Legal Misconceptions Should Not Stand In The Way of Massachusetts’ Microgrid Market Development

A Harvard report says there are no legal barriers for the development of microgrids in Massachusetts.
Published: Fri 10 Oct 2014

Utility franchise rights aren’t a major challenge for the development of microgrids in Massachusetts according to a legal analysis conducted by Harvard Law School.

The City of Boston requested the analysis from Harvard’s Emmett Environmental Law & Policy Clinic to see how state utility law affects microgrid development. The reason for this is because the city is aiming to increase the number of microgrids within its borders.

Ideal market for microgrids

The state is seen as an ideal market for microgrids due to its ambitious clean distributed energy goals. Boston, in particular, views microgrids as a way to help meet its aggressive community-wide greenhouse gas reduction targets of 80% by 2050. Local officials see microgrids as a way in which to strengthen their power systems especially in the face of mega storms.

The Massachusetts Department of Energy Resources (DOER) and the Patrick administration have recently awarded US$7.4 million to six municipal-led resilient power projects that will support critical infrastructure and services during natural disasters and other emergencies.

Brian Swett, Boston’s chief of Environment, Energy and Open Space, says that the city recognizes that smart grids and district energy will be part of how they reach their goals. He adds, “Given Boston’s current experience with campus energy systems including electrical, heating, cooling, the city is asking itself if these benefits – lower cost of energy, more resilient power, and lower GHG emissions – can be accrued more widely.” [Engerati – Microgrids – More Than Just a Back-Up Plan.]

“In this post Sandy-era, mayors and public officials are actively seeking deployment of more resilient urban energy infrastructure, both for public safety as well as economic and energy security reasons,” said Robert Thornton, president & CEO of the International District Energy Association (IDEA). “We know from experience that robust CHP/district energy microgrids on our college campuses deliver highly reliable and resilient energy with lower environmental footprint. It’s time that cities and communities had the same access to proven technologies like CHP/district energy microgrids and that arcane statutory restrictions are revisited to enable mayors to allow these cleaner energy efficient options to compete and flourish.”

Combined heat and power or district energy microgrids also provide heating and cooling. Other microgrid services include reliability, the sale of demand resources into the regional wholesale market, and islanding during a power outage. [Engerati – Utilities Begin To See The Value of Adopting Microgrids.]

Misconception about franchise rights

The report challenges the idea that utility franchise rights make it hard for microgrids to run wires across public roads in the state. “There is a widespread misconception that the utility’s consent is required before one can run an electric line across a public way. Nothing in state law “requires such consent, only the consent of the municipality is required, explains the report.

It is likely that if residents are not allowed to run wires across public ways, microgrid developers may put together smaller configurations where energy users all reside on one property.

Microgrid ownership models

The Harvard report analyzes how case law affects a range of microgrid types, from a simple system with a single-owner on a single piece of land to those that have multiple owners and tenants and generation both on and off site.

The report claims that in all of these scenarios, a microgrid ownership model can be constructed that likely complies with the franchise clause.

The more complex microgrid does not go against franchise rules because the rules were established to prohibit energy users from shopping amongst utilities. In the case of microgrids, consumers are not opting for another utility, but a “new entity” that will continue to purchase services from the utility and will aid the central grid by integrating renewables and demand response. [Engerati – Are Microgrids The Route To The Utility Of The Future?]

“Harvard’s study at the City of Boston’s request confirms that there are no legal barriers for building owners or third parties to develop microgrids in Massachusetts. That’s great news for property owners, the electricity industry, and the Commonwealth,” said Clarke Bruno, senior vice president of Anbaric Transmission.

Further Reading

The Emmett Environmental Law & Policy Clinic - Massachusetts Microgrids: Overcoming Legal Obstacles [pdf]