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Published in Energy

Michigan’s clean energy transition continues with federal laws, utility plans, state political shift

BY Sunday, December 18, 2022 06:00pm

Two months ago, a group of environmental and clean energy groups issued a report examining how well Gov. Gretchen Whitmer’s climate change action plan would actually meet its target of statewide net-zero carbon emissions by 2050.

The “2030 Report” concluded that Whitmer’s MI Healthy Climate Plan would need to be bolder to collectively reduce emissions from the electricity generation, transportation, building and industrial sectors.

The environmental groups’ report also was released a month before Democrats achieved a trifecta in state government, retaining the executive branch and gaining a majority in the state House and Senate.

According to clean energy advocates and utility officials, that changes the calculation when lawmakers return in January. 

“A plan is only as good as you implement it, and that’s going to be a really important piece of the puzzle,” Charlotte Jameson, chief policy officer at the Michigan Environmental Council, said of Whitmer’s climate plan during a webinar earlier this month. The MEC was among three other groups to analyze the state’s MI Healthy Climate Plan.

“When we were developing this report and the administration and others were developing the climate plan, we looked at what we thought was going to be the politics of the Legislature over the next few years,” Jameson added. “But that changed last month. So I think we can be a little bolder in terms of our thought process around legislative solutions and how the new majorities in the House and Senate work with the administration on climate. That’s what I’m really excited about. … It just opens up a lot more possibilities.”

And so the stage is set for Michigan’s energy outlook, which will involve state-level clean energy plans and policies, coalition-building among Democrats, historic levels of federal infrastructure and stimulus funding, major utilities’ clean energy targets, and the auto industry’s ongoing shift to electric vehicles.

For clean energy groups, it remains to be seen how or whether lawmakers tackle the administration’s climate goals via legislation. Until now, those long-term targets for renewable energy and electric vehicle adoption have relied more on carrots than sticks, or incentives over mandates.

Jameson hopes to see more reliance on sticks, specifically a stronger renewable energy mandate of up to 60 percent by 2030, as well as a vehicle emissions standard that would require a certain percentage of new vehicle sales to be electric by 2034.

 

Utility targets

Meanwhile, utility officials in Michigan and elsewhere have started setting long-term emission-reduction and renewable energy targets similar to those outlined in Whitmer’s climate plan. They argue that they are well on their way in the clean energy transition and bristle at higher renewable energy mandates.

“We’re in implementation mode,” Brandon Hofmeister, Consumers Energy’s senior vice president of governmental, regulatory and public affairs, said of the utility’s clean energy plan.

The Jackson-based utility’s “integrated resource plan,” which the Michigan Public Service Commission approved in June, calls for retiring its remaining coal units in 2025, building out 8,000 megawatts (MW) of solar energy and 550 MW of energy storage by 2040, and achieving net-zero carbon emissions by 2040. The utility expects roughly 40 percent of its generation portfolio to be made up of renewables by 2030.

Detroit-based DTE Energy’s recently revised long-term clean energy plan, which is subject to approval by state regulators, aims for net-zero emissions by 2050, retiring its coal fleet by 2035, and adding 18,400 MW of renewables and 2,900 MW of storage by 2042.

A DTE executive told Bridge Michigan this month that the transition is happening because of technology advancements, decreasing costs and demand from customers and shareholders — “not because of any mandates.”

Hofmeister said that while a new Democratic majority in Lansing “opens up new possibilities,” he noted that Democrats’ margins are “razor thin.”

“Anything needs to be pragmatic, thoughtful and ideally bipartisan,” he said. “A lot of energy policy has been bipartisan in Michigan over the past several decades.”

Hofmeister added that electric vehicle policy is “one of the things I’m bullish on. There’s a lot of great things we can do with the new Legislature in the new year.”

In addition to electric vehicles, Consumers also is anticipating long-term power demand to grow from large advanced manufacturing projects. The utility often works closely with economic development officials on the state’s major project pipeline.

“These are big projects,” Hofmeister said. “On the energy demand side, it’s a big deal. They’re also big capital investments, a lot of mega projects that several years ago Michigan wasn’t seeing at that scale. We’re in the mix on a lot of these projects.”

 

 

More customer choice

Heading into the new year, advocates for large energy users also share a clean energy focus specifically around creating more favorable conditions for industrial customers to generate their own electricity or contract directly with third-party developers.

Rod Williamson, executive director of the Association of Businesses Advocating Tariff Equity (ABATE), said companies are increasingly looking to more directly control their power supplies and are moving away from virtual power purchase agreements.

“We’re seeing more of a desire to start to match the renewable energy supply with their actual electrical usage. That requires some newer structures in order to help those customers achieve that,” Williamson said.

Instead of contracting for power that may be produced by wind turbines in another region of the country, companies want to be closer to the power source to achieve their clean energy targets.

“We believe it just makes sense that the state should be considering those types of options that allow that type of private investment to come forward to develop these renewable energy projects, which would still bring benefits to the state as a whole,” he said. “That would leverage these companies and private investments to build that renewable energy generation in addition to what utilities are planning for in the (integrated resource planning) process.”

ABATE also plans to work with lawmakers to reintroduce legislation that failed to advance this session involving “asset backed electricity supply,” a way of opening Michigan’s relatively limited electric choice market for industrial manufacturers.

“While the investor-owned utilities are certainly willing to build new generation and charge those costs to all its customers, Michigan should also be fostering an environment that encourages independent, non-utility development of new generation,” Williamson said. “For this to happen, Michigan needs to open its energy market to these merchant developers.” 

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