A wind turbine near Alma, Michigan. (Photo by Corey Seeman via Creative Commons)

Study: Michigan could expand renewable energy at low cost

With Michigan’s renewable energy standard set to expire at the end of 2015, and a high-profile fight over the standard in 2012 still fresh in many minds, debate has swirled about the costs and benefits of renewing or strengthening the law.

Amid the discussion, a recent study finds that Michigan could more than triple its renewable energy resources by 2030, with virtually no extra cost to consumers

Michigan’s current Renewable Energy Standard (RES) – created by a 2008 law – is among the least ambitious in the country. It requires just 10 percent of the state’s electricity to come from renewable sources by 2015.

That compares to Illinois and Minnesota standards that call for 25 percent by 2025; a number of states calling for 20 percent by 2020; and on the high end, a New York standard of 29 percent by 2015 and California’s 33 percent by 2020.

Increasing Michigan’s standard to more than 30 percent is not only feasible, according to the March 12 report by the Union of Concerned Scientists, but would result in only a 0.3 percent increase for ratepayers over 15 years.

“That’s 30 cents on a hundred dollar bill, and you get all the benefits of renewable energy – carbon emissions reductions, reducing dependence on fossil fuels,” said UCS energy analyst Sam Gomberg. “Our analysis really builds on what’s already been done in the state – it’s another piece in the puzzle showing what Michigan’s energy future should look like.”

The UCS is a member of RE-AMP, which also publishes Midwest Energy News.

The UCS calls for a standard mandating that renewable energy make up 1.5 percent more of the state’s total energy mix each year, accounting for 32.5 percent by 2030. That is actually the same rate of gain enshrined in the state’s current standard, Gomberg explained.

The current standard didn’t require utilities to report results for about four years after the program was created. The UCS’s proposed program would require accounting every year for 15 years through 2030.

The UCS also evaluated a scenario that would culminate in renewables making up 17.5 percent of the energy mix by 2020. That situation would offer far fewer environmental, health and economic benefits, said the report, which used modeling methods developed by the National Renewable Energy Laboratory.

Chilling renewable development

In recommendations included in the report, the UCS calls for the Michigan legislature and Governor Rick Snyder to pass legislation extending an RES that calls for at least 30 percent renewable energy by 2030. The report also recommends that Snyder or the legislature encourage or mandate that utilities sign long-term power purchase agreements with renewable providers, which should spark more construction of renewable energy projects.

Now renewable energy developers and investors are “pulling back,” in Gomberg’s words, “because they don’t have the certainty they need to know demand for renewable energy will be there beyond 2015.”

“Construction has already started on the last renewable energy projects to meet the current standard,” he added. “It’s also important from the utility side of things – what do they do with old coal-fired power plants? How much do they really start looking at natural gas?”

The report says that renewable power which helps meet the RES costs an average $78 per MWh, while building a new coal plant costs an estimated $133 per MWh.

Michigan utilities are considered to be firmly on target to meet the 2015 goal of 10 percent renewables. Utilities are allowed to recover the costs of their renewable investments from ratepayers, though those charges are capped at $3 per customer per month. The current RES requirement is mandatory, and utilities risk a fine for noncompliance.

Utilities also get credits toward the requirement for things including using in-state labor and production on projects and producing electricity during peak hours. “Triple credit” is given for solar PV energy. Gomberg says the UCS’s modeling assumed that such provisions would continue.

Shifting energy landscape

Michigan has many archaic coal plants, with its fleet named among the most vulnerable to closing by the UCS in its “Ripe for Retirement” report. The UCS identified 7,000 MW of Michigan coal-fired power as uneconomical and likely to go off-line.

In 2008, coal provided 60 percent of Michigan’s energy; by 2012 it was just 48 percent, with the price of coal in Michigan increasing 50 percent during that time. Natural gas generation from 2008 to 2012 increased from eight to 20 percent. And renewables not counting hydropower grew from 2.2 percent to 3.2 percent; with hydro providing 1.2 percent. The state also has significant reliance on nuclear power.

Shifting to renewables from coal would mean a more stable and secure energy base, the UCS argues, and a strengthened RES would facilitate this shift while offering other economic benefits.

The report projects $9.5 billion in new capital investment between 2016-2030. “Such investment would also generate millions of dollars in new tax revenue, expenditures on facility operation and maintenance, and wind power land lease payments for local communities.”

The UCS says there is plenty of potential for renewables to provide for a large portion of the state’s energy needs. In fact the union says onshore wind energy in Michigan could theoretically provide more than five times the energy the state used in 2012, and solar power including in urban areas could provide 71 percent of 2012 power used. That’s not to mention new geothermal, offshore wind, hydropower (installations could be added to existing dams) or other clean sources.

Political obstacles

In 2012, Michigan voters rejected a proposal that would have increased the renewable energy standard to 25 percent by 2025. Polls had initially showed strong voter interest in Proposal 3, and former President Bill Clinton even voiced his support. Observers theorized that an influx of campaign spending from utilities and their representatives led to the measure’s ultimate defeat.

Gov. Snyder has announced his support for clean power in general and for replacing coal plants with renewables and natural gas.

Gomberg said there is no legislation pending or in the works that would extend Michigan’s RES. Despite strong public support for renewables, he doesn’t expect such legislation to pass any time soon.

“Even with the abundance of evidence that’s out there publicly and that’s been delivered to the Governor and that legislators have access to showing renewable energy is good for Michigan,” said Gomberg, “it’s frustrating that renewable energy is still a bit of a hot potato. All the evidence says that this is a good direction for Michigan to go in. But the political world is often different than reality.”

11 thoughts on “Study: Michigan could expand renewable energy at low cost

  1. Did the study include the cost of transmission lines to get the kwh to where the people are located? If not, a very deceiving “study” which implies a study written to push an agenda. If a kwh is produced in the forest, and no wires are there to distribute it, is it really energy?

  2. If, in fact, renewables are as cost competitive with conventional, an argument could be made that RES’s are unnecessary. Renewables will be driven by pure economics, as it should be.

  3. Comment (1;) Why would Distributed RE be produced in areas where it is not needed? The sun shines everywhere! Solar energy replaces the need for ubiqutous high power trans lines. It is also true for all states, not just MI! Good for them on leading the way to sustainability!
    The eastern shore of L Michigan is prime for wind energy. The NIMBYs need to relax into a new reality, and realize it won’t hurt you.

  4. It’s time that the people who traditionally vote republican in Michigan and are supporters of improving the environment, seek national energy security, and improving the economy start speaking up. Reasonable individuals shouldn’t be cowed by a minority.

  5. I was wonder if they ‘averaged in’ the cost of another 1M gallon Kalamazoo into those figures; that it might reduce them even more…..

  6. I looked at the UCS report, and it doesn’t indicate what assumptions were made about the cost of wind and solar (or rather, it says something like “we looked at a bunch of studies and then picked numbers we thought fit Michigan”).

    Before it is reasonable to believe the UCS report, it would be important to know just how they tweaked cost estimates for the Michigan case. For example, it tends to be windier in Minnesota and Illinois on average compared to Michigan, meaning that the high fixed cost of construction for wind is spread over fewer units of output. Did they adjust for this or not? The report doesn’t say.

  7. Dan
    Getting off of fossil fuels is what we can pass on to our children. Climate change is deadly at the higher levels of emissions and extended delay of action. The sooner we get off of fossil fuels, the better climate our children can live in.

  8. I work in the energy sector and am indifferent to how energy is produced. Arguments that renewable energy costs more is incorrect. The cost to generate is what important and all renewables generate cheaper power than coal, propane and diesel and is on par with NG but natural gas is arbitrarily low.

    The key to this is that all sides need to understand that a blend of all sources is critical to lower cost energy, a clean environment and a continuous competitive market.

  9. I am the lead author on the report discussed in this article and thought I’d take a minute to briefly answer a few of the questions posed here in the comments:

    John: the study did include the cost to interconnect renewable energy facilities to the grid and the cost of any additional transmission lines that might be needed.

    Michael: If you look at the end notes to the report, many of our assumptions are included there. for example, we assumed an installed cost for wind at just over $2,000 per installed kilowatt, which is slightly lower than costs reported by utilities, but higher than the costs reported by project developers. We also used the most recent data available for wind capacity factors, based on GIS studies done by the National Renewable Energy Lab — so yes, we did take into account the specific characteristics of Michigan’s wind resource.

    Thank you.

  10. Kari, you report that “Gomberg said there is no legislation pending or in the works that would extend Michigan’s RES.” Please take a look at Michigan Senate Bill 322 (2013) introduced by Hopgood http://legislature.mi.gov/doc.aspx?2013-SB-0322 which would expand renewable energy in the state to 22%. Hopgood is a democrat, and both of Michigan’s chambers are controlled by republicans, so it is unlikely this bill will move forward.

  11. Michigan is a great example of what clean energy can accomplish with the right policies in place.

    The Michigan RES has been an overwhelming success, and the state’s fleet of wind turbines already power more than 300,000 homes.

    Over 3,000 Michiganders work in wind power out of the 80,000 across the country, building and maintaining the high-tech components that keep these innovative machines up and running.

    Thanks to the state’s embracing clean energy, over $1.9 billion has been invested into Michigan wind, driving the economy forward and providing thousands of much-needed jobs.

    Affordable, reliable and clean, wind power is a win-win for Michiganders and the country.

    For more about wind power, visit http://www.awea.org

    Peebles Squire