Massachusetts Wants More Clean Energy and Lower Costs. Energy Storage and the Clean Peak Standard are Increasingly at the Center of That Debate.

Authors: Jim Kennerly, Director, Yasin Naman, Principal Analyst, and Roddy Akeel, Lead Technical Consultant

Estimated read time: 7-8 minutes

On March 16, 2026, Massachusetts Governor Maura Healey (D) issued Executive Order No. 654: To Secure Massachusetts’ Energy Future by Establishing an Energy Supply Plan that Drives Affordability and Reliability. In an accompanying press release, Gov. Healey explained that the Executive Order (Order) is intended to promote the development of 10 GW of new energy resources and save $10 billion in ratepayer costs through 2035. By targeting a full 5 GW of additional storage by 2030, beyond the 5 GW of mid- to long-duration storage procurement already required under Section 83E, the Order makes clear that Massachusetts is:

• Increasingly positioning energy storage as core to its broader energy affordability and climate strategies; and

• Seeking to continue to host/drive an energy storage market material scale, with incentives meant to support financing, despite that ubiquitous affordability narrative.

This simultaneous commitment to energy storage development and affordability is already asserting itself across several recent policy developments, including:

• Changes to the Clean Peak Standard minimum standard;

• The Section 83E Round II storage procurement; and

• The emerging energy affordability bill pending before the Massachusetts General Court.

Changes to Minimum Standard Show Affordability Concerns Have Arrived for the Clean Peak Market.

With no advance notice, DOER’s recent emergency Clean Peak Standard (CPS) regulations issued on June 3, 2026, made three targeted changes. Most importantly, they reduced the CPS Minimum Standard for 2026 through 2030:

• 7% to 4% in 2026;

• 9% to 8% in 2027;

• 13% to 12% in 2028;

• 19% to 18% in 2029; and

• 25% to 24% in 2030.

The regulations also revise the Qualified Energy Storage System (QESS) Near-Term Resource Multiplier by allowing deadline extensions for good cause and updated CPS references to reflect the transition to the newest iteration of the Solar Massachusetts Renewable Target program (known as SMART 3.0).1

In terms of the market enabled by the CPS, the Minimum Standard reductions are likely the most consequential for eligible QESS economics. The Minimum Standard establishes the compliance obligation that drives demand for Clean Peak Energy Certificates (CPECs). All things equal, lowering that obligation reduces the quantity of CPECs needed for compliance and should place downward pressure on CPEC prices. In our view, the larger issue is the durability of the market signal sent to potential project sponsors. The CPS price signal depends not only on scheduled ACP increases but also on the level and perceived certainty of compliance demand. If affordability concerns lead market participants to expect additional downward adjustments to the Minimum Standard, the long-term revenue signal intended by the CPS could weaken even if ACPs continue rising.

Similar to similar past adjustment with RPS Class II targets and December 2024 changes in the CPS regulatory review, DOER’s CPS emergency target reductions took care to limit reductions to be timed primarily during a period of expected shortage and scaled to a level intended to reduce shortage and ACP exposure. In the past, DOER’s similar moves have successfully avoided changing shortage to surplus, and thereby minimized interference with market price signals, supporting that market signal durability.2 That said, our team plans to analyze the changes made in our upcoming Clean Peak Market Outlook^SM market briefing.

We believe that it’s unlikely that DOER will in the future introduce further and more dramatic changes to the minimum standard that could indirectly discourage submission of Section 83E RFP bids. However, we note that in a vacuum, even modest changes could affect perceptions in the market, and if reductions are overzealous, could be perceived as reducing revenue for CPS-eligible projects financed with merchant CPEC price strips, risking the chilling of future investor interest. We believe such regulatory changes elevate the necessity of sophisticated market analysis and due diligence to either assuage or affirm such superficial perceptions.

Transmission-Connected Resources in the Section 83E Round II RFP3: Less Capacity and More Requirements, but More Time.

For transmission-connected storage resources, the Section 83E Round II Draft RFP, as filed before the Massachusetts Department of Public Utilities (DPU) in Docket 26-75 in late May 2026, is a bit of a mixed bag. As in Round I, projects generally must provide between four and ten hours of storage duration, and transmission-connected projects may range from 40 MW to 700 MW. Compared to Round I, it offers less procurement volume while imposing a more detailed set of eligibility and development requirements but also provides developers a longer runway to bring projects online.

Specifically, the Draft RFP:

• Seeks up to 1,000 MW of mid-duration energy storage (versus 1,500 MW in the 2025 Round I procurement); and

• Extends the allowable commercial operation deadline to December 31, 2032 (rather than 2030, as required for Round I projects).

Compared to Round I, the Draft RFP also includes more detailed requirements pertaining to interconnection, safety planning, environmental justice, workforce development, and project readiness.

Distribution-Connected Resources: A Debut in 83E…but Perhaps Not For Long?

If the DPU approves the Draft Round II RFP, it will mark an important development for distribution-connected storage in Massachusetts. Unlike Round I, the Draft RFP would allow distribution-connected projects larger than 1 MW to participate and would establish a target of 250 MW to 300 MW for distribution-connected resources.4

That said whether Section 83E remains the main long-term approach to distribution-connected project procurement is less clear. Indeed, H.5175 - An Act Relative to Energy Affordability, Clean Power and Economic Competitiveness, as passed by the Massachusetts House in March 2026 and currently pending before the state Senate, would authorize DOER to establish a statewide energy storage incentive program for storage resources connected to the distribution system. If authorized and implemented, such a program could potentially be better suited to resources with durations shorter than four hours.

An Indexed Storage Credit: A Potential (But Contested) Path to Bridge Deployment and Affordability.

At a high level, the Commonwealth appears to be considering two competing approaches:

• An environmental attributes-only structure would remain centered on the fixed $/CPEC pricing used in procurement Round 1 (supported by the electric distribution companies (EDCs); or

• A proposed Indexed Storage Credit (ISC)/Energy Services structure, which would compensate a broader set of storage services in a contract-for-differences-like structure while bundling CPECs into a more comprehensive compensation framework providing enhanced revenue certainty.5

DPU’s determination of which approach is used for the Round II procurement is made more consequential by DOER’s recent reductions to the CPS Minimum Standard. If Section 83E proceeds through a CPEC-only structure, storage projects would remain heavily dependent on those revenues. In contrast, an ISC would not eliminate the importance of CPEC prices to financing, but it could reduce reliance on CPEC-specific compensation, thus opening the door to reducing CPS compliance costs to ratepayers.6

However, as noted in our Clean Peak Market Outlook (CPMO) Section 83C Part II blog post on the Round II draft RFP, National Grid, Eversource and Unitil (the EDCs procuring the resources) have objected before the DPU to the ISC structure as proposed in the draft RFP filed for approval by DOER. The EDCs’ concerns appear less focused on indexing itself, than on what the ISC would permit in practice. Specifically, they appear most concerned that the ISC could create a pathway for non-CPS-eligible resources, including existing resources, to receive long-term contract support. From the EDCs’ perspective, this raises questions regarding both:

• The legal basis for their future cost recovery, and

• Whether ratepayer-backed procurement should support resources that may not require additional incentives to remain operational.

In addition, the EDCs express related concerns that opening the procurement to non-CPS-eligible resources (including operational resources and/or those sited outside Massachusetts) might put the basis for PPA cost recovery at risk.

Given our experience with other types of large-scale clean energy resource procurements in New England and New York, we believe these developments point toward a future in which long-term storage procurements – like those for clean energy generation resources – carry more of the storage finance-ability burden. That said, we anticipate that procurement will not be the sole path to developing and financing storage and other Clean Peak Resources, and that CPEC supply-demand and price expectations will remain an important input into procurement bids, contract valuation, project economics, and the assessment of policy and revenue risk.

Our View: The ISC Is More Likely to Be Narrowed Than Rejected.

Section 83E explicitly requires that procurements are required to consider inclusion of environmental attributes, energy services, or a combination of both. Given this, we believe that, although the EDCs have identified a cogent potential risk, it is unlikely that the DPU would reject an ISC structure outright as inconsistent with Section 83E. Rather, given the Administration’s emphasis on affordability and finance-ability, we believe approval of some form of ISC is more likely than outright rejection, though guardrails on participation by existing resources seem likely.

Nevertheless, it is also possible (though, in our view, less likely) that the DPU could view an attribute-only procurement as a safe near-term resolution to the dispute, especially given expectations that the General Court will pass legislation in Fall 2026 giving DOER broader clean energy procurement authority. Such procurement authority would reduce or eliminate the statutory contracting risk the EDCs would otherwise bear under the current structure.

Moving Forward

If you are a resource owner, developer or investor looking to deploy energy storage in the Massachusetts market, navigating these issues and more requires a deep fundamental understanding of the CPEC market and its intersection with the Section 83E procurements. Since the outset of the Clean Peak Standard, our Clean Peak Market Outlook (CPMO) service has been the gold standard of CPS market fundamentals. The CPMO team will continue tracking and analyzing how the CPS, the Section 83E procurements, and related storage policy developments affect CPEC market expectations and storage economics.

We will discuss these issues during our upcoming CPMO Market Outlook 2026 #1 Briefing on June 25, 2026. To join this briefing, and/or learn more about CPMO subscription offerings and Massachusetts Clean Peak Standard, request a demo HERE. To explore Section 83E analysis, storage bid support, or transaction due diligence, please click HERE to request a consultation.