Biomass Qualification under the MA RPS Program and Status of the Biomass Notice of Inquiry

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Biomass Qualification under the MA RPS Program
and Status of the Biomass Notice of Inquiry

• Robert Sydney, General Counsel
• Massachusetts Division of Energy Resources
• EBC Seminar on Biomass
• October 28, 2005

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Outline

• Summary of the MA RPS Program
• Eligibility of Biomass
• Overview of the DOER/DEP Biomass Notice of
  Inquiry (NOI)
• DOER Policy Statement (issued 10/27/05)
• Schedule for RPS Regulatory Revisions

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RPS Policy Context and Objectives

• Policy Context
• 1997 Electric Utility Restructuring Act
• Recognized need to provide subsidies to promote
  RE development
• Employed market forces to expand RE development
  at least cost (by mandating increasing demand
  level and encourage supply to respond).
• Policy Objectives
• Decrease pollution from fossil fuels
• Reduce dependence on imported fuels
• Increase fuel diversity
• Hedge against volatile fossil fuel markets
• Dampen electricity market clearing prices
• Promote economic development

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RPS Technology EligibilityWhich
technologies/fuel sources qualify?

• Landfill gas
• Biomass (low-emission, advanced technology)
• Wind
• Ocean thermal, wave or tidal
• Fuel cells utilizing renewable fuels
• Solar electric (PV)

In all cases, generation unit must have been
placed in commercial operation after 1997.
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New England RPS (Class I) Demand
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Biomass Energy

• Wind and biomass are the dominant renewable
  energy indigenous resources in New England
• MA can produce roughly 4 million tons of wood
  chips per year on a sustainable basis
• Forestry management, saw mill residues, land-use
  change, tree trimmings, etc.
• Biomass offers opportunity for Combined Heat and
  Power applications
• CD wood is eligible for RPS but upcoming
  regulatory revisions will clarify any
  limitations.

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2003 RPS ComplianceGeneration Type and Location
Biomass and LFG are currently the predominant
contributors to the RPS.
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Biomass Notice of InquirySummary

• DOER and DEP issued Biomass NOI on July 1, 2005,
  held informal Stakeholder meeting on July 28,
  2005, and has reviewed broad set of comments.
• Plan to initiate formal RPS rule changes
  pertaining to biomass eligibility.
• NOI Key Issues
• Eligibility of Retooled biomass units for MA RPS
• Establishment of standards for Advanced
  Technology and Low Emissions criteria
• Eligibility of advanced stoker technology

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NOI Policy Statement

• Policy Statement was issued by DOER on October
  27th to address only the issue regarding
  eligibility of retrofitted biomass units.
• Policy Statement Existing biomass units that
  retrofit to meet advanced, low emission criteria
  can be qualified for RPS only through recourse of
  Vintage Waiver (e.g. only net additional annual
  generation qualifies for RECs).
• Basis for Decision
• RPS Statute calls for new renewable energy
  generation retooling does not add new
  generation (unless output is increased).
• Clarity of this issue is critical to restore
  market certainty for biomass and all renewable
  energy developers.
• Allowing retrofitted biomass RECs into RPS market
  (including historic generation level) will likely
  cause rapid oversupply of RPS RECs, jeopardizing
  ability of new renewable development to continue.

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RPS Regulatory RevisionsAnticipated Schedule

• DOER will issue proposed revisions to its RPS
  regulations pertaining primarily to the
  qualification of biomass units.
• Proposed revisions will be issued December 2005
  triggering formal regulatory review process.
• Review process including Public Hearings and
  comments will take 3-4 months.
• Final rules will be issued in Spring 2006.