Clarifying New Hampshire’s Class III RPS Target: A Market-Stabilizing Decision Informed by SEA Analysis

Publish Date: December 10, 2025

Written by: Bob Grace, President & Managing Director

Estimated Reading Time: 5-7 Minutes

For more than a decade, New Hampshire’s Class III Renewable Portfolio Standard (RPS) requirement—intended to support the continued operation of eligible biomass and landfill gas facilities—has been hampered by an unusual structural feature. Under RSA 362-F:4.VI, the Class III target could be modified after the production year, once REC supply conditions became clear.

Though well-intentioned, this backward-looking design created profound uncertainty. Obligated buyers delayed procurement until they knew the final target; sellers of New Hampshire Class III RECs were discouraged from investing in fuel procurement and operations because would-be shortages were consistently adjusted into surpluses. Over time, this dynamic contributed to:

• Eroded liquidity in the Class III REC market
• A weaker investment and operating environment for New Hampshire biomass assets
• Inefficient reliance on ACPs
• Price instability that benefited neither consumers nor generators

In short, New Hampshire found itself with one of the least predictable RPS market structures in the region, despite legislative intent to protect ratepayers.

A Changing Regional Landscape Opened the Door for a New Approach

In 2025, Connecticut enacted Public Act 25-173, removing nearly all biomass and landfill-gas resources from CT Class I eligibility effective October 1, 2025. This change eliminated a major competing source of demand for generation that also qualifies for New Hampshire Class III.

As a result, approximately 110 MW of biomass capacity—almost all of it located in New Hampshire—would no longer have access to Connecticut’s premium Class I market. New Hampshire became the primary compliance market for these facilities.

This shift fundamentally changed the regional supply-and-demand outlook and created the opportunity to establish a binding, forward-looking Class III target that could provide:

• Stable expectations for obligated entities
• Predictable revenue signals for in-state biomass facilities
• Reduced volatility and ACP reliance
• A more rational, transparent policy framework

Recognizing the importance of these changes, the New Hampshire Department of Energy (NH DOE) initiated a Class III investigation for Compliance Year 2025.

SEA’s Analysis Helped Chart a Path Toward Stability

To support this effort, NH DOE engaged Sustainable Energy Advantage, LLC (SEA) through competitive solicitation to contribute to its Renewable Portfolio Standard 2025 Review by developing a report “2025 Review of New Hampshire’s Renewable Portfolio Standard” (Appendix C to DOE’s Review).  While SEA’s Report and the DOE’s Review spanned a broader scope, pertinent to the Class III RPS, SEA’s charge was to:

• Evaluate alternative approaches to setting the Class III target prospectively
• Analyze current and expected REC supply in light of Connecticut’s policy changes
• Recommend solutions that balance REC availability, market stability, cost-containment, and the continued operation of in-state biomass resources.

As cited in the Order, SEA found that with Connecticut’s changes, New Hampshire Class III would become the only premium REC market outlet for roughly 110 MW of biomass generation (Order, p. 8).  This significantly increases the importance of setting a clear, predictable target calibrated to the expected output of these facilities.

SEA’s analysis concluded that a 5% Class III obligation would:

• Absorb expected production from eligible NH biomass and landfill gas facilities
• Support more stable staffing, fuel sourcing, and operations at those facilities
• Minimize reliance on ACPs
• Establish a binding prospective target that restores meaningful price signals
• Reduce the incentive for end-of-year procurement delays

This recommendation formed one of the analytical foundations for the NH DOE’s decision.

The NH DOE’s Decision: A Clear, Predictable 5% Class III Target for 2025

In its Order Setting the 2025 Class III Obligation, issued December 8, 2025, the NH DOE:

• Reduced the 2025 Class III requirement from 8% to 5%
• Cited SEA’s analysis of supply availability, Connecticut policy changes, and prospective target-setting methods
• Emphasized the need to support continued operation of New Hampshire’s biomass fleet
• Recognized the importance of a binding, proactive approach to avoid recurring market instability

The Order concludes that a 5% requirement is appropriate based on the data, stakeholder input, and SEA’s analytical findings (Order, pp. 7–8) .

A Forward-Looking Framework for Class III Stability

New Hampshire now has an opportunity to transition from the uncertainty of retrospective adjustments to a more stable, predictable regulatory regime—strengthening its biomass industry, supporting forest-product markets, and reducing unnecessary compliance volatility for suppliers and customers.

SEA is proud to have supported NH DOE in advancing a durable solution to one of the most complex and persistent RPS design challenges in the region.

Stay tuned for more insights from our RPS and REC market experts as the region adapts to shifting eligibility rules, changing resource mixes, and evolving policy objectives. Next week, we release our Next New England Renewable Energy Market Outlook (NE-REMO) briefing. Contact us to learn about how to sign up.