resources as well as qualified renewable and energy storage resources with a date of service on or after January 1, 2019. Significant work remains to be done to put the baseline details and rules in place in Massachusetts, but it is not too early to look at what kind of technologies might be best positioned to meet CPS and customer needs.

Clean Peak Standard and Beyond

CPS is a regulatory construct pioneered by Guidehouse’s Lon Huber that mirrors a renewable portfolio standard (RPS). An RPS creates a mandate that a certain percentage of megawatt-hours of renewable energy must be supplied to the grid. A CPS requires a certain number of megawatts supplied to the grid during peak energy use periods to come from clean resources. The purpose of a CPS is to encourage low carbon energy resources that can reliably meet peak demand.

There are other low carbon policy levers that can be pulled to reduce the carbon intensity of peak demand beyond a CPS. One example is technology-dependent time-of-use tariffs, where utility tariffs are developed and aligned to reliably balance customer electricity use or self-generation during peak demand events with less carbon-intensive assets. Another example is a sector-based strategic electrification technology incentive that can also meet peak demand carbon intensity reduction. A good example of this type of program is the recent approval of a Con Edison natural gas DR program. This program specifically highlights technologies that “convert natural gas applications of firm gas customers to efficient electric applications or other low carbon fuel sources,” such as air source heat pumps and heat pump water heating. 

Moving Forward in Massachusetts

In Massachusetts, there is recent alignment of interest between third-party developers and utilities for solar PV and energy storage assets related to the ownership of capacity market injection rights. Moving forward, this alignment positions distributed solar PV coupled with energy storage as a key player in the Massachusetts CPS. As highlighted in Guidehouse Insights’ recent report, Strategic Electrification Offers Load Growth and Carbon Reduction Opportunities, standalone distributed solar PV subject to intermittent generation cannot reliably reduce the use of carbon-intensive peak power or provide reliable local grid benefits. Solar PV coupled with battery energy storage can provide a diverse array of customer and grid benefits that solar PV alone cannot. Guidehouse Insights will be keenly tracking Massachusetts' CPS developments as the details of the program implementation requirements begin to emerge.