Clean Peak Energy Standard

Summary

On August 9, 2018, An Act to Advance Clean Energy (H.B. 4857) was signed into law, requiring the Department of Energy Resources (DOER) to develop the Clean Peak Energy Standard (CPS). The DOER officially established the first CPS in the nation in July 2020, directing retail electricity suppliers and distribution companies to meet a baseline minimum percentage of sales with qualified clean peak resources (those that dispatch or discharge to the distribution system during seasonal peak periods or reduce system load). Municipal lighting plants in Massachusetts are exempt from the standard. 

Qualified Clean Peak Resources

As part of the CPS, the following are categorized as qualified clean peak resources: qualified energy storage systems (those that are commercially operational or provide incremental new capacity at an existing energy storage system, and primarily store and discharge renewable energy, starting in 2019); qualified RPS resources (a renewable energy generating source that started operations before 2019 and collocates a qualified energy storage system, or is commercially operational starting in 2019); and demand response resources (those that demonstrate changes to load that are measurable and verifiable, and are operational starting in 2019, including certain aggregate demand response resources through Active Demand Response programs, electric vehicle supply equipment, energy storage systems, electric water heaters, load curtailment, metering, and building thermal mass and thermal storage systems; this does not include qualified RPS resources).

Qualified energy storage systems must have a storage duration of at least four hours and must be collocated on the same or adjacent land parcel as RPS Class I or Class II renewable generation facilities within the same utility’s service territory. Energy storage systems certified as a demand response resource are not allowed to be certified as qualified energy storage and do not enable eligibility of Class I and Class II RPS resources as part of a demand response resource.

Minimum Standard

The standard began in 2020 at 1.5% and will increase by 1.5% each year, until reaching 46.5% in 2050; after which the minimum standard will no longer exist. If the market supply of clean peak resources is above 100% in any compliance year before 2030, the standard increases by 3% for the following compliance year. If the market supply is above 120% in any compliance year before 2030, the standard increases by 3.5% for the following compliance year. The DOER may determine a standard adjustment and must review the standard at least every four years starting in 2024. The following chart shows the standard percentage for each compliance year:

Multipliers

The CPS offers several multipliers based on season, resilience, and resources, among other types. Multipliers are reviewed and may be modified at least every four years starting in 2024.

Seasonal: modifies certificates produced during a clean peak season, including Spring (March 1st – May 14th), Summer (May 15th – September 14th), Fall (September 15th – November 30th), and Winter (December 1st – February 28th, adjusted for leap years). Spring and fall each have a multiplier of 1, while Summer and Winter have a multiplier of 4.

Actual Monthly System Peak: modifies certificates generated during the Hour of Actual Monthly System Peak or the highest net demand in a calendar month in the ISO-New England Control Area, and are given a multiplier of 25.

Resilience: modifies certificates generated by facilities that generate power during external outage conditions, which are given a multiplier specific to output during seasonal peak periods determined as follows: 5 PM – 9 PM (Spring), 3 PM – 7 PM (Summer), 4 PM – 8 PM (Fall), and 4 PM – 9 PM (Winter), for a multiple of 1.5. 

Existing Resource: modifies certificates generated by an existing resource, granting them a multiplier of 0.1.

Contracted Resource: modifies certificates generated by contracted resources, granting them a multiplier of 0.01.

SMART ES Resource: modifies certificates generated by a SMART energy storage (ES) resource, granting them a multiplier of 0.3.

Distribution Circuit: modifies certificates generated by a resource based on the “locational value of the unique load profile” and needs of each circuit with a max eligible capacity of 1 MW/circuit. Eligible generation facilities are assigned a multiplier of 2 for years one through 10 of operation, and a multiplier of 1.5 for years 11 through 15. The multiplier is applied to the facility’s certificate production in accordance with the methodology defined on the DOER website. 

Clean Peak Energy Certificates (CPECs)

Certificates are received for each MWh of energy or energy reserves at NEPOOL GIS that are adjusted by multipliers and provided during a seasonal peak period that represents a compliance mechanism. Clean peak resources must register at NEPOOL GIS to receive a CPS identification number, and must also register with the Massachusetts Protection Tracking System (PTS). Non-energy storage demand response resources must register with the Massachusetts Clean Energy Center (MassCEC) PTS. Certificates produced in one compliance year may be used for compliance in three subsequent compliance years.

Alternative Compliance Payment

An Alternative Compliance Payment (ACP) can be made to the MassCEC. The ACP Rate was $45/MWh starting in 2020 and remains at that amount through 2024, after which the rate declines by $1.54/MWh per compliance year; until reaching and remaining at $4.96/MWh in 2050 and thereafter. If the market supply of clean peak resources is above 100% in any compliance year, the rate decreases by $3.08/MWh for the following compliance year. If the market supply is above 120% in any compliance year, the rate decreases by $4.62/MWh for the following compliance year. The DOER may determine a standard adjustment and must review the standard at least every four years starting in 2024. Updates on the ACP rate for the current compliance year can be found on the DOER’s annual compliance information website page. 

Compliance Reporting

Retail electricity suppliers must annually file a compliance filing with the DOER by July 1, or the next first day of business, of the subsequent compliance year. The filing must include the certificates allocated, alternative compliance credits, and electrical energy sales, among other attributes.