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Michigan may be next to mandate 100% clean energy. What comes next?

Michigan may be next to mandate 100% clean energy. What comes next?
In April 2023, DTE Energy announced the commissioning of Meridian Wind, a 225 MW wind farm that became the largest operating in Michigan. (Courtesy: DTE)

Michigan is poised to become the next state to set a 100% carbon-free energy standard. But exactly what that standard ultimately looks like – and what other energy policies are put in place to support it – is still up in the air. The outcome, whatever it may be, will be a bellwether for clean energy policy across the whole country.

There is momentum in Lansing behind legislation that would require utilities to source 60% of the electricity they provide from renewable energy starting on or around 2030 (HB 4759 and SB 271) and 100% from carbon-free sources (including nuclear energy) by 2040. Gov. Gretchen Whitmer dedicated a large portion of her recent address on “what’s next” for the state to energy policy, where the 100% carbon-free energy standard was the first step she listed as necessary to “protect our air and water for future generations while creating jobs, lowering costs, and enhancing reliability.” She also urged a better balance of local control with the statewide need for large energy generation projects by passing policies to improve the process of siting of wind, solar, and storage projects.

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Indeed, renewable and carbon-free energy standards are some of the key policies for reducing emissions while also enabling economic growth. A recent analysis from the Michigan Energy Innovation Business Council (Michigan EIBC) and 5 Lakes Energy found that a set of state-level clean energy policies, including a clean energy standard, can lead to the creation of about 160,000 more jobs and over 2.5% higher state GDP growth by 2050, all while decreasing household energy costs.

But while these clean energy standards are a necessary piece of any strategy to cut emissions, grow the economy, and preserve a reliable supply of energy, they are not sufficient by themselves to achieve those three goals. To work most effectively, the clean energy standards need to be accompanied by several other policies:  1) a reform for the process of siting new clean energy projects, 2) a target for the deployment of energy storage, 3) an elimination of the utility-imposed cap on the amount of distributed generation in Michigan, 4) an expansion of community solar programs so all Michiganders can access distributed energy and 5) a requirement to keep costs low by limiting utility ownership of projects.

Without these policies, the shift to cleaner energy in Michigan would be less cost-effective than it can and should be.

First, the governor was right to place permitting reform at the center of her list of what needs to be done for energy in this state. The number of disputes over the siting and permitting of new wind and solar projects has been increasing lately, leading to some projects being blocked entirely. Although it is absolutely critical to ensure that projects benefit local communities and respect local input, without a change, these conflicts stand to prevent the state from meeting its clean energy goals, threatening jobs, tax revenue, and economic development. A new process needs to be put in place that balances the need to build more clean energy infrastructure with the rights and well-being of local communities. As the governor said in her address, “It should be easier to create jobs and build wind and solar projects. Let’s permit clean energy projects through the [Michigan Public Service Commission] — just like all other sources of energy. This ensures local perspectives are reflected in the planning process while also allowing us to move faster on installation. And let’s pay the workers building these large clean energy projects wages you can raise a family on.”

Village of L’Anse Community Solar ribbon cutting ceremony in September 2019. Photo Credit: Julie Staveland, EGLE

Second, for the effort to cut emissions in Michigan to work, there needs to be a policy in place to ensure there is enough energy storage to back up the renewable energy that will power the state’s future. Fortunately, there is already a bill, HB 4256, introduced to the Michigan House that would establish a state-wide target of 2,500 MW of grid-scale energy storage by 2030 and require utilities to achieve that goal by competitively procuring storage systems. This target was supported by the 2022 Energy Storage Roadmap for Michigan.

Energy storage refers to a broad range of technologies from batteries to pumped storage hydropower to compressed air to a multitude of nascent approaches. What they all have in common is that they store energy so it can be deployed later. Storage fills in the gaps that occur when renewable sources like wind and solar are not producing electricity. That value was clearly demonstrated in Texas in early September, where brutally hot temperatures in the evening, when the sun is going down and solar energy output is dropping, led to an energy supply crunch. But rolling blackouts were ultimately avoided in great part because there was record-high deployment of electricity from batteries.

Storage also helps integrate renewable energy when wind and solar are pumping out lots of electricity. Sometimes more renewable energy is being produced than the grid needs, and so that energy is wasted, a problem called curtailment. But if storage is available to absorb that excess energy and deploy it later, renewable energy is used much more cost-effectively.

Storage can also mitigate the costs of improving electric reliability, by, for example, serving as a more cost-effective alternative to building more grid infrastructure. For example, in 2021 DTE Energy found that it could defer a proposed $15 million substation upgrade in Port Austin by deploying a $4.5 million solar plus storage alternative instead.

Next, for years, state statute has allowed Michigan utilities to cap the amount of distributed generation (such as rooftop solar) that they must interconnect to the grid in their service territory. This is an arbitrary limit on the ability of Michiganders to provide clean energy from their own homes and businesses. Utilities in the state are hitting their caps and in response, closing their programs. This uncertainty has a chilling effect on the growth of rooftop solar, hamstringing a cost-effective method of deploying clean energy. We need as many options on the table as possible to reach 100% clean energy by 2040, so rooftop solar and other forms of distributed generation should be free to grow.

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Next, in addition to eliminating the cap, Michigan needs to enable the expansion of community solar to allow Michiganders without access to rooftop solar the ability to benefit from renewable energy. Community solar programs allow customers to buy energy from distributed energy installations and reduce their utility bills. But these kinds of programs are rare in Michigan because of the lack of a legal framework for them to be established. Bills to create the proper framework to allow community solar to flourish have been introduced in Michigan previously, and those provisions should not be left behind in this current moment in Lansing.

Finally, wind and solar are some of the most affordable forms of electricity generation available. Renewable energy projects are built through a dynamic market, where many companies compete to develop new projects. That competition keeps the price down. However, utilities are financially incentivized to build and own new projects outside of this competitive market. Studies by the Michigan Public Service Commission have shown that time and time again, these utility-owned projects are more costly. As the amount of new renewable energy projects keeps skyrocketing to meet the long-term clean energy goals, it will be more important than ever to have rules that preserve competition so that those new energy projects can be built as affordably as possible.

Right now, policymakers in Michigan are more motivated than perhaps ever before to take action on moving the state toward more clean energy. We should not, however, let this moment pass without including all the necessary pieces of an effective clean energy policy. Reforming siting for large projects, setting storage targets, eliminating the distributed generation cap, enabling community solar, and setting rules that protect competition are components of an energy strategy that should not be left on the table.