Consumers Energy's community solar array at Grand Valley State University.

Consumers Energy via Creative Commons

Consumers Energy's community solar array at Grand Valley State University.

Michigan bills limit opportunities for renewable energy development, advocates say

Clean energy groups in Michigan are taking a variety of positions on a proposed statewide energy policy overhaul, but all agree the bills could be strengthened to encourage in-state renewable energy development apart from utilities.

Even though the proposal calls for increasing the renewable portfolio standard to 15 percent, some advocates say existing state policy should be maintained that requires 50 percent of renewable projects to be developed by independent power producers. As proposed, Senate Bills 437 and 438 would eliminate the “50/50 split” between utilities and independent producers under a 2008 statewide law.

The proposed bills also establish a “distributed generation program” that charges grid-usage fees for solar customers in lieu of the existing net metering program. That fee would be set by the Michigan Public Service Commission, but “does not fairly reflect the cost of distributive generation,” according to the Michigan Conservative Energy Forum.

“Requiring power generators to pay for distribution, transmission, and generation when they are not creating those costs is essentially a new and unfair tax that will effectively kill Michigan’s solar market, denying homeowners control they want over their own energy production and use,” MCEF executive director Larry Ward said in a Nov. 28 memo to lawmakers.

The MCEF — a coalition of politically conservative groups pushing for clean energy development — is opposed to the bills. Other clean energy groups interviewed for this story are neutral or in support of the bills.

Roughly two years in the making, though, the energy policy overhaul may have a good chance at passing during the legislature’s remaining lame duck session this year.

SBs 437 and 438 — sponsored by Republican Sens. Mike Nofs and John Proos — passed the Senate with bipartisan support on Nov. 10. The bills gained backing from Democrats and some environmental groups after including a provision to increase the state’s renewable portfolio standard to 15 percent by 2021. The bills also have support from the state’s major utilities, DTE Energy and Consumers Energy, as well as the Michigan Chamber of Commerce.

Observers are cautiously optimistic about a similar outcome in the House as in the Senate, though opposition to the bills remains among some business groups as well as House Republicans over what they see as attacks on the state’s electric choice market.

Others also want work on the bills to halt pending the transition to President-elect Donald Trump’s administration and a potentially new direction from federal agencies. The way the Michigan Legislature is structured, the bills would have to be re-introduced during the next session, which would also see a turnover of several key positions in the House due to term limits.

‘Incremental improvement’

But on the clean energy front, some advocates are supporting the bills even though they believe they could be strengthened.

James Clift, policy director of the Michigan Environmental Council, said while his group supported the bills as passed by the Senate, they are hoping the House adds its own measures that structure energy efficiency incentives differently and maintain the status quo for net metering.

“We support (the bills) as an incremental improvement,” said Clift, who is “fairly optimistic” they will pass the House. Any changes made in the lower chamber would go back to the Senate for approval before reaching Gov. Rick Snyder’s desk.

The bills could also do more to strengthen ratepayer protections through greater use of advanced meters and time-of-use rates to reduce energy demand, Clift added.

As for the renewable portfolio standard being increased to 15 percent: “We think that still represents the bare minimum. If you’re really out protecting the interests of ratepayers, we think utilities should be invested at least that level. It’s good to see a floor in the law, but we think a good business model for utilities would have them above that,” he said.

Ward, of the MCEF, said an additional 5 percent is “not a lot, folks. It’s not a heavy lift. I keep telling guys whining about the mandate, ‘It’s a mandate, but it’s not like anyone’s not going to do it. It’s going to happen, why are you arguing about it?’

“If that’s all it takes to bring Democrats on board, then good. They haven’t been asking for anything else,” he said.

Clift and others say the 50/50 requirement on renewable development has also helped drive down costs since it became law in 2008.

“The market access that was created by the 50/50 split in the renewable standard — the fact that that is not in (the bills) is a concern,” said Liesl Eichler Clark, president of the Michigan Energy Innovation Business Council. The MEIBC is neutral on the bills.

Overall, clean energy groups — as well as Gov. Rick Snyder’s administration — support maintaining the energy efficiency standard. The bills also remove existing spending caps and provide utilities incentives for efficiency spending.

Solar development threatened

Clean energy groups also argue that the states’ net metering program — which reimburses customers at retail rates and caps participation at 1 percent of utilities’ peak energy demand — is far from being oversubscribed throughout most of the state, making the case to maintain the status quo.

“The program is capped. I don’t understand why they’re screwing around with it,” Eichler Clark said.

“I think the time to revise (net metering compensation) is when you move everyone to time-of-use rates,” Clift said. “A crude measure to add a grid access charge to net metering isn’t a proactive use of time and we think it will provide a disadvantage (to self generation).”

SB 438 largely passes the implementation of a new “distributed generation program” on to state regulators. An earlier version of the bill would have increased the net metering program cap but reimbursed customers for their electricity at wholesale, rather than retail, rates.

Ward, of the MCEF, said the “grid usage fee added in at the last minute is pure utility companies trying to screw that industry bad.”

The bill also has a “grandfather” provision that allows existing net metering customers to continue participating in the program, but only for 10 years after they enrolled.

“That’s not a grandfather clause, it’s a sunset,” Ward said.

Clean energy momentum

Advocates are optimistic that the legislation overall is unlikely to stop the clean energy momentum already happening in the state.

Major utilities have vowed to continue to shut down coal plants despite the presidential election outcome, and even a slight renewable standard increase sends a signal to potential developers and manufacturers, Eichler Clark said.

“There are so many market signals right now, the momentum behind this industry is really irreversible,” she said. “The question comes with what kind of pace it will have.”

Clift agrees, saying “energy markets have a little life of their own. They’re going to keep moving in the direction they’ve been moving.”

As coal plants close, the question remains to what extent that generation will be replaced by renewables, natural gas and energy efficiency.

“We should be thoughtful about these decisions and what they mean from the ratepayers’ perspective,” Clift said.

One thought on “Michigan bills limit opportunities for renewable energy development, advocates say

  1. No one mentions why SB438 will destroy the solar industry. It’s actually quite simple: The bill reduces the summer over-production credits from 15c/kWh to 3c/kWh – an 80% reduction. This extends the solar payback from the current 10-12 years to over 30 years. Nn one will install residential or small commercial solar in Michigan if this bill passes.

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