Michigan ranks among the top Midwestern states for clean energy jobs, but environmental advocates say further policy changes are needed to push the state from “good” to “great.”
The Chicago-based Environmental Law and Policy Center (ELPC) published a report on Dec. 4 showing Michigan has 316 companies in the wind and solar energy supply chain, comprising more than 9,500 jobs. Only Illinois has more people employed in clean energy among the seven Midwestern states the group has surveyed since 2015.
“It really makes Michigan a hub in the growing clean energy economy,” said ELPC Executive Director Howard Learner.
The report includes wind and solar manufacturers, contractors and installers, and other professional services like design, finance and insurance firms. A majority of Michigan’s clean energy companies — 249 firms — are involved in solar.
Matt Lentini, vice president of energy at Southfield-based construction firm Barton Malow Co., said the company started focusing on clean energy more than a decade ago. Barton Malow has built 13 wind projects across the state since 2007. The solar market is poised to play an even bigger role for the company, Lentini said, particularly compared to Ohio where policymakers have been criticized for stifling clean energy growth.
“We’ve seen the opportunity potential in Michigan second-to-none with solar,” he said. “There’s no churning in Ohio, but a lot of activity in Michigan.”
The ELPC report cites a series of recent policy changes that have helped the industry, including sweeping 2016 energy laws that created a new long-term planning process for utilities, a bill signed last month by Gov. Gretchen Whitmer that clarifies tax exemptions for small-scale solar projects, and a settlement agreement with Jackson-based Consumers Energy that will lead to a large buildout of independently owned solar projects within the coming years.
For environmental advocates, these are good signs for the industry.
“Clean energy is not some specialized piece of the economy, it is the economy,” said Margrethe Kearney, staff attorney at the ELPC.
More changes needed
While clean energy has seen positive growth in Michigan, advocates say further policy reforms are needed to attract more companies. However, their goals have been met with opposition from the state’s largest utilities.
In particular, lawmakers and state regulators should address pricing for rooftop solar compensation, enable cooperative-style community solar and expand the state’s 15 percent renewable energy standard by 2021, the ELPC report says.
Illinois and Minnesota, for example, have set 25 percent renewable energy standards by 2025. While Michigan’s major utilities — Detroit-based DTE Energy and Consumers Energy — have pledged long-term targets that extend beyond the state mandate, they have opposed initiatives in recent years to expand the renewable standard.
The 15 percent mandate is “a little lackluster of a goal,” Kearney said, adding that “Michigan can do better and compete” with states like Illinois and Minnesota.
“(Whitmer) should challenge the legislature to step up and make Michigan a leader,” Kearney said.
A series of bills introduced earlier this year would tackle other ELPC policy goals.
H.B. 4955, introduced by state Rep. Michele Hoitenga, R-Manton, would allow residents to subscribe to community solar projects if they are unable to install it themselves.
“This particularly benefits low-income communities who too often bear the brunt of pollution from climate change,” Kearney said.
A bill package called Powering Michigan Forward introduced in October would raise the amount that solar panel owners are credited for when they send excess power back to the grid. Michigan utilities are transitioning from a “net metering” program that credits customers at the full retail price of power to a “distributed generation” program that is less than the retail price but more than the wholesale price of power, which utilities initially sought. The change was outlined in the 2016 energy laws.
“Credits are supposed to be fair and equitable, but in reality they’re neither,” Kearney said, noting the situation discourages utility customers from installing solar in hopes of recovering their upfront investment.
The amount of this compensation has been hotly contested at the Michigan Public Service Commission for the past two years, with utilities arguing that customers credited at the retail price of power are being subsidized to still rely on the grid by all other customers.
Utilities are opposed to the package of bills pending at the House Energy Committee. They have opposed versions of similar bills in the past three legislative sessions.
In an Oct. 24 earnings call, Consumers Energy CEO Patti Poppe said the bills “really aren’t necessary” in light of the company’s long-term Integrated Resource Plan approved this year.
“I think some of the proposals that are on the table are trying to do an end around and they’re not getting much traction,” Poppe said on the call.
Another policy concern for ELPC involves the federal Public Utility Regulatory Policies Act (PURPA) of 1978, which requires utilities to buy power from independent producers at a cost for which utilities would build it themselves. This is known as the “avoided cost.”
Earlier this year, the Federal Energy Regulatory Commission proposed changes that critics say would limit the ability for independent producers to participate in the market. Utilities maintain that the federal law is outdated and that customers are overpaying for power that, in some cases, has been under contract for decades.
A settlement agreement between Consumers Energy and independent producers earlier this year will lead to more than 500 MW of solar built in the near term as Consumers transitions to a competitive bidding process. But questions remain over PURPA contracts in DTE’s territory and elsewhere in the state.
“We’ve seen PURPA exert a really important competitive pressure on our monopoly utilities in Michigan,” Kearney said. “There’s a concern with the proposed (federal) changes that it’s sort of death by a thousand cuts. A number of small changes would make it very difficult for independent power producers to engage on a level playing field with utilities.”
Amid policy uncertainty at the state and federal level, the ELPC is optimistic that clean energy is seeing increasingly bipartisan support.
“Michigan is in a good place with clean energy jobs,” Kearney said. “If the legislature and Public Service Commission enact recommendations in the report, it would be not in a good place, but a great place.”