Renewables Corner – Summer 2016

In August, Tom Mackie attended a signing ceremony at which Governor Baker signed the long awaited  Act Relative to Energy Diversity (H. 4568).  The result of significant compromise between house and senate conferees and their surrogates, the energy bill promises to significantly change the Massachusetts energy landscape by requiring  utilities to competitively solicit and contract for approximately 1,200 megawatts (MW)  of clean energy generation – base load hydropower, onshore wind and solar supported by hydropower, standalone onshore wind, solar, or other Class I renewable resources and allows for the procurement of approximately 1,600MW of offshore wind.

Also in August, in ENGIE Gas & LNG LLC v. Department of Public Utilities the SJC struck down a proposal by the DOER, approved by the DPU, to allow electric distribution companies to enter into contracts for natural gas pipeline capacity and pass along the cost to electric rate payers.  Rejecting the Baker administration’s efforts to ensure the development of additional pipeline capacity in Massachusetts, the proposed ruling was opposed by environmental groups, such as the Conservation Law Foundation.  Although the case came down on strictly statutory interpretation grounds, the result will make it more difficult/costly for pipeline companies to finance new natural gas pipelines, which may ultimately make renewable energy resources more competitive in the market.

In December, Congress extended the 30% solar investment tax credit and wind production tax credit for five years.  Unlike prior iterations of the credits, however, the amount of tax credit declines over time.  Go to the  NC Clean Energy Technology Center DSIRE website for a useful description of these tax credits and the fate of others like combined heat and power and biomass.

On April 11 Governor Baker signed legislation to increase the solar net metering caps.  Identified by the Northeast Clean Energy Council as an “interim solution” the increase in net metering caps is expected to be exhausted by new solar projects within a year.  As part of the grand compromise that led to the Governor’s signature, although net metering caps will be raised, the amount to be paid for net metered power is going down for new projects.  The net metering cap is raised by 3% for both public and private projects but the amount to be paid is reduced by 40% for new projects except small residential and municipal projects which will continue to receive 100% of the retail electric price.  At the same time the Department of Energy Resources filed emergency regulations to bridge the gap between the currently fully subscribed 1600 MW solar renewable energy credit program, (SREC II) to a to be developed future program.  Under those regulations, generally speaking solar projects that will be completed by January 8, 2017, will be entitled to receive SREC II benefits even though the 1600 MW cap for the SREC II program has been reached.

Although not “renewable energy” it is relevant that Kinder Morgan has abandoned its plans for a gas pipeline.  Low gas prices and increased supply are considered a potential threat to renewable energy resources and to achieving greenhouse gas reduction goals. According to the Conservation Law Foundation’s Greg Cunningham, “The project as proposed was flawed from the outset.”  According to the Boston Globe, among the winners are Danish wind power developer, DONG, and members of Massachusetts Clean Energy Partnership, including developers of other renewable energy resources.

In Hughes v. Talen Energy Marketing, the United States Supreme Court issued a very narrow ruling that avoids calling into question state renewable energy incentive programs such as renewable portfolio standards under the Federal Power Act and exclusive jurisdiction of the Federal Energy Regulatory Commission over wholesale electric markets.  In a scenario too complicated to describe here, Maryland’s DPU passed a rule to encourage the development of new in-state generating capacity that had an effect on interstate wholesale electric markets.  Although the challenge to Maryland’s program had the potential to derail many state renewable energy incentive programs, the Supreme Court made clear that it was only invalidating Maryland’s program.

What the United States Supreme Court giveth with one hand, it taketh away with the other.  In February 2016, the Supreme Court put President Obama’s Clean Power Plan on hold.  Some of the important goals of the CPP are to improve coal plant efficiency and deploy renewable energy.  It also requires all fifty states to adopt plans to reduce greenhouse gas emissions, similar to the RGGI program.  While EPA Administrator Gina McCarthy remains “optimistic” about the fate of the CPP, | all of the work states would have been required to perform to demonstrate compliance is seriously in doubt under the Court’s ruling.

And while we are on the subject of giving and taking away, Governor Baker’s Clean Energy and Climate Plan for 2020 does just that.  It gives an optimistic projection that the Commonwealth is on track to achieve 25% GHG reductions 2020, while taking away any real confidence that the goal can be achieved with domestic resource by placing heavy emphasis on the future import of Canadian Hydropower.