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A Clean Energy Market for New England

On January 4, 2023, the Massachusetts Department of Energy Resources released its New England Forward Clean Energy Market (FCEM) proposed market design. This new market design would create a competitive arena to meet clean energy goals.

The proposal would establish a regional, centralized auction market for clean energy products, such as renewable energy certificates, the renewable attributes of a resource that are separately sold and tracked, and state-specific certificates as determined by different states. These products would be used to meet clean energy and climate policy goals and requirements. The proposal seeks to leverage competitive market forces and lower the cost of renewables with the goal of helping achieve state climate goals in New England states.

The region’s electricity markets and grid are run by the Independent System Operator of New England (ISO-NE). The FCEM “is envisioned to work alongside and in a complementary fashion to the wholesale electricity markets administered by ISO-NE. The FCEM will consist of an auction conducted three years in advance for clean energy products. Buyers include any entity that needs to purchase power to sell or use in the future, such as state and local agencies, utilities serving end-use customers, and companies seeking to meet sustainability targets.

Other elements and goals of the FCEM proposed design include containment of costs to voluntary participants in the market; financial terms to attract large investments in new clean energy; and the alignment with regional reliability needs to ensure a reliable transition to clean energy.

There is a question about what organization will administer the FCEM. The options are a new entity, ISO-NE, or the states. The proposal includes the creation of a new entity, the Forward Clean Energy Market of New England, to manage the market and implement rule changes by filing with the Federal Energy Regulatory Commission (FERC). The six New England states are currently “undertaking legal analyses to identify the most desirable institutional and governance arrangements for the FCEM.” The proposal explores alternatively creating a non-FERC jurisdictional market (overseen exclusively by state authorities), as well as the possibility that ISO-NE or an affiliate could administer the FCEM.

The proposal was developed with the Brattle Group, Sustainable Energy Advantage, New England states, and other stakeholders.

The Massachusetts Department of Energy Resources is seeking written public comments on the design proposal by February 17, 2023, and can be submitted to [email protected]. The agency also plans on holding a public webinar to discuss the design details before comments are due.