Looking Back and Looking Ahead: CPS in 2024 and What’s Next for 2025

Late addition: the article below was drafted before President Trump’s return to office. Our preliminary review of the initial set of executive actions suggests that, to date, actions would have a limited direct impact on the Clean Peak Energy Standard market. We will continue to monitor both executive and legislative actions and reflect these actions in future updates to our subscribers and in our modeling.

As we close the books on 2024 and move bravely into 2025, it’s the perfect time to reflect on the whirlwind of changes to the Clean Peak Energy Standard (CPS) over the last year. The CPS regulations required the Massachusetts Department of Energy Resources (DOER) to conduct its initial quadrennial review of key components of CPS in 2024. For those hoping for a little excitement in CPS, the year did not disappoint! DOER was busy with emergency regulations making major changes to the policy. The Massachusetts legislature was no slouch either, with S. 2967 making major reforms to siting and permitting and introducing a new requirement to solicit 5 GW (that’s GW with a “G”) of energy storage.

Here’s a review of what’s changed, and a sneak peek at what might drive the market in 2025.

2024: The Year of (CPS) Change – DOER’s Emergency Rulemaking Extravaganza

The DOER kept us on our toes with three rounds of emergency regulations this year. With minimal pushback during public comment sessions, all three sets of emergency regulations were finalized without revision. Here are the changes:

1. ACP Rate Overhaul

The Alternative Compliance Payment (ACP) rate will rise to $65/MWh for Compliance Years 2026–2032, then settle back to $45/MWh post-2033. This marks the end of the program’s declining ACP—a unique feature that previously had the rate dropping to $4.96 by 2050. DOER also eliminated the ACP ratchet, which would have the ACP fall faster in response to market surpluses, replacing this feature with a fixed ACP trajectory without built-in feedback mechanisms.

2. Minimum Standard Adjustments

DOER lowered the Minimum Standard in the near-term, in an attempt to reduce ACP collections (and mitigate ratepayer impacts) during periods of large, sustained market deficits. By the end of the decade, however, the new Minimum Standard will exceed the one included in the original regulations, anticipating large volumes of supply coming online. Similar to the ACP ratchet, the DOER also eliminated the demand ratchet. As we’ve discussed in our CPMO briefings, this has implications for what will happen if the market finds itself in surplus multiple years in a row.

3. CPEC Banking Period Changes

Load-serving entities can now bank CPECs for up to two years (down from three), bringing CPS into line with MA’s Renewable Portfolio Standard. All else being equal, this will make CPEC pricing more sensitive to surpluses.

4. Summer Peak Period Shift

The Summer Seasonal Peak Period moved to 4:00–8:00 PM (from 3:00–7:00 PM) to better align with net peak demands which are shifting to later in the day.  The windows for other seasons remain unchanged.

5. Near-Term Resource Multiplier

For you multiplier enthusiasts, we got an entirely new one! DOER introduced the Near-Term Resource Multiplier, which doubles CPEC production for the first 10 years of qualified resources. To be eligible for the NTRM, resources must:

• Be a standalone, front-of-the-meter, Qualified Energy Storage System, connected to the distribution system. SMART storage need not apply!
• Not have received a Statement of Qualification on or before 1/1/2025
• Achieve commercial operation by the end of 2026
• Not also receive the Distribution Circuit Multiplier

DOER created a limit of 50 MW of total resources that can qualify for the NTRM, and specified that no more than half of that capacity can go to resources associated with a given entity.

6. CPEC Procurement Tweaks

The original requirement for EDCs to initially procure 30% of market demand for CPECs and guidance on how to adjust subsequent target volumes was removed. This change was driven, at least in part, by anticipation of mandated storage procurements from the legislature. And that, friends, is how you set up the perfect segue…

The Energy Omnibus Bill: A Needed Boost for Storage

November brought the enactment of S. 2967, the Massachusetts energy omnibus bill, which, in addition to other provisions relating to building decarbonization, electric vehicle charging infrastructure, and decarbonization of the gas distribution system, includes transformative provisions for storage siting and procurement. Here are some of the key provisions related to energy storage and CPS:

1. Permitting and Siting Reforms

The legislation allows the Energy Facilities Siting Board (EFSB) to streamline permitting for storage projects over 100 MWh (yes, MWh, not MW) by granting Certificates of Environmental Impact and Public Interest. The EFSB have previously found that it did not have authority over energy storage, complicating the permitting process for larger-scale storage.

2. Storage Solicitations

The bill requires the procurement of 5,000 MW of storage by 2030, with carve-outs for:

• 3,500 MW of mid-duration storage (4–10 hours)
• 750 MW of long-duration storage (10–24 hours)
• 750 MW of multi-day storage (24+ hours)

It also includes interim targets to ensure rapid progress, with environmental attributes (i.e., CPECs) to be solicited from 1,500 MW of mid-duration storage by July 31, 2025 (a target date DOER will struggle to meet). For resources struggling to finance their projects on a merchant basis, these mandated solicitations offer an opportunity to firm up CPEC pricing. Still, key details related to the solicitations won’t be defined until later in 2025. Bringing us to another seamless transition…

Looking Ahead: Key Drivers of CPS and Storage in 2025

1. Long-Term Storage Contracts

DOER’s forthcoming solicitation designs will be critical. Questions around eligibility, contract duration (6 years vs. up to 30 years), and auction structures (pay-as-bid vs. clearing-price) will shape clearing prices, the volume of resources that are eligible, and, ultimately, how much of an impact on overall supply the solicitations have. We discussed some of these key design questions in this post. As DOER files a proposed approach with the Department of Public Utilities and, ultimately, initiates the solicitation, we’ll use the additional information to refine our solicitation analysis, helping developers refine both their development portfolio and their bid strategies.

2. New Administration – Tariffs, ITC reform, and…?

The Republican sweep in national elections created a new set of uncertainties for storage (and renewable) developers. Top of mind will be what action the new administration takes on storage import tariffs and whether Congress sunsets the ITC or amends the eligibility of storage for the credit. While we may learn more about the administration’s intent for energy storage component import tariffs soon (which would help alleviate uncertainty, even if the news is not great), the slim Republican majority in the House and some signs of support for renewables amongst a limited set of Republican Senators suggests that changes to the ITC, if any, may not materialize soon. Other changes (e.g., obstruction of offshore wind projects) would also affect CPS.

3. Interconnection (yes, we would probably say this every year)

Still, 2025, in particular, should be an interesting one for interconnection. On the transmission side, we’ll be on the lookout for a FERC response to ISO-NE’s FERC 2023 compliance filing, implementing a cluster study process. The lack of a FERC ruling on ISO-NE’s compliance filing led ISO-NE to rescind on September 4 its plans to implement its Transitional Cluster Study Process. On the state-jurisdictional front, we’ll be looking for evidentiary hearings and, ultimately, an order in the dockets (Eversource, National Grid, Unitil) in which storage operational tariffs are being considered. While most of the changes that could come from the conclusion of this proceeding are marginal, any improvement to the process for interconnection storage is welcome and has the potential to move the needle.

Your Partner in Navigating Change

2024 has been a transformational year for CPS. As we look ahead to 2025, the Massachusetts storage market is poised for growth—but also uncertainty. Through CPMO, we’ll continue to help our subscribers manage uncertainty and position themselves to benefit from the new opportunities created by recent changes.

If you’re interested in gaining access to CPMO’s market intelligence to guide your decision-making during a critical phase of the CPS market or in learning more about our service please contact the CPMO team.