Creating A Greener Energy Future For the Commonwealth

Massachusetts Incentives for Renewable Energy Generation

Dwayne Breger, PhDDirector, Renewable Energy Division

March 29, 2011

MassRecycle & MassDEP

2011 Conference & Trade Show

Advancing Recycling & Organics

Management

Boxborough, MA

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Summary of Presentation

• What are the programs that drive Renewable Energy development in MA/New England?

• How does the Renewable Energy Portfolio Standard (RPS) Program work and how does it apply to Organics and Anaerobic Digester projects?

• What are Renewable Energy Certificates (RECs) and how do they provide financial incentive to RE? How does a project access this program?

Creating A Greener Energy Future For the Commonwealth

MA Renewable EnergyPolicy Framework

• Renewable Energy Portfolio Standards– Require all electricity suppliers in MA to supply a small but increasing

percentage of their load with new RE generation. Suppliers demonstrate compliance by purchasing sufficient Renewable Energy Certificates (RECs) from RE generators.

– RPS Qualified RE units generate electronic RECs (one per MWh) which are sold to electricity suppliers, providing units with additional revenue.

– Strategy is to “green up” the ISO-NE grid. Generation from throughout New England and adjacent control areas are eligible.

• Alternative Energy Portfolio Standard– Operates similarly to RPS program, but supports Combined Heat and Power

(CHP) units through creation of Alternative Energy Certificates (AECs).• MA Clean Energy Center / Renewable Energy Trust

– Provides targeted funding programs to support development of RE supply in Massachusetts.

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MA Class I RPS Program Success

0

500

1000

1500

2000

2500

3000

RPS

Com

plia

nce,

GW

H

Surplus Banked 61 20 1 9 81 211 386

ACP Compliance 0 265 368 323 11 1 0

Compliance from Banked 255 61 20 2 7 81 190

Compliance Year Generation 304 445 645 939 1600 1896 2130

2003 2004 2005 2006 2007 2008 2009

Compliance Year Generation

Surplus Banked for Future Compliance

ACP

Compliance from Banked

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MA RPS Class ICompliance Trend By Technology

ComplianceYear

0

500

1,000

1,500

2,000

2,500

2003 2004 2005 2006 2007 2008 2009

GW

h

Hydro

Wind

Solar PV

Landfill Methane

Biomass

Anaerobic Digester

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MA RPS Class IMap of Qualified Projects

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Farm Organics – Anaerobic Digesters

One of five AD projects being developed in MA by

AGreen Energy LLC

Jordan’s Dairy, Rutland, MA

Anaerobic Digester

Mixed Feedstock (manure and other organic wastes), Medium Temperature

Equip Vendor: Quasar Technologies

Creating A Greener Energy Future For the Commonwealth

Opportunities for Organic Feedstocks for RPS Program

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• Anaerobic Digesters (AD) and other conversion technologies that generate electricity using bio-solids (e.g. wastewater treatment plants) and other organic waste feedstocks (food waste, agricultural wastes, source separated organics) are eligible for the MA RPS.

• AD projects that operate as CHP (combined heat and power) in MA are additionally eligible for the MA APS program.

• EEA Secretariat has convened an interagency collaboration (EEA, MassDEP, DOER, MDAR, MassCEC) to explore and develop AD opportunities at WWTP and other locations.

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What’s in a REC?

• A REC encompasses the non-energy attributes associated with one MWh of RE generation.– A list of attributes is not defined in statute or regulation, but

might reasonably be considered to include air emission reductions, greenhouse gas emission reductions, energy diversity, benefits to local economies, etc.

• REC attributes are typically economic externalities, and the REC market enables these attributes to be valued in the marketplace.

• Nearly all RECs are sold by RE generators to electric suppliers for their RPS compliance obligations. A small amount of RECs are sold into voluntary RE markets or are retired by the generator without being sold.

Creating A Greener Energy Future For the Commonwealth

RPS Renewable Energy Certificate (REC) Market

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Project Ownership & Marketing RECs• Ownership Models

– Merchant plant, self financing, self ownership– Host site (farm, municipal WWTP) engages with Third Party project

developer/owner and Power Purchase Agreement

• Selling/Marketing RECs– Project Owner or Authorized Agent seeks RPS qualification from DOER

and establishes NEPOOL GIS Account on which RECs are minted for generation. Electric meter readings are reported to the GIS by Independent Verifiers.

– Aggregators are available (and typically used for small projects) to create “aggregation” GIS Accounts and manage REC transactions.

– Owner or Aggregator can market/sell RECs to electric suppliers through multiyear contract or spot market.

– DOER’s RPS Team is here to help you through this process.

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So, what’s a REC worth?• Value of REC is determined in market place and depends on relative

supply and demand.• Price of RPS Class I RECs is “capped” by the Alternative Compliance

Payment Rate.– 2011 ACP Rate (MA Class I) = $62.13/MWh (6.2 cents/kWh)– ACP Rate adjusted each year with inflation (Consumer Price Index)

• Value of REC is determined in market place and depends on relative supply and demand.

• Current 2011 REC market is in reasonable supply/demand balance and RECs are generally trading at $15-$25/MWh.

• Though MA program tends to have most robust market and prices, projects will typically try to get qualified in multiple New England state RPS programs, to increase marketing options.

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Issues under Consideration

• RPS eligibility for bio-gas upgraded and injected into natural gas pipeline and delivered to natural gas generation unit.

• Policy treatment for bio-gas used for thermal applications.

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Questions/Comments

Contact Information

Dwayne Breger, Ph.D.Director, Renewable and Alternative Energy DevelopmentMassachusetts Department of Energy Resourcesdwayne.breger@state.ma.ushttp://www.mass.gov/doer