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MEMA & DOER Present Webinar on Alternative Energy Portfolio Standard

by Samuel Diamond

On Tuesday, March 6, the Massachusetts Energy Marketers Association (MEMA) and Massachusetts Department of Energy Resources (DOER) presented a webinar by DOER titled “Biofuels in the Massachusetts Alternative Energy Portfolio Standard.”

Over 110 individuals attended the webinar while many others joined in via phone. The following are some key takeaways, including updates to information previously reported by Oil & Energy in the November/December 2017 article “Massachusetts Looks Ahead to APS Rollout.”

Participation & Eligibility

As previously reported, the Alternative Energy Portfolio Standard (APS) is a program that enables clean-energy providers, including Bioheat® fuel dealers, to generate and trade Alternative Energy Credits (AECs) for dollar amounts.

All heating oil retailers who deliver eligible Bioheat fuel blends of B10 or higher to end users (heating system owners) in Massachusetts may participate in the program. The Bioheat® fuel may be purchased by the retailer outside of the state as long as it is sold to an end user in the Commonwealth of Massachusetts, DOER clarified.

The Bioheat fuel delivered to the end user must contain a minimum of 10% eligible liquid fuels, which includes those derived from waste vegetable oils (such as soybean oil), waste animal fats, grease trap waste, and others as approved by DOER. During the presentation, the agency stressed that it is open to reviewing alternative materials and adding them to the list of approved feedstocks.

Eligible liquid fuels must be registered with the Environmental Protection Agency’s Renewable Fuel Standard (RFS2) program and comply with ASTM 6751 (the standard spec for B100) or ASTM D396-15C (the standard spec for fuel oils). The fuel must also qualify as part of an aggregation, as retailers are strongly encouraged to work with a “renewable energy aggregator” to manage AEC reporting and collecting.

The final APS regulations covering eligible liquid fuels were promulgated December 29, 2017. DOER began accepting applications for liquid fuel AECs on January 16, 2018.

Dates & Deadlines

AECs for 2016 and 2017 are retroactively available to retailers that sold eligible biofuels prior to Q4 2017. However, the reporting deadline for retroactive AECs was March 30, 2018. Applications for retroactive AECs were being reviewed at press time and must be approved by April 15, 2018.

Moving forward, the APS will maintain the following schedule for AEC generation, reporting and minting.

Q1 & Q2 Generation Period: January 1 – June 30;
Q1 & Q2 Reporting Deadline: July 15;
Q1 & Q2 AECs Minted: October 15;
Q3 & Q4 Generation Period: July 1 – December 31;
Q3 & Q4 Reporting Deadline: January 15;
Q3 & Q4 AECs Minted: April 15.

Efficiency Standard Update

The formula for determining AEC biofuel generation units is now Useful Thermal Energy = (Fuel X Volume X EFC X Eff.) / 3,412,000, where: Fuel = BTU content of fuel delivered, established as 127,000 BTU/gallon; Volume = Total gallons delivered; EFC = Eligible fuel content (e.g., .2 for B20); and Eff. = Efficiency of heating system, established as 80%.

A prior draft of the APS regulations, as reported by Oil & Energy, had set the efficiency standard at 85%, but this percentage was lowered in the final rules promulgated December 29, 2017.

Biofuel Generation Caps

As previously reported, the total pool of biofuel-generated AECs cannot exceed 20% of the state’s aggregated annual APS obligation. During the presentation, DOER revealed that this 20% will be broken up into 10% for Q1 and Q2, and 10% for Q3 and Q4. The program uses data from two years ago to determine the state’s aggregated annual APS obligation.

Because the aggregated 2016 obligation was 1,874,577 BTUs, the amount of biofuel generation units available for 2018 is 374,915. This breaks down to a maximum of 187,458 for Q1 and Q2, and no less than 187,458 for Q3 and Q4. It could be higher for Q3 and Q4 if the amount of biofuel generation units from Q1 and Q2 does not reach the 187,458 threshold.

The agency said that if Q1 and Q2 biofuel generation units surpass 187,458, the units carrying over to Q3 and Q4 would be allocated on a prorated basis. This, DOER reasoned, should encourage heating oil dealers to sell Bioheat fuel blends with higher biofuel content. However, DOER noted, biofuel generation units do not carry over from one year to the next.

In other words, if total renewable thermal generation units of Bioheat fuel sales from July 1, 2018 to December 31, 2018 surpasses 187,458 BTUs, the sales beyond that threshold would not carry over to Q1 and Q2 2019. That being said, DOER noted that the numbers will be reset each year based on the aggregated APS obligation from two years prior and might be recalibrated at a later date taking past reporting into account.