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Energy Outlook: Solar and electric vehicles on Michigan’s horizon

BY Sunday, December 22, 2019 02:45pm

The beginnings of a large-scale solar power build-out, bolstering electric vehicle infrastructure and preparing a power grid of the future are among Michigan’s top energy-related trends expected in 2020.

Over the past year and a half, Michigan’s transition from coal-fired power plants took on a more firm schedule as each of the state’s regulated utilities filed formal plans with regulators that outline plant closures, new generation and ways to conserve energy.

The state’s largest utilities will gradually close coal plants by 2040, at the latest, and the state’s electricity portfolio will rely more heavily on natural gas, wind and solar, according to Integrated Resource Plans required under 2016 energy laws.

The solar industry, in particular, is expected to make up a greater share of the state’s renewable energy mix, where it is currently just 4 percent.

There appears to be more certainty in the near term for medium- and large-scale solar projects. Jackson-based Consumers Energy plans to own or buy 5,000 megawatts of new solar by 2030. Currently, Michigan has a total installed solar capacity of less than 200 MW. 

Under a settlement agreement with Consumers this year, nearly 600 MW will be built by independent power producers by 2023, starting next year. Consumers plans to competitively bid for solar contracts beyond that. Meanwhile, New York-based developer Ranger Power is in the early stages of two large projects in Calhoun and Shiawassee counties.

The build-out of larger solar projects, though, is expected to raise additional land use and siting concerns. Some communities have been apprehensive about allowing utility-scale solar projects, similar to disputes over siting wind energy. 

“That’s going to be an important area of policy work going forward to support that (solar) build-out,” said Charlotte Jameson, program director at the Michigan Environmental Council.

As utilities pursue larger projects, much more uncertainty surrounds the role of small-scale and residential solar projects. 

Sweeping 2016 energy reforms put in place a distributed generation program to replace Michigan’s net metering program, which required utilities to credit customers who send excess power from renewable energy back to the grid at the retail price of power. The Michigan Public Service Commission spent considerable time designing a new program, which requires utility customers to purchase their energy needs upfront at retail rates and be credited at a new “outflow” rate. Utilities have wrangled with clean energy advocates about what that outflow rate should be, with utilities arguing it should be the wholesale price of power and advocates wanting to maintain retail credits.

Detroit-based DTE Energy was the first to have its distributed generation program approved, and outflow rates were set at roughly midway between wholesale and retail rates. Solar advocates maintain this removes incentives to install rooftop solar, although DTE continues to see new participants in its program.

The growing problem — and one that’s likely to bear out over the next year — is when utilities reach the cap in the number of customers who can participate. The cap is set at 1 percent of a utility’s total capacity. One utility in the Upper Peninsula already has reached its cap, while Consumers and DTE are estimated to reach theirs over the next year or two. The Michigan Public Service Commission reported this month that solar installations grew nearly 57 percent in 2018.

“We’re really going to run into a difficult spot when it comes to small-scale solar in 2020,” Jameson said.

Additionally, clean energy advocates say Michigan lags behind states like Minnesota and Illinois by not having “community solar” laws that allow residents who may not be able to afford or accommodate solar to invest in local small-scale projects.

Bipartisan bills introduced throughout 2019 aim to address distributed generation and community solar. Although clean energy advocates support the legislation, DTE and Consumers came out against them. 

In October, Consumers Energy CEO Patti Poppe said the bills “really aren’t necessary” in light of the company’s long-term Integrated Resource Plan approved in June.

Laura Sherman, president of the Michigan Energy Innovation Business Council, says solar installations are part of a broader trend of utility customers and businesses taking control of their energy usage. Much of the shift, she added, is being driven by declining costs.

“Big cost declines across the board are driving utilities, customers and cities toward advanced energy, wind, solar, storage and energy management,” she said. 

EVs and grid planning

As major automakers across the globe prepare to build new electric vehicle models in the coming years, state regulators and utilities are actively preparing charging station infrastructure in Michigan.

Consumers and DTE have launched their own electric vehicle pilot programs totaling a combined $23 million for charging station rebates, both for homes and in public areas. In 2019, the Michigan Energy Office also commissioned studies on optimal locations for public fast-charging stations across the state. The goal is to give EV drivers peace of mind to cross the state without running out of charge. The state is also using $10 million from its $64.8 million in Volkswagen settlement funds to contribute to rebates for public fast-charging stations.

Lawmakers, too, have taken up the issue. In June, state Sen. Mallory McMorrow, D-Royal Oak, led a bipartisan package of bills that would encourage charging stations at state parks and carpools while also giving incentives to property owners who install stations.

The movement around EV charging is meant to align with automakers’ ramp up of EV models in the coming years.

“Our EV charging landscape is really going to grow,” Sherman said. “That aids in customer confidence along with the new models coming out.”

The Michigan Public Service Commission — which includes two new members appointed this year by Gov. Gretchen Whitmer — also launched the MI Power Grid initiative in October. The project is meant to prepare Michigan for the shift from large, centralized power plants to more distributed generation driven by declining costs.

“For us, the push is really to make sure that’s a policy-driven process,” Jameson said. “That we’re going to actually see commission orders or some real decision-making coming out as opposed to more reports.”

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