Michigan RPS report sees room for renewable growth

A joint report by the Michigan Public Service Commission (MPSC) and the Michigan Energy Office (MEO) says the state has the potential to grow its renewable power industry.

From a “theoretical technical perspective,” Michigan could meet a renewable target of 30% from resources within the state, the agencies say in the report. At the same time, there are complicating factors.

From a legal perspective, Michigan’s local governments address siting of all types of electrical generation, including renewables. Secondly, the agencies fear that Michigan’s current renewable program could be challenged under a recent federal court decision. To date, no party has directly challenged the constitutionality of Michigan’s current law, the agencies add.

The two agencies released the report Nov. 4. An initial draft had been issued Sept. 20 and public comments were taken through Oct. 20. A total of 373 comments, multiple attached documents, and over 1,000 emails were received in connection with the report.

Michigan’s current renewable portfolio standard (RPS) requires electric providers to ramp up their use of renewable energy in order to obtain 10% of their electricity sales from renewable resources in 2015.

In November 2012, Michigan voters rejected a proposal that would have required 25% renewables by 2025.

The RPS has resulted in approximately 1,400 MW of new renewable energy projects operating or currently under development. About 94% of the new projects are wind facilities and about half are owned by non-utilities, according to the report.

By the end of 2013, in total, Michigan consumers will have paid approximately $675m in surcharges supporting this expansion. Due to decreases in renewable energy costs, surcharge collections are expected to be significantly reduced or even eliminated for some electric providers beginning in 2014, because project costs are in some cases essentially equivalent to conventional generation under current conditions.

There are 29 states, Washington D.C., and 2 territories with renewable portfolio standards. There are eight states and two territories with renewable goals.

An apples-to-apples comparison of state renewable policies is difficult, the report said. States vary in the way renewables are defined, the agencies said in the report. Some states allow energy efficiency to be used to calculate RPS compliance.

During the years Michigan’s RPS has been in place, the price of the lowest-cost renewable resource, wind, has declined from over $100 per MWh in 2009 to $50 – $60 per MWh now.

Michigan law is structured to create Renewable Energy Credits (RECs) that satisfy the requirements for generation, and to allow trading in these credits.

The report itself is intended to be informative and intentionally stops short of making policy, according to the introduction.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.