The Massachusetts Department of Energy Resources (DOER) is considering a new plan for incentivizing energy efficiency that designates equity and greenhouse gas reduction as goals with minimum thresholds under state programs.
Current goals outlined under state programs identify cost efficiency, passive demand and active demand management as DOER’s main priorities. State program administrators earn more financial benefits from DOER the closer they are to achieving these goals.
DOER presented a new proposal to the Energy Efficiency Advisory Council (EEAC) on Wednesday that ties quantifiable equity goals and GHG emission reductions to state energy efficiency program funding.
The department revised the model to align with the GHG emission reduction goal that Energy and Environmental Affairs Secretary Kathleen Theoharides set in July as required by the state’s new climate law. That law also makes communities overburdened by disproportionately high rates of pollution a priority for clean energy programs.
“The current mechanism is based on one pool of benefits at the [strategy] level, and there’s no differentiation [of benefits] within that pool” to achieve the desired outcomes of state energy efficiency program, said Jeff Schlegel, an energy policy consultant advising the EEAC, at the meeting on Wednesday.
A single benefits pool, Schlegel said, “addresses one goal — get more benefits — but it does not adequately focus on two of the priority goals for 2022 to 2024,” equity and reducing emissions. Revising the performance incentive mechanism would allow DOER and state programs to directly incentivize equitable investment levels in underserved communities.
Equity benefits would be the benefits achieved in the environmental justice communities as defined by state law, including benefits from electrification or weatherization projects.
Heat pumps, deep energy retrofits with an electrification aspect and all-electric new construction projects would qualify for the climate benefits.
“We’ve selected these efforts because they are the area that we feel needs the most work” and would help the state reach its new legally mandated climate goals, Schlegel said.
A third component in the new model would accommodate remaining portfolio benefits, or benefits achieved that are not in the climate law’s electrification benefits, Schlegel said.
Whichever way a benefit is achieved, it would count in one of these buckets; there wouldn’t be any overlap,” he added.
The minimum threshold to receive performance incentive dollars would apply to each category individually, to ensure state program administrators are achieving all three goals.
Schlegel also suggested that the DOER remove the “value” component from the performance incentive model.
In some cases, measures to address electrification inequity come at a higher cost per unit benefit.
“We don’t want to have a performance incentive out there that discourages that investment,” Schlegel said.
DOER staff plan on filling in more details of the revised incentive model for state programs before bringing it to the EEAC for a vote.