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The debate over renewable energy in Michigan is again in full swing. Within the past two weeks, advocates launched a ballot initiative to require utilities to hit 30 percent renewables by 2030, and Consumers Energy announced a goal to end coal use and up its renewable portfolio to 40 percent by 2040. (Consumers’ announcement follows a similar one last year by DTE Energy.)
Meanwhile, the Michigan Public Service Commission a week ago offered its latest annual report on the implementation of the state’s existing renewable portfolio standard. In short: it’s working as intended. Utilities met a 10 percent renewable standard by 2015 and are likely to meet a 15 percent target by 2021. Here are five takeaways from the report:
The cost of renewables is falling much faster than regulators expected. The average price for renewable contracts plunged 38 percent between 2009 and 2016 to $72.60 per megawatt hour (MWh). Wind contracts were even cheaper, landing between $45 to $69 per MWh, or roughly half of what they were when the 10 percent standard took effect. The MPSC reports that not only are renewables on a “downward pricing trend,” but also that the prices are “much lower than expected.”
Renewables come with costs, but so does everything else on the grid. While renewable energy “has had an impact on electric rates,” it “should be considered in context of other rate drivers as well,” the MPSC says. For example, fuel costs, environmental controls and infrastructure investments also contribute to rate increases. Under the law, utilities are allowed to add a renewables surcharge to bills, which are limited to $3 a month for residential customers, $16.58 a month for commercial customers, and $187.50 a month for industrial customers. However, through 2016 only two utilities — Indiana Michigan Power Co. and Wisconsin Electric Power Co. — still had surcharges in place.
Renewables beat coal by a long shot — and they’re closing in on natural gas. Renewable energy has left coal in the dust, coming it at nearly half the cost of power from a new, conventional coal plant. The better benchmark to compare renewables with today is natural gas. This is playing out as DTE Energy looks to build a nearly $1 billion gas plant for new capacity that clean energy supporters argue could be done cheaper with renewables. Last year, the Energy Information Administration projected levelized natural gas costs to range from $59 to $101 per MWh, depending on the type of plant.
Utilities aren’t as aggressive as their percentages indicate. James Clift, policy director with the Michigan Environmental Council, points to an important caveat with the numbers. Utilities can bank renewable energy credits (RECs) for anticipated generation. That means new generation may not be built for up to five years under the 2016 energy law. According to the MPSC, 60 percent of the RECs used to comply in 2016 were from generation in 2013 or 2014. Utilities’ actual portfolios are “just barely at 10 percent now, some aren’t even at 10 percent yet,” Clift said.
Renewable energy has created thousands of jobs under the standard. Alternative energy sector employment reached 9,100 jobs in Michigan halfway through 2017, according to the state Bureau of Labor Market Information and Strategic Initiatives. The figure was at 6,775 jobs in 2005. By 2020, the agency expects the sector to grow by 7.1 percent. The MPSC also reports that the state’s original 10 percent standard spurred $3.3 billion in renewable energy investment statewide.