With no national RPS, all state mandates have been designed and implemented differently, many of which have been increased, amended or extended in recent years. Though all have a common goal of embracing cleaner, natively produced energy, there is little parity amongst Northeastern state policies in terms of what is eligible for RPS credit, what kinds of materials are considered renewable biomass resources or acceptable conversion technologies and emissions limits.
For example, while Connecticut’s statute clearly defines and encourages renewable sources of biomass including urban wood, wood waste, forest thinnings and municipal solid waste (MSW), Maine excludes MSW from its extended RPS and New York and Vermont ban it completely. Massachusetts, however, encourages MSW combustion yet has a suspension in place on woody biomass technologies. Connecticut allows cogeneration/combined-heat-and-power (CHP) facilities over 1 megawatt (MW) to receive credit, but Maine has scrapped it from the new portion of its RPS.
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While some states in the Northeast may be attracting new project proposals with an RPS, they must be careful not to drive them away with frequent changes, extreme restrictions or inconsistent policies.
Structuring and Amending Policies
Maine is in the lead with RPS implementation, which is fitting, as the Pine Tree State spends the most on energy per person in the country, yet is among the lowest in the U.S. for net electricity generation, according to the U.S. DOE.
The state originally set its RPS at 30 percent. In 2006, the goal was raised to 40 percent by 2017, adding restrictions on MSW and CHP while providing a 1.5 multiplier credit for community-based energy projects. Mitchell Tannenbaum, deputy general counsel of the Maine Public Utilities Commission, explains that the new provisions were decided upon by the legislature, as are most states’ RPS policies, although there are a few exceptions. Out of the 29 states that have an RPS, New York and Arizona’s were established through regulatory channels, and Colorado, Missouri and Washington’s were ballot initiatives.
Though the Southeast is commonly touted as the country’s vast forest resource, Maine actually possesses the highest wood and wood waste power generation capacity in the U.S., and is home to nine wood-fired power plants that, according to the Biomass Power Association, create $108 million a year in economic value and employ 1,000 people in direct operations, wood harvesting and other jobs. Maine’s forest resources are carefully monitored through the use of biomass harvesting guidelines. Developed over several years and released in 2010 as a result of a collaborative effort of the Maine Forest Service, University of Maine and the Trust to Conserve Northeast Forestlands, the guidelines serve to avoid negative impacts of biomass removal.
Like Maine, which Tannenbaum says is currently on track to meet its goals, many other states have made changes to their initial RPS targets and language over the years by increasing them, dividing existing and new renewable energy generation into different classes and adding restrictions. Most recently, Massachusetts has proposed changes to its RPS (15 percent by 2020) that may have resounding negative implications for woody biomass power development not just in Massachusetts, but in neighboring states as well.
In November, the state Department of Energy Resources suspended consideration of biomass plants utilizing wood under the RPS and commissioned a study to analyze the sustainability of woody biomass. The study was completed in June, and DOER is working to amend the RPS based on the study’s results and additional stakeholder input (see page 18).
Though amendments can often be good, ever-changing RPS policies and renewable energy credit (REC) price variability can be troublesome for developers. Since RPS policies created by a state legislature or regulatory authority are subject to legislative and regulatory changes such as those made in Maine, Massachusetts and elsewhere, uncertainty tends to deter financers of new (and always capital intensive) renewable energy projects. A few states have caught on, however, and have developed ways to prevent that.
To date, RPS implementation experience demonstrates that industry growth has been most successful in states such as Texas, where developers have been able to secure long-term contracts with creditworthy counterparties. In fact, several U.S. states require utilities to sign long-term power purchase contracts with eligible renewable energy developers, but it hasn’t caught on in the Northeast, where renewable energy resources are typically most expensive.
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