The future of power

David Cash, former state energy secretary and dean of the John W. McCormack Graduate School of Policy and Global Studies at the UMass Boston, gave the keynote address at the Massachusetts Energy Fourm.

WBJ Editor Brad Kane (left) moderated a panel discussion with energy industry experts and stakeholders: (from left) Laura Canter, MassDevelopment; Charlie Fox, Bloom Energy; Matthew Morrissey, Deepwater Wind; David O’Connor, ML Strategies; Timothy Roughan, National Grid.

PHOTOS/RON BOULEY Matthew Morrissey, vice president of Massachusetts at Deepwater Wind

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By Laura Finaldi

About 10 years ago, the Massachusetts solar industry was just an idea. But today, thanks to government programs and industry developments, the commonwealth now ranks sixth in the nation for overall installed capacity, and it's pretty much impossible to drive down a major highway without seeing a panel array.A new law passed by the legislature could send offshore wind down a similar path – although those turbines won't be visible from the beach, let alone a major highway.

At the Worcester Business Journal's Massachusetts Energy Forum on Sept. 21, experts and industry stakeholders discussed what the state's energy market could look like years down the line after all three branches of state government – most notably the legislature – took steps over the summer towards making Massachusetts more energy productive, in an effort to meet greenhouse gas emission reduction goals.

An energy law passed by the legislature in July requires utilities to enter into 15-20 year contracts with power providers to bring 1,600 megawatts of offshore wind power and 1,200 megawatts of hydropower and onshore wind to Massachusetts. The law also established a clean energy financing program for commercial properties, made room for fuel cells as an alternative portfolio standard fuel and put forth goals for energy storage innovation.

“It seems like there's a moment right now, a moment where there's a kind of confluence and ideas and decisions that are being made through our state government that, if grabbed on to, could be something even more game changing,” said David Cash, dean of the John W. McCormack Graduate School of Policy and Global Studies at the University of Massachusetts Boston, who was the keynote speaker at the event.

A former state energy secretary, Cash said while the legislation was historic, it wasn't comprehensive, and Massachusetts is at a clean energy crossroads.

A win for wind

By setting aside 1,600 megawatts exclusively for offshore wind in the energy law, the legislature launched a new industry in Massachusetts, said Matthew Morrissey, vice president of Massachusetts for Deepwater Wind, a Rhode Island offshore wind development company.

It had to, because the state wasn't going to meet its greenhouse gas reduction goals organically, said David O'Connor, senior vice president for energy and clean technology at Boston consulting firm ML Strategies. The Global Warming Solutions Act of 2008 set a goal of an 80 percent reduction of greenhouse gas emissions by 2050.

“The reality is that we need to make such dramatic reductions in our emissions to address climate change, to reach the Global Warming Solutions Act goals that Massachusetts has set for itself – 80 percent by 2050 – we have to get on a very aggressive trajectory downward,” O'Connor said. “The legislature knew it could not sit back and rely on the wholesale marketplace in New England to deliver those kinds of reductions.”

That's why the legislature is banking heavily on wind and hydropower, he said. Offshore wind was isolated from competition with other power sources because it won't come close price-wise, O'Connor said, but developers will have to compete with each other.

As the global offshore wind market grows, costs will go down, Morrissey said, and the wind industry will establish itself here in Massachusetts.

“The legislation clearly articulates that no project can be more expensive than the previous project, so every project is forced to step down in terms of cost by legislation. Commercial volume in the marketplace and competition will see that decrease to the point where … we think that offshore wind will be cost competitive,” he said.

A place for fuel cells

The legislation created a pathway for fuel cells, by adding them as an eligible power source for the state's alternative portfolio standards requirements, which involves clean energy technologies that are not traditional renewables. Fuel cells allow customers to generate their own power on-site, and to isolate themselves from the grid when the grid goes down, said Charlie Fox, senior director of regulatory affairs and business development for Bloom Energy, a California-based fuel cell technology manufacturer.

“Now we're in a situation where a customer, irrespective of their energy profile, can now look at various options and access the one that is most suitable for them,” Fox said.

The new law also established a pathway for commercial property owners to finance energy improvements through the new Commercial Property Assessed Clean Energy (C-PACE) program. The program allows business owners to finance renewable energy upgrades through a property tax assessment on their building.

In order to participate in C-PACE, each city and town has to pass an ordinance, said Laura Canter, executive vice president of finance programs at MassDevelopment.

“We see it as being a way to take on some of the things that really do make energy efficiency not as widely adopted as it really could be, and we look forward to working with every city and town to pass a local ordinance that allows them to opt-in to this program,” Canter said.

Winding down solar subsidies

In April, a few months before the legislature would finalize its omnibus energy bill, the state made some strides in the solar industry. The public net metering cap on solar projects was raised from 5 percent of a utility's peak load to 8 percent, and the private cap was bumped up from 4 percent to 7 percent.

While the raising of the cap allowed stalled solar projects to move forward, it was also a less generous incentive than in the past, O'Connor said. That's because solar is now more established in the commonwealth.

“The cost has gone down substantially, so it's time for the public sector to pull back the contribution they're making. It was a healthy next step in the evolution of that industry,” O'Connor said.

Timothy Roughan, director of energy and environmental policy at National Grid, said customers who are able to zero out their electric bills through net metering create issues for utility companies. Customers who net meter their electricity are reimbursed at the retail – rather than the wholesale – rate for their power, meaning they don't pay for transmission and utility maintenance costs. They also don't contribute to the state's greenhouse gas emissions reductions or community solar programs, Roughan said.

“Folks who are now upset about the net-metering regime and a loss of percentage of the credits, really need to recognize that ultimately, we're all part of this together,” he said. “If we allow a growing subset of customers to opt out of paying, that's really not fair to the rest of us who are also in the mix.”

Predicting the future

As a result of the new law and trends in the industry, the region's energy mix will diversify, O'Connor said.

“While people have said that the power that comes from these [wind and hydro] facilities might be 30 percent of Massachusetts' consumption, a better way to think of it is 15 percent of New England's consumption,” he said. “That consumption is going to be put on a long-term trajectory with 20-year contracts, where the price is predictable, the greenhouse gas initiatives can be counted upon and will be delivered, and we can achieve the goals and the stability the legislature was looking for.”

Fox said the only thing that's for certain is that there is always room for new, transformative technologies.

“There are things that we cannot yet think of that will play a major role in the energy picture 10 years from now,” he said. “They will have a profound effect on our fight against climate change.”