Governor Deval Patrick signed a landmark energy bill yesterday that does away with long-standing obstacles to building renewable power projects in Massachusetts and making homes and businesses more energy efficient.
The Green Communities Act was hailed by environmentalists as among the most innovative efforts in the nation to reduce dependence on fossil fuels and to encourage use of clean technologies that don't contribute to global warming.
The law will probably result in utilities' designing customized plans for homeowners and businesses to cut energy costs and providing rebates to pay for measures such as installing insulating windows and more efficient boilers. Homeowners and businesses will be able to rent solar panels from utilities to avoid expensive up-front costs, and the law makes it easier for homeowners who have installed wind turbines or solar panels to sell surplus energy.
Supporters said the new law could save hundreds of millions of dollars through energy efficiency, helping to hold down consumers' electric bills as energy prices are skyrocketing.
"I am here today to sign into law the best clean energy bill in America," a jubilant Patrick said during a signing ceremony at the Museum of Science. "Climate change is the challenge of our times, and we in Massachusetts are rising to that challenge."
Massachusetts has long been a leader in energy legislation, and it is taking part in a regional effort to reduce greenhouse gases from power plants. Patrick has set an aggressive goal to increase solar power in the state by 600 percent in four years.
The law "maintains Massachusetts' status as a state leader," said Patrick Hogan of the Pew Center on Global Climate Change, a Virginia-based environmental policy think tank.
Business leaders praised the legislation, saying it could stabilize electric rates in New England, already among the highest in the nation. Utilities, including NStar and National Grid, said they have long focused on energy efficiency but are eager to ramp up the effort, as well as to provide solar power to customers.
"It pushes us to a new level," said Tom May, NStar's chief executive. "We get to cross the street to our customer side and help them with energy choices . . . such as windmills in a neighborhood or solar panels. It's helping them reduce their carbon footprint."
Among the law's major provisions:
A requirement for utilities to invest in energy efficiency when it is cheaper to do so than it is to buy power. Historically, companies would simply buy more power when demand went up, which over time would lead to construction of very costly and polluting power plants. Now, utilities will have to invest in energy efficiency if to do so is equal to or cheaper than buying power. The law will also use at least 80 percent of the revenue from the regional effort to cap power plant emissions for efficiency programs, such as home energy audits to identify how to save on energy bills.
"The cleanest power plant is the one that never gets built," said Sam Krasnow, attorney for Environment Northeast, a research and advocacy group. "Energy efficiency is the cheapest and cleanest energy resource available."
Several efforts to promote renewable power. Utilities would have to enter into 10- or 15-year contracts with renewable energy developers, an effort to help those developers get financing from banks. The Patrick administration is particularly proud of a provision that lifts a prohibition on utilities owning solar electric panels and allows them to rent the panels to customers. The law is designed to allow utilities to recoup the cost of panels over time from rental fees while the customers reap energy savings.
Utilities will have to purchase a greater amount of their electricity from renewable power sources than under current law. By 2030, utilities would buy 25 percent of their power from renewables.
It is unclear whether that goal, one of the most ambitious in the nation, can be met, however. The current requirement of 3.5 percent has not been met, partly because of the difficulty in siting renewable projects. The utilities instead pay a fee to the state.
The creation of "Green Communities." The state will commit $10 million annually to help communities figure out ways to become more energy efficient or invest in renewables, including giving them no-interest loans. New buildings in the state will have to meet updated building codes with energy-savings provisions.
The energy bill encountered some controversy during the two years it took to become law. Early versions guaranteed a market for coal gasification, a technology that is cleaner than conventional coal-burning power plants but still emits large amounts of carbon dioxide.
The final language would give financial incentives to gasification technologies only in limited cirumstances and only to those that capture and store the carbon dioxide underground.
Environmentalists had nothing but praise for the law yesterday, saying it was a paradigm shift in the way energy will be created, bought and sold.
"This is a tremendous advancement that comes not a moment too soon, given rising energy prices and the climate crisis," said Sue Reid, a lawyer with the Conservation Law Foundation.
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Beth Daley can be reached at bdaley@globe.com.
Microsoft has introduced employee incentives to improve energy efficiency and it’s paying off. From 2004 to 2007, Microsoft saw a 22 percent improvement in the energy efficiency of its data centers, Network World reports. 
