At the New England Governors’ Conference (NEGC) on July 30th, 2012, Governor Deval Patrick of Massachusetts presented and all six governors signed a resolution stating their intent to launch a coordinated regional procurement by the end of 2013. The resolution charges the New England States Committee on Electricity (NESCOE) with the responsibility of developing a work plan and executing the procurement, though all six states will contribute input and experts to the process. The procurement process will likely involve a request for proposal (RFP) issued by the body for a certain amount of renewable energy, with projects competing for contracts based on their bid-in price.
The New England Governors’ Conference is comprised of the leaders from Maine, New Hampshire, Vermont, Connecticut, Rhode Island, and Delaware. This initial resolution is a call to mobilize for the organization and related bodies but does not contain binding language for action. NESCOE has been working for several years on this topic at the direction of the New England governors, issuing requests for information establishing that markets for significant amounts of renewable energy do in fact exist within the six states.
The regionally coordinated procurement will be held as an open and competitive solicitation, meaning it will likely be similar to a bid-in RFP or reverse auction mechanism (RAM). Solar will have to compete with all other sources of renewable energy, including large-scale wind, in this competitive RFP. However, states like Massachusetts have already incorporated large solar capacities. In fact, Massachusetts recently broke the half-way point on their 250 MW by 2017 solar goal.
Sources from the Massachusetts Executive Office of Energy and Environmental Affairs (EEA) noted that while no exact figure for program capacity has been named, ideally it will be measured in gigawatts – a program of unprecedented size. EEA Assistant Secretary for Renewable Energy Steven Clarke expects that the ceiling for the RFP will be set by the combined renewable portfolio standards of all six states. However, if the all-in costs of the projects submitted are lower than conventional fuel sources, there is no reason for the RPS requirements to limit the procurement.
Clarke named three main policy drivers supporting the plan. First and most obviously, such a large-scale procurement is a huge win for the environment and will help all states meet various climate goals. Secondly, potential economies of scale are significant when all-in cost is the competitive factor in an RFP. There is no word yet on whether certain technologies will have capacity targets within the overall procurement figure. Finally, in order to meet such an aggressive goal, new transmission capacity will likely be added during the course of the program. Coordinating transmission requirements for a large amount of renewable energy over many states will aid in long-term planning and likely result in cost efficiencies on the transmission side as well. Job creation will also be significant, as a renewable energy procurement of this size is unprecedented in the U.S.
Sol Systems will continue tracking developments on this procurement process for the benefit of our investors and developers. For more information on commercial solar finance services, please reach out to us through our SolMarket finance community or at email@example.com.
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