Massachusetts cities and towns are using an innovative state program to lower residents’ utility bills while aggressively driving demand for clean power in the state, according to a new analysis.
The report, which comes as wholesale electricity prices soar in New England and across the country, provides evidence that supporting clean energy doesn’t always have to come at a big cost to consumers, said Larry Chretien, director of Green Energy Consumers Alliance, the nonprofit organization that issued the report.
“Aggregation is a shining example of how it’s possible, at least sometimes, to have better outcomes when we disrupt the status quo,” he said.
David Hsu, associate professor of urban and environmental planning at MIT, cautioned that the current competitive prices may not survive coming shocks in the energy market amid inflation. Still, the programs create other important benefits, he said.
The Community Choice Aggregation model allows cities and towns to pool homes and businesses together to directly purchase energy from competitive power suppliers, rather than relying on investor-owned utilities such as Eversource and National Grid. Almost 160 communities across Massachusetts use the model, serving 54 percent of the state, according to the Green Energy Consumers Alliance.
Once seen primarily as a means to slash utility costs, aggregation is increasingly viewed as a way to promote clean energy. In Boston, for instance, which purchases its power from Constellation Energy, the standard plan is 10 percentage points cleaner than Eversource’s basic plan. Still, through the first half of 2022, it saved users an average of $27.62 monthly, and from July through December, it’s expected to save those customers an average of $40.26 monthly.
Massachusetts requires that clean energy be part of all electricity supplied to consumers. Under the state’s renewable portfolio standard, that includes locally produced solar, wind, and some controversial sources like landfill gas. This year, the minimum is 20 percent.
Eversource and National Grid, which each serve more than 1 million customers statewide, purchase energy at that minimum requirement. But many aggregations are working with suppliers who guarantee an even cleaner mix, a model the Alliance calls “green municipal aggregation.”
In Massachusetts, all aggregations are opt-out, meaning if your town has one, you’re automatically enrolled into its standard package, but can choose to use the local utility or a competitive provider instead.
Municipalities control how much clean power their standard plans offer, and most choose to just meet the state’s minimum. But the authors found that, currently, more than 50 municipalities’ standard plans are offering higher amounts of renewable power. Half of those offer at least 10 percentage points more clean energy than the required minimum; some have wildly exceeded the state’s requirement. Newton’s standard energy package is the cleanest in the state, with an 82 percent renewable mix, and Lowell and Brookline, with 65 and 50 percent, respectively, are next in line.
Many towns also offer optional “opt up” plans that provide 100 percent renewable power, which costs a bit more, and “opt down” plans that are at the state’s minimum, which are a bit cheaper.
Your chosen energy package doesn’t guarantee that your home runs on a particular blend of sources, because once power is produced, it gets combined with all other sources and integrated into the grid.
Instead, clean energy percentages reflect how many renewable energy certificates — or credits for supporting renewable energy projects — providers buy for every kilowatt hour of clean energy purchased.
A variety of retailers say they sell “clean” certificates, but the report specifically focuses on the amount of one particular class of energy credits that aggregations purchase. Due to their strict requirements and high cost, Green Energy Consumers Alliance says these are most likely to drive local demand.
Currently, aggregations are increasing demand statewide for clean energy beyond the state’s requirements by about 11 percent, the report estimates.
In its first year, in 2021, the aggregation plan in Boston purchased more than 131,000 megawatt hours of additional clean power, for an average of 191,000 customers, said Theresa Teixeira, the program’s manager. This year, she said, the city is expecting to purchase even more due to an “increase in customer participation.”
Standard service plans offering between 5 and 11 percent more clean energy than the state minimum — a group that includes Boston, Somerville, and more than 30 other communities — saved customers an average of $78 per year over basic utility plans, the research suggests.
That doesn’t necessarily mean renewables are cheaper than fossil-powered energy. Rather, municipalities are able to negotiate lower rates, Chretien said, because they can guarantee providers more business. Utility companies must sign new electricity contracts — and change their rates — every six months. But communities can negotiate longer-term contracts that encourage suppliers to offer better prices. They also have more flexibility on when to sign contracts, giving them more time to weigh options and assess market conditions.
At least recently, even municipal plans with high renewable percentages have offered competitive prices. For instance, from January through June, Eversource’s basic service cost about 15.8 cents per kilowatt hour. In Newton, which is also served by Eversource, the standard municipal plan included 62 percent more renewables and cost about 13.5 cents per kilowatt hour.
On July 1, Eversource rates in Newton increased to about 17.9 cents per kilowatt hour, a 15-year high. But since Newton’s aggregation prices are locked in until January 2024, residents will continue to enjoy the lower prices.
Even 100 percent renewable customers are expected to save $19.25 per month over the Eversource basic plan, said Ann Berwick, co-director of climate and sustainability for Newton. And in Boston, 100 percent renewable customers will save $24.08 per month over standard utility prices, officials say.
But Hsu, the MIT professor, said though aggregations may have offered better deals during the time period in the study — roughly from 2017 to this year — that trend won’t necessarily last.
“There’s no guarantee that three years from now, we won’t be opposite on that — that it wouldn’t have been better to have the fluctuating price,” he said.
In Arlington, where Hsu lives, for instance, the aggregation contract will expire in November. If energy prices are still high, that will affect customers for the duration of the next contract.
“They’re probably not going to be able to sign at the same low rates,” he said. “They’re probably going to sign at something closer to what Eversource’s basic service is.”
Still, Hsu said, aggregation is a useful tool to clean the grid and boost local control of energy — and customers can always opt out to take advantage of lower rates.
In an e-mailed statement, Eversource said it does not oppose customers using aggregations, but encourages them to “closely evaluate all options.”
A National Grid spokesperson said the company has “helped transition many cities and towns to municipal aggregations” and will continue to do so, adding that the company is working to decarbonize its operations.
National Grid’s Green Up program allows customers to pay a small premium to obtain additional clean energy from renewable suppliers, she noted.
Green municipal aggregation has tremendous potential for growth, the Alliance says. If every eligible community set up a plan with 10 percent more renewable content than the state requires — and if every resident of those towns sticks with the standard option — that would result in demand for 1,600 megawatts of additional clean power annually. That’s 60 percent more than the researchers estimate Massachusetts will have in place by 2023.
To harness more of that potential, said Chretien, the state could expedite the approval process. He says dozens of communities waited nearly a year to get theirs approved, and predicted more communities would set them up if the process were faster.
“We think that’s just a travesty,” Chretien said.
The Department of Public Utilities says the pandemic caused delays in approvals. And it says its complex approval process for municipal plans — which includes public hearings, reviewing documentation, consultation with other agencies, among other requirements — is necessary to ensure they operate fairly.