On November 21, 2024, Massachusetts Governor Maura Healy signed into law sweeping clean energy legislation (St. 2024 c. 239, An Act Promoting a Clean Energy Grid, Advancing Equity and Protecting Ratepayers, referred to here as the “Clean Energy Act” or the “Act”) packed with measures aimed at accelerating the clean energy transition. Among these measures are several intended to facilitate the deployment of energy storage assets across the Commonwealth. As part of our blog series covering the Clean Energy Act’s many parts (see prior posts focusing on electric vehicles here, here and here; posts focusing on natural gas and embodied carbon; and a presentation on the siting and permitting aspects here), this post gives an overview of the Act’s primary energy storage procurement-related provisions.
The Act creates a new “Section 83E” procurement for energy storage, following the form of “Section 83” procurements for offshore wind and other clean energy resources conducted in the last several years. The new Section 83E directs Massachusetts utilities to enter into long-term contracts for approximately 5,000 MW of energy storage systems by July 31, 2030, to be identified through a competitive solicitation coordinated by the utilities and the Massachusetts Department of Energy Resources (“DOER”).
Of the 5,000 MW of energy storage to be procured by 2030, the Act directs that 3,500 MW will be made up of mid-duration energy storage (defined as storage “capable of dispatching electricity… for greater than 4 hours and up to 10 hours”), 750 MW will be made up of long-duration storage (defined as storage “capable of dispatching electricity… for greater than 10 hours and less than or equal to 24 hours”), and, if commercially available at a reasonable cost, 750 MW will be made up of multi-day energy storage (defined as storage “capable of dispatching electricity… for greater than 24 hours”). Existing storage systems are expressly eligible to participate in the procurements.
This procurement builds on the Commonwealth’s target for establishing 1,000 MWh of energy storage by December 2025, set by law in 2018. As of February 2024, according to DOER, nearly 570 MWh of energy storage was installed with nearly 9,000 MWh of energy storage in the pipeline.
How Much Energy Storage Will Be Procured, and When?
While DOER, in coordination with the utilities, has some flexibility to craft a timetable and solicitation process, the Act establishes a schedule for the amount and type of energy storage to be procured for environmental attributes, energy services, or both between now and July 2030. Specifically, DOER’s schedule must ensure that procurements lead to contracts such that:
- Approximately 1,500 MW of mid-duration storage is procured by July 2025 (note that this first procurement will be for environmental attributes only, not energy services);
- Approximately 1,000 MW of mid-duration storage is procured by July 2026;
- Approximately 1,000 MW of mid-duration storage is procured by July 2027; and
- All remaining energy storage systems capacity is procured by July 2030.
The utilities may fulfill their obligations for this procurement by filing contacts with the Department of Public Utilities (“DPU”) that arise out of a procurement conducted under the Clean Peak Program (as authorized by G.L. c. 25A, § 17). This is critical because there are indications that this may be the preferred mechanism for procuring energy storage, at least in the near term. On October 11, 2024, DOER amended the regulations for the Clean Peak program to require procurement of at least 30% of the compliance requirements for Clean Peak Certificates and that a schedule for such procurements be established by November 12, 2024 (see the announcement here). DOER then announced a schedule that called for the first RFP to be issued on July 31, 2025, with subsequent RFPs every two years. While the Clean Peak procurement schedule does not perfectly align with the statutory schedule established by the Act, DOER may well implement the Clean Peak procurements so that they can satisfy the requirements of the Act.
How Will the Procurements Work?
To the extent procurements outside of the Clean Peak process are used, the timetable and method of solicitation will be worked out between DOER and the utilities and subject to approval by the DPU. However, the Act provides that the solicitations may be staggered over time and may be issued jointly with other New England states.
DOER and the Executive Office of Economic Development, in consultation with an “independent evaluator,” will select winning bids or terminate the solicitation if reasonable proposals are not received. Preference will be given to proposals demonstrating compliance with certain labor laws and having a history of participating in certified apprenticeship programs. Additionally, preference may be given to proposals that provide additional benefits or value to the electric grid or communities, including those that:
- Support grid resiliency and transmission needs in certain geographic locations;
- Provide economic opportunities or public health benefits to environmental justice or disadvantaged communities; or
- Create economic opportunities to support “transitioning fossil fuel communities.”
The Act directs the DPU to promulgate rules, consistent with the Act, allowing for energy storage developers to submit proposals, requiring that long-term contracts executed between energy storage developers and the utilities receive approval from the DPU, requiring that contracts meet several criteria relating to cost-effectiveness and viability, and providing for annual remuneration to the utilities for accepting the long-term contracts. The Act also provides that DOER may promulgate rules for implementing this energy storage procurement.
We will continue to monitor progress as the Commonwealth’s implementation of these new procurement requirements is finalized.
