Massachusetts expands incentives for additional renewable technologies

Solar thermal, ground source heat pumps, and air source heat pumps among renewables included in Alternative Portfolio Standard at higher certificate prices, backdated to January 2015.

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Massachusetts institutions that have invested in, or are considering investments in, alternative “clean” thermal energy technologies—such as solar thermal, ground-source heat pumps, and air-source heat pumps—could be eligible for additional returns on their investments.

In parallel with the Renewable Energy Portfolio Standard (RPS), which obligates utilities to purchase increasing amounts of renewable electricity to serve their customers, Massachusetts also has an Alternative Portfolio Standard (APS) that obligates utilities to purchase non-traditional sources of thermal energy.

Alternative Energy Certificates (AECs )are similar to Renewable Energy Certificates (RECs), in that they enable utilities to meet their renewable portfolio standard by purchasing certificates representing 1 MWh of alternative energy generated by institutions and residences.

The new rules, issued on December 29, 2017, expand the APS to apply to thermal energy sources an addition to the electric generation sources to which it previously applied. Like the RPS, the APS is priced per megawatt hour (MWh). It also has an alternative compliance payment (ACP) that serves as both a cap on prices and a path for utilities to meet shortfalls in their regulatory obligations.

While the RPS has had a surplus of renewable electricity, driving the market rate of renewable energy certificates well below the ACP cap, the APS has had a shortfall to date. Thus, the current value of APS certificates appears to be near the capped price of $22.23 per MWh.

Institutions employing certain technologies could enjoy price increases on the sale of alternative energy certificates by way of multipliers, which will be applied to spur more rapid adoption. For example, under the new system, an alternative energy certificate for a ground-source heat pump is worth five times more than the base certificate price. Thus, if the base certificate price is $22.23, one MWh of equivalent net thermal output from a ground-source heat pump will be 5 x $22.23, or $111.15. Below is a list of alternative energy technologies and multiplying factors.

  • Active solar hot water systems for domestic hot water: x 3
  • Active solar hot water systems for domestic hot water, space condition, or process loads: x 1
  • Ground-source heat pumps: x 5
  • Air-source heat pumps that: a. supply less than 100% of building heating load, and b. have output capacity ≤ 134,000 Btu per hour: x 2
  • Air-source heat pumps (all other): x 3
FREQUENTLY ASKED QUESTIONS

Q. What is different about the DOER’s new guidelines?

A. The most significant change to the new guidelines on alternative renewable energy certificate pricing is that the definition of “renewable” (non-emitting) sources has been expanded to include thermal energy sources, such as ground-source heat pumps, air-source heat pumps, and solar thermal.

Q. Are the new guidelines retroactive, and if so, to when?

A. The Massachusetts Department of Energy Resources (DOER) guidelines were effective immediately upon their issuance on December 29, 2017; however, the DOER may consider exceptions in the case of renewable thermal generation units (RTGUs) that went into commercial operation prior to the issuance date, not earlier than January 1, 2015.

Q. What are the requirements for system verification and reporting?

A. Systems with heating capacity greater than 134,000 Btu/hour are required to verify net output based on metered data. This verification must be performed by an independent verification system or person participating in the New England Power Pool Generation Information System (NEPOOL GIS) accounting system as an independent third-party meter reader.

Q. Is biomass a technology that would be eligible for alternative energy certificates under this program?

A. Biomass systems are eligible with some limitations and restrictions. Note that net thermal energy is thermal energy output minus source fuel for electric energy input, based on an average grid efficiency of 44%. (See Commonwealth of Massachusetts, Executive Office of Energy and Environmental Affairs, Department of Energy Resources, December 29, 2017, “Alternative Energy Portfolio Standard Guideline on Multipliers for Renewable Thermal Generation Units.”)

Q. What are systems performance criteria?

A. There are several eligibility criteria for small units (≤ 134,000 Btu/hour). Larger units do not appear to have performance criteria, although since credits are based on net thermal output, higher performance is inherently incentivized.

Q. How does the cooling function of air-source or ground-source heat pumps factor into the net output calculation?

A. Credits are only available for heating output.

 

Questions about your school’s eligibility for Alternative Portfolio Standard incentives in Massachusetts? Contact GreenerU at 781-209-5670 or info@greeneru.com and we will be glad to help.


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