Published in Energy

Clean energy, Line 5, electric choice on Michigan’s energy docket in 2021

BY Sunday, December 20, 2020 05:30pm

Gov. Gretchen Whitmer signed an executive order in late September creating a long-term climate change plan calling for the state to be carbon neutral by 2050.

It’s an ambitious target at the state level, but it’s also one of myriad ways the public and private sectors are gearing up for the clean energy future. 

This past year, the state’s two large investor-owned utilities — Detroit-based DTE Energy and Jackson-based Consumers Energy — announced their own emission-reduction targets calling for net zero by 2050 and 2040, respectively. Meanwhile, cities like Grand Rapids, Traverse City and Ann Arbor want to reduce their emissions through new renewable energy projects and electrified vehicle fleets, as well as by cutting energy use in buildings.

Taken together, the plans chart a clear path to reducing Michigan’s use of fossil fuels, although fissures have emerged heading into 2021.

Distributed solar dispute

The rapidly declining cost of solar energy makes it an ideal candidate for utilities to build out their renewable energy portfolios. It’s also an increasingly attractive option for homeowners and small businesses that want to reduce their electric bills with an upfront investment that pays off over years.

Although Consumers and DTE have announced plans to add thousands of megawatts of new solar energy, the companies want to build or purchase it in large quantities. Utilities in Michigan and other states have put up resistance to incentives for adding small, customer-owned solar. In Michigan, clean energy advocates have called for fair compensation rates for the customer-owned power sent back to the grid, as well as lifting caps in state law on the number of customers who can participate in distributed generation programs. Those program limits are increasingly being met, including in Consumers’ territory, causing the utility to voluntarily double the program size.

Laura Sherman, president of the Michigan Energy Innovation Business Council, says a key way utilities could support small-scale solar is by supporting legislation to lift the program caps entirely.

“For our members, the biggest existential threat is this cap,” Sherman said, adding that new legislation on the issue is “going to be a top priority for us next year. The need for a legislative fix statewide to avoid relying on the random generosity of utilities is pretty important.”

Margrethe Kearney, Grand Rapids-based staff attorney for the Environmental Law and Policy Center, said the distributed generation debate particularly affects small businesses that might want to offset their electricity with renewables, either for economic or environmental reasons.

“We need to figure out how to optimize private and utility investments in distributed generation,” Kearney said. “Next year, that will be a huge focus at the (Public Service) Commission and what advocates are working on.”

The MEIBC also is pushing for action to open community solar projects in Michigan where utility customers who may rent or not be on suitable property to install solar can still subscribe to it. As well, the group wants to see new bills introduced that expand property assessed clean energy (PACE) financing for energy efficiency and renewable energy projects on commercial properties.

Line 5, clean energy standards

Meanwhile, environmental groups are closely following the legal dispute over the Line 5 pipeline and proposed tunnel project in the Straits of Mackinac. The debate is playing out in state and federal courts as well as the Michigan Public Service Commission, which will decide whether Enbridge Inc. can move forward with its tunnel plan that was negotiated in the final weeks of former Gov. Rick Snyder’s administration.

Whitmer announced last month a plan to revoke Enbridge’s easement to operate Line 5 in its current form along the Straits of Mackinac lakebed. Whitmer gave Enbridge a six-month window to shut down the pipeline, which the company is challenging in court, while still leaving open the option for a tunnel.

Environmental groups, tribes and some Northern Michigan hospitality businesses are aligned in support of shutting down Line 5 while construction trades, the Michigan Chamber of Commerce and oil industry groups favor the tunnel.

Kearney said the ELPC has intervened in the pipeline case with state regulators.

“Our focus has been on climate change and measuring the impacts the tunnel will have on the climate, which is a huge economic issue for municipalities and businesses,” she said. “We should not be developing significant infrastructure that’s not going to be used in 20 years.”

Charlotte Jameson, director of legislative affairs, drinking water and energy with the Michigan Environmental Council, also notes that Michigan’s renewable and energy efficiency standards, which were expanded slightly in 2016 energy reforms, are scheduled to sunset in 2021. 

While the Snyder administration set longer term, non-binding goals for renewables and utilities have emission-reduction targets, a state law requiring specific percentages is key to holding utilities accountable, Jameson said.

“Even with the economics favoring clean, efficient energy, that’s not sufficient. We will need strong standards to move us in the right direction on climate,” Jameson said. “My hope is there’s some renewed focus on those standards in the coming year.”

Large energy users’ priorities

Outside of the clean energy space, advocates for large energy users — industrial utility customers — plan to push next year for legislation that opens up Michigan’s retail choice market. For more than a decade, Michigan’s retail choice program allowing customers to shop among alternative energy suppliers is capped at 10 percent of a utility’s electric sales. For years, a queue of companies have been looking to jump in. 

Although the cap was fiercely debated but not lifted as part of the 2016 energy reforms, groups are still looking to make Michigan’s market more flexible through “asset backed retail choice,” said Rod Williamson, executive director of the Association of Businesses Advocating Tariff Equity (ABATE).

The legislation, which may be introduced in early 2021, would create some exemptions from the 10-percent cap, require large energy customers to give utilities a several-year notice if they plan to leave, and require a certain amount of in-state generation.

“We think this hits all key points of Michigan-based assets and longer-term contracts with customers,” Williamson said. “It addresses utility concerns about jumping in and out. We think it provides a lot of upside to Michigan and these energy-intensive customers.” 

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