Massachusetts is close to implementing a clean peak standard that could bring wider opportunities for microgrid developers. It would also make Massachusetts the first state in the nation to implement the standard.
Based on the premise that renewable energy is good for the environment, but even better if used at the right time, the clean peak standard (CPS) attempts to incentivize clean energy technologies that serve the peak.
It does so by sending a market signal to deliver clean energy when electricity use is highest on the grid, such as extremely hot or cold days.
The program also provides incentives for reducing demand when electricity use peaks on the grid. So for microgrids that provide demand response, the clean peak standard creates a new source of revenue.
Backers of the standard see it as necessary because if clean resources don’t serve the grid during these high demand periods, it’s likely that fossil fuel generation will, which can increase emissions and costs.
Massachusetts issued a straw proposal for the clean energy standard in April, and early in August released its draft rules. Under the current timeframe, the state Department of Energy Resources (DOER) expects to finalize the regulations in first-quarter 2020.
History of the clean peak standard
The clean peak standard concept first gained public attention in 2016 when the Arizona Corporation Commission released a paper, “Evolving the RPS: A Clean Peak Standard for a Smarter Renewable Future,” written by Edward Burgess and Lon Huber at Strategen Consulting.
The basic idea was that renewable portfolio standards (RPS) — requirements by states that a certain amount of energy come from renewables — bolsters clean energy development, but it’s not necessarily designed for use when the grid needs it most. This leads to challenges such as California’s “duck curve” that occurs when solar generation quickly drops off and has to be augmented with peaking plants, often run on fossil fuels.
Strategen proposed building on the traditional RPS framework by adding components, namely that a certain percent of energy delivered to customers during peak load hours must come from clean energy sources. For instance, a 30% standard would mean that 30% of megawatt-hours delivered to customers during a predetermined peak period must come from clean energy.
Massachusetts enacted its clean peak standard in August 2018 with An Act to Advance Clean Energy. Other states also are pursuing the concept. Arizona regulators are in the early stages of creating rules.
California has put into place a law, but it “has no teeth,” said Huber, who is now a director at Navigant. Illinois and New Jersey are considering clean peak standards, and New York’s energy storage roadmap includes provisions for clean peak actions that provides compensation for carbon dioxide reduction that varies with time.
How it works in Massachusetts
Without the standard, Massachusetts would remain “dependent on gas and oil generation to meet our peak demand, resulting in high costs and emissions, despite our substantial investment in clean energy resources,” says the DOER in a presentation describing the program.
Under the law, the DOER sets a baseline minimum of retail electricity sales that are supplied by clean generation or load reduction during seasonal peak periods. The law defines clean peak resources as demand response resources and qualified renewable and energy storage resources that are in service by Jan. 1, 2019.
Microgrids or others would create the clean peak energy certificates by reducing demand on the grid or supplying clean energy at specified times. Utilities and other retail electric suppliers would purchase the certificates to fulfill the mandate set by the state law.
Only certain technologies qualify to generate the certificates: new renewable resources, existing renewables paired with new energy storage, new energy storage that charges primarily from renewables, and demand response resources.
For the purposes of the clean peak standard program, the DOER defines four seasonal peak periods: spring (March 1 – May 14), summer (May 15 – Sept. 14), fall (Sept. 15 – Nov. 30), and winter (Dec. 1 – Feb. 28). By law, the seasonal peak periods must be at least one hour and no more than four hours each weekday, excluding holidays, and they are set for each of the clean peak seasons.
The DOER also proposes the use of multipliers to align the generation of clean peak energy certificates with the times when the qualified resources would have the most impact.
Multipliers adjust the number of certificates a resource would receive for each MWh generated during times of peak demand. They include a seasonal multiplier – 3X for summer and winter and 1X for spring and fall – a 15X multiplier for the highest actual monthly peak, a resilience multiplier of 1.5X for resources that increase energy resilience to outages, and application of the existing state contracted resource multiplier of 0.1X.
What do the draft regulations mean for microgrid developer?
“If a microgrid uses CPS eligible technology, they can participate in the program,” Huber said. For example, in DOER’s draft rules microgrids would fit under the heading of demand response. “If the microgrid responds to peak and scarcity events, then they will get large CPS multipliers,” Huber said.
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