The brand new Massachusetts clear vitality legislation that focuses on streamlining the allowing course of for large quantities of recent clear vitality tasks, transmission, and battery storage handed somewhat quietly throughout a uncommon lame duck session, contemplating the huge attain in implications it’ll have on Massachusetts residents and their wallets. Amongst different issues, the legislation mandates the speedy buy of tens of billions of {dollars} price of big grid scale batteries. We talk about the fundamentals of this a part of the legislation at: massfiscal.org/op-ed-the-actual-costs-legislature-climate-bill.
That is positive to be a really complicated course of with little steerage from the brand new legislation. The massive query we now have is who will wind up paying for one thing we beforehand discovered gained’t give us a lot bang for our buck, the place many billions of {dollars} will purchase you a number of extra hours of vitality at greatest. Large price will increase are sure nevertheless it’s unclear which ratepayers can be taking the hit and the way these value will increase can be distributed amongst them.
We thought of what the method will appear to be within the close to time period. There’s a nice rush as a result of the brand new legislation mandates that 1,500 megawatts (MW) of batteries should be purchased by subsequent July, which may be very quickly for such a posh procurement. That is round a thousand tractor trailer-sized batteries that must find yourself in somebody’s neighborhood, and that might value nicely over $3B which must come from someplace.
One level to be thought of is that the legislation says this big battery storage purchase shall be made collectively by “each distribution firm” within the State. The legislation is unclear on whether or not this contains municipal energy authorities, which aren’t technically firms. If it does exclude them, then municipal energy prospects is perhaps off the hook in terms of paying the billions.
Assuming it’s simply the investor-owned utilities that the majority of us use, the massive query is then how will the fee be divided amongst them? The brand new legislation is silent right here. They could do it on the idea of buyer fairness, equivalent to complete retail gross sales. Or they may do it on the idea of their relative want for batteries by which case prospects of 1 utility might see a lot greater price will increase than one other utility’s prospects.
One other complexity is that these price will increase all need to be utilized for and authorised by the state Division of Public Utilities. This could be a long-drawn-out course of however the invoice itself places the state beneath a big deadline. Speeding to spend billions isn’t good coverage, however it’s now the legislation that our elected state representatives and governor authorised only a week after most of them secured reelection, whereas the senate gave its approval days earlier than. Presumably whereas the acquisition course of is finished collectively the speed will increase can be accomplished on particular person utility circumstances, particularly if the speed will increase differ loads.
There may be additionally a rooster and egg dilemma. The speed will increase needs to be primarily based on the battery prices, however the utilities can not finalize the purchases to ascertain prices with out the speed will increase. Maybe they may make the acquisition contracts contingent upon getting the mandatory price will increase. Among the many uncertainty, the one factor that may be assured is that your payments will go up.
There are different massive prices that will even be coated by the looming price will increase. These embody buying the websites and constructing the amenities to deal with the thousand big batteries, plus new transmission strains and different grid upgrades. In addition they embody working and sustaining these amenities, in addition to revenue. Maybe the most important further value that ratepayers will find yourself paying is the curiosity value of financing all these different prices. The whole of all these prices is known as the income requirement, which the speed will increase need to cowl.
One other situation is the big federal tax breaks that include this kind of grid battery buy. These are usually funding tax credit. The query is who will get the advantage of the credit, the utilities or the ratepayers? It may be accomplished both method and the brand new legislation appears silent on this huge cash situation.
One other wrinkle is that a few of the tax credit are contingent on the placement of the batteries, which is unlikely to be totally recognized by subsequent July. There are bonus credit for finding the amenities in deprived communities. So till the ability websites are recognized and authorised the entire income necessities of this multi-billion greenback battery venture is perhaps unknowable.
As if all this complexity weren’t dangerous sufficient there are two extra big battery buys mandated within the close to future. These are 1,000 MW every by July 2026 and 2027. The income necessities for buying this 3,500 MW of complete mixed storage capability could also be nicely over $10B in lower than three years. Time will inform.
These staggering prices and who can pay them will begin to come into focus with the speed enhance purposes that the facility firms must file. The affected ratepayers ought to demand an evidence as there is no such thing as a obvious use for all these 1000’s of extraordinarily massive, costly and harmful batteries that can be dotting the panorama in our communities.
Laurie Belsito is the coverage director at Massachusetts Fiscal Alliance
