On December 9, 2022, Foley Hoag continued its twenty-year plus commitment in hosting the latest gathering of the Raab Associates New England Electricity Restructuring Roundtable. The Roundtable has been meeting four to six times per year since 1995 to discuss current topics related to revolutionary changes in the electric power industry in Massachusetts and beyond.
Entitled “Transforming Policy, Procurement & Data to Achieve Carbon-Free Electricity in New England,” this Roundtable consisted of two panels, the first of which focused on the next frontier in net zero commitments, which entails procuring carbon-free energy (CFE) on an hour-by-hour (or “24/7”) basis as opposed to an annualized basis. While the 24/7 CFE approach is continuing to progress in both cost and efficiency, it has the potential to achieve greater GHG reductions in both the short and long term. The second panel presented a practitioner-focused perspective on changes in policies, procurement practices and data access that will be needed to achieve a decarbonized grid.
Both 24/7 CFE and locational marginal emissions (LME)-based strategies (i.e., measuring the incremental greenhouse gas (GHG) abatement effect of injecting one megawatt-hour of energy into the grid at a given node and five-minute dispatch interval) represent a greater impact compared to the currently dominant practice among corporate commitments of simply matching a buyer’s load with renewable energy on an annual basis. In many respects they are complimentary. As Professor Jesse Jenkins of Princeton noted, an organized market for time-based energy attribute certificates (T-EACs) based in part on LME could improve the economic efficiency, affordability, and accessibility of 24/7 CFE procurement. LME-based storage incentives likewise could incentivize more GHG abatement and more effectively support 24/7 CFE matching.
To the extent there are tradeoffs, 24/7 CFE could be more effective in creating a market for advanced or emerging technologies (clean, firm generation and long duration storage, for example) than relying on LME-based price signals alone. Several panelists stressed that the policy or procurement tools employed should match the specific objectives of the customer or policymaker.
Overall, the panel discussions reflected a growing appetite among buyers and suppliers for more sophisticated CFE procurement options that can drive greater grid-wide GHG reductions. While there are promising advances in this space, there remain barriers to full-scale adoption, including but not limited to market formation, resource availability, accessible and transparent data, and procurement cost.
As a leading advisor on virtual power purchase agreements, Foley Hoag has been closely following developments in electricity procurement strategies and how client needs are evolving in this space. If you have any questions about 24/7 CFE and how it may affect your business, please contact a member of our Energy and Climate practice to discuss.