A new law that goes into effect in January will make it
cheaper to use renewable energy to heat a home – and could provide a boost to
the wood industry in rural parts of Western Massachusetts.
"This is going to help (renewable) technologies compete
with and replace oil-fired furnaces and other fossil fuels for use for heating
... and cooling," said David O'Connor, a former Massachusetts Commissioner
of Energy Resources who is now senior vice president for energy and clean
technology at ML Strategies and who lobbied for the law on behalf of the
Massachusetts Forest Alliance.
Under the new law, the Massachusetts Department of Energy
Resources will calculate the amount of energy generated over a 10-year period
and award those credits up front. Those credits can then be sold to electricity
suppliers, a sale that would most likely be brokered by suppliers of renewable
energy technology. The home or business owner who buys the wood stove or heat
pump would then receive the money from the sale of the credits up front, to
help defray the cost of installing the technology.
O'Connor said this is important because while renewable
energy can be competitive with oil or coal in the long term, there can be
significant start-up costs for installing the technology. "That up-front
cost is a real barrier," O'Connor said. "So what these regulations
will do is allow the Commonwealth to come up with ways that the customer can
see some of the benefits of these technologies, give them help handling those
first costs, and make that payback quicker."
The Massachusetts Forest Alliance, which represents forest
landowners and sawmill owners, was a major backer of the bill because of its
impact on the forest industry – an important industry in Western Massachusetts.
According to Jeffrey Hutchins, executive director of the
alliance, the markets for low-grade wood in Massachusetts have typically been
depressed, which means there is no way for foresters to make money off of
low-grade wood. Although foresters in central Massachusetts have access to
markets in New Hampshire and Maine, this is a particular problem for Western
Massachusetts landowners. If the new law creates a financial incentive to use
wood pellet and wood chip heating systems, that could create a stronger market
for the low-grade wood used in those systems.
"It helps keep people employed in the woods, and the
forest-based economy is very important for rural towns in the state,"
Hutchins said.
Dicken Crane, president of the board of directors of the
Massachusetts Forest Alliance and the owner of Holiday Brook Farm in Dalton,
owns 1,000 acres of forest, in addition to agricultural land. He said that with
no market for low-grade wood, foresters tend to cut only the best trees and
leave the rest. But young trees then have trouble growing in the shade of
larger, uncut trees.
"I struggle to find a way to cut some of the low-grade
trees, because I have no market for them," Crane said. "What this
could potentially do is create a market for being able to sell low-grade wood
at, if not a profit, at least at break even."
Some local organizations use wood heat already –
Cooley-Dickenson Hospital, for example, uses a wood-burning co-generation
system for its heating. But Crane said Williamsburg recently opened a new
school and, although the town in surrounded by saw mills, it did not use a wood
heat system because it would take too long to recoup the up-front costs.
Crane hopes the new law changes that calculation.
"Across the state, if more and more facilities that are having to upgrade
or put in new heating systems would be inclined to use wood heat rather than
oil or gas because of these credits, that increased demand for wood fuel is
what would create the market," Crane said.
Supporters of the law point out that it could also keep more
money in local communities. While money spent on oil typically goes to
out-of-state oil companies, Massachusetts has sawmills, forests and companies
developing all kinds of renewable energy technology.
"It's more than just a benefit of a market for forest
land owners, it's a potential benefit for rural communities' budgets and to
their economic viability in that that money stays in the community and creates
jobs and economic activity," Crane said.
The law could also impact consumers in the Hilltowns or
other rural areas who do not have access to natural gas so rely on oil heat,
which can be more expensive.
The law is not expected to significantly change electricity
prices. Dwayne Breger, director of the renewable and alternative energy
development division at the Massachusetts Department of Energy Resources, said
currently, there are not enough alternative energy credits in the market for
electricity suppliers to fulfill their legal obligation. Instead, suppliers pay
money to the state, called "alternative compliance payments."
Suppliers can typically buy credits at a slightly lower cost than they must pay
to the state, so in the long term, Breger said creating more credits could save
ratepayers money.
A spokeswoman for WMECo and NSTAR said energy suppliers,
rather than the delivery companies, would have a better sense of how the law
will affect prices. A spokeswoman for ISO New England, which administers
wholesale electricity markets, referred questions about retail pricing to the
utility companies.
Dan Dolan, president of the New England Power Generators
Association, said he does not anticipate that the law will have a major impact
on rates because the technologies currently do not produce the kind of capacity
to significantly affect supply or demand. "It's unlikely to really move
the needle dramatically one way or another," Dolan said.
State Sen. Barry Finegold, an Andover Democrat who sponsored
the bill, said 15 other states have similar laws. He said Massachusetts is
working to meet its goals for the use of renewable energy, while remaining
competitive. "In the end, it's a long term investment in trying to
diversify our energy sources," Finegold said.
The bill was passed by the state legislature on July 31, the
last day of formal legislative sessions. It was signed into law by Gov. Deval
Patrick Aug. 6.
It goes into effect Jan. 1. But Breger said while the state
hopes to draft regulations by the end of the year, the formal rulemaking
process is not likely to be completed before the summer of 2015. The rules,
however, could retroactively award certificates for thermal energy systems
installed this winter.
"We see this as being a real opportunity to move the
market forward in a substantial way," Breger said.
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