Massachusetts 83E Round II: The ISC Saga Begins
The Massachusetts Department of Energy Resources (DOER) and the electric distribution companies (EDCs) have released the Draft Request for Proposals (RFP) for the second round of Section 83E mid-duration energy storage procurements, introducing several significant structural and policy changes relative to Round I. Most notably, the Draft RFP proposes a potential Indexed Storage Credit (ISC) framework tied to “Energy Services,” which could materially expand project eligibility and alter how storage revenues are compensated under long-term contracts.
This first part of our two-part analysis focuses on the proposed ISC structure, the legal and policy questions currently before the Department of Public Utilities (DPU), and the implications for existing and non-CPS eligible storage resources. Part Two will examine the procurement mechanics of the Draft RFP, including contract structures, evaluation criteria, interconnection requirements, and safety and environmental justice provisions.
Background/Summary: On May 8, 2026, in DPU Docket 26-75, DOER and the EDCs posted the RFP for approval under Section 83E of Chapter 169 (83E Round 2 RFP). The Draft RFP is also available on the Massachusetts Clean Energy Website.
As drafted, the RFP seeks to procure up to 1,000 MW of mid-duration energy storage (MDES) capacity through long-term contracts. Eligible projects must be between four and ten hours duration and achieve commercial operations by December 31, 2032. The RFP includes a 250 MW to 300 MW target for distribution-connected projects, though the Selection Team is not required to select any particular mix of distribution or transmission projects. Eligible projects include transmission-connected projects between 40 MW and 700 MW and distribution-connected projects greater than 1 MW. Round II also extends the allowable commercial operation date from January 1, 2030 in Round I to December 31, 2032, reflecting the more complex interconnection and development timelines now facing storage projects in New England.
You may recall that on January 16, DOER, the EDCs, and the Massachusetts Attorney General’s Office (AGO)—collectively RFP Drafting Parties—issued a Request for Public Comment (RPC) regarding the 83E Round 2 RFP. The Drafting Parties explicitly noted in a commenter guideline that they were exploring an Indexed Storage Credit (ISC) structure for this procurement round to accommodate the procurement of Energy Services beyond Environmental Credits, namely Clean Peak Energy Credits (CPECs), the compliance attribute for the Clean Peak Standard (CPS). DOER published the public comments to this request here.
Proposed ISC/Energy Services Framework: By some distance, the proposed ISC framework represents the single largest structural departure from Round I. The Round I Final RFP only permitted Environmental Attribute contracts tied to fixed $/CPEC pricing. In the Draft RFP, DOER refers to environmental attribute long-term contracts as a fixed $/CPEC structure and refers to the ISC structure as a long-term contract for energy services. Describing the ISC structure, DOER asserted that CPECs would be transferred for free as part of the energy services bundle under the ISC construct. In our view, both structures are effectively contracts for CPECs; however, the ISC model would correlate CPEC compensation with a strike-price mechanism and representative wholesale energy market revenues. This approach shares energy price risk between the developer and the buyer by smoothing the impact of deviations between forecast and realized market values, whereas a fixed-price environmental attributes-only structure results in a more rigid hedge on the CPEC revenue a project generates without consideration of other market performance.
Procuring Energy Services Opens the Door to a Broader Suite of Energy Storage: In its filling to DPU, DOER asked DPU to clarify whether the RFP can include Energy Services and thus adopt an ISC model for the auction. The draft RFP contains highlighted language for an ISC mechanism, under which a bidder would propose a storage strike price indexed to the ISO-NE day-ahead energy market. If DPU suggests removing the highlighted language, the RFP would effectively become an Environmental Attributes Only RFP. The central policy issue in the proceeding is whether Section 83E permits – or potentially requires – the procurement to include compensation structures tied to “Energy Services,” rather than limiting compensation solely to the procurement of Environmental Attributes such as CPECs.
The inclusion of an ISC construct appears to be DOER’s attempt to meet the statutory requirement to consider energy services, in addition to addressing stakeholder desire for a more robust hedging instrument against merchant energy revenues. That said, not only does the ISC provide a more robust hedge for financing, it also provides a participation pathway for non-CPS eligible projects. In fact, DOER specifically defines formulas for how the ISC structure is applied to non-CPS eligible projects in the Draft RFP. Indeed, DOER directly references this outcome in its Cover Letter submitted with the Draft RFP, where DOER requests DPU to provide clarity on whether the RFP must solicit energy contracts, given the consequence of opening eligibility to non-CPS projects.
EDC Disagreements with ISC Structure/Approach and Participation of Non-CPS Eligible Projects: Although the DPU filing does not fully outline the EDCs’ rationale, the filing makes clear that the EDCs disagree with the proposed ISC structure, arguing that the procurement should be limited to Environmental Attributes, similar to 83E Round I, because it provides a more straightforward compliance procurement mechanism and given that the proposed ISC construct would both open the Procurement to non-CPS eligible projects and effectively expose ratepayers to wholesale energy market outcomes. However, Section 83E, subsections (b) and (d), state that “Each procurement shall consider inclusion of environmental attributes, energy services or a combination of both” and that “the distribution companies shall consider long-term contracts for energy services, for environmental attributes and for a combination of both.” Accordingly, DOER and the EDCs are required to consider energy services, but they are not required to enter contracts that include them. As shown in the comments posted above, project developers have encouraged the inclusion of such services in their comments, arguing that they could reduce project risk exposure and improve access to financing. However, it is unclear whether the EDCs would sign contracts that include services they do not wish to procure, or what the mechanism is to force them to do so if they choose not to.
Analysis Regarding Existing Project Inclusion: The CPMO Team notes that the concept of non-CPS eligible projects participating in Section 83E procurements is not new. As previously discussed in one of our CPMO blogs, when DPU issued its order on the Draft RFP for Round I, it ordered a change to the RFP to explicitly state that existing energy storage systems were eligible for Round I. A participation pathway in 83E Round II for non-CPS eligible resources (via the ISC construct) removes the locational and COD vintage requirements inflicted by CPS-eligibility and enables participation of an estimated 1.9 GWs of existing projects namely Bear Swamp and Northfield Pumped Hydro stations and Cranberry Point Energy Storage. As a result, existing pumped hydro projects may still need to demonstrate that the contract supports continued investment in the facility, such as upgrades, modernization, augmentation, operational enhancements, relicensing, or other reliability and storage-related improvements that advance the objectives of Section 83E.
The first solicitation under Section 83E, currently in the contract execution stage (as discussed in our CPMO blog), mandated that the procurement seek environmental attributes only. Though the Round I RFP explicitly allowed existing storage facilities to participate, it did not establish a clear commercial participation pathway for non-CPS eligible projects comparable to the proposed ISC framework. Under the proposed ISC construct, however, non-CPS eligible resources could participate directly through REAP-based settlement structures described in Appendix I of the Draft RFP.
Furthermore, in July 2025, State Representatives Bradley Jones (R) and Jeffrey Roy (D), respectively, submitted letters to Massachusetts Department of Public Utilities Chair James Van Nostrand regarding the first 83E storage solicitation. The letters highlighted that the statute, S. 2967 – Act, Promoting A Clean Energy Grid, Advancing Equity And Protecting Ratepayers, includes text which intentionally states that existing energy storage shall be eligible to participate in Section 83E procurements. Given this precedent, it is reasonable to assume that DOER could be attempting to accommodate existing projects – including those that are not eligible under CPS – since such participation is both permitted and encouraged by Section 83E.
Although it remains unclear how the DPU will interpret the obligation to “consider” energy services, the statute does not appear to require procurements to include environmental attributes exclusively beyond the initial 1,500 MW tranche. Instead, the statutory language preserves procurement flexibility for DOER and the EDCs. Combined with the legislative clarifications provided by Representatives Jones and Roy, this suggests that the DPU is likely to allow procurements that incorporate energy services, even if such structures are not mandated. However, we note that it is not clear what mechanism exists to compel the EDCs to contract for such services, if it were to refuse to do so.
Proposed Schedule: The Drafting Parties proposed the procurement schedule in the table below.
| Event | Anticipated Date |
| Issue RFP | July 31, 2026 |
| Bidders Conference | August 13, 2026 |
| Deadline for Submission of Questions | August 20, 2026 |
| Due Date for Submission of Confidential and Public Proposals | September 10, 2026 |
| Selection of Projects/Commence Negotiations | January 27, 2027 |
| Execute Long Term Contracts and MOU (Memorandum of Understanding) with DOER | April 28, 2028 |
| Submit Long Term Contracts for DPU Approval | May 26, 2027 |
Conclusion/Next Steps: The proposed ISC framework represents an impactful change to Massachusetts energy storage procurement, yet it is not surprising given the statutory language. By attempting to incorporate “Energy Services” compensation into the Section 83E framework, DOER appears to be testing a more flexible procurement structure that could broaden project eligibility, expand participation by existing storage facilities, and provide developers with a more comprehensive hedge against merchant market risk.
At the same time, the proposal raises significant legal and regulatory questions regarding the scope of Section 83E authority, the treatment of non-CPS eligible projects, and the extent to which Massachusetts ratepayers should be exposed to wholesale market outcomes through long-term storage contracts. The DPU’s forthcoming guidance will likely determine not only the final structure of this solicitation, but also the direction of future storage procurements in Massachusetts.
In Part Two of this series, we examine the operational and procurement mechanics of the Draft RFP itself, including the proposed contract structures, evaluation process, interconnection requirements, safety provisions, and expanded environmental justice and DEI obligations.
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