Renewable Energy Mandate Proves Effective In Michigan

Posted by Joseph Bebon on February 20, 2017 No Comments
Categories : Policy Watch

State renewable portfolio standards (RPS), which require regulated utilities to procure a certain amount of clean energy, have been a major driver of renewables development across the U.S.

Highlighting that success, a new report from the Michigan Public Service Commission (MPSC) finds that all of Michigan’s electric providers met or exceeded the state’s 10% RPS in 2015. Granted, wind energy eclipses solar as a major part of the state’s power supply, but it is clear that the policy has led to cheaper and cleaner energy in Michigan, overall – and that’s a great thing!

In December, Gov. Rick Snyder, R-Mich., signed Public Act 342 into law. The bill, amending Act 295, increases the state’s RPS from 10% in 2015 to 12.5% in both 2019 and 2020; the final requirement is 15% in 2021. The new act becomes effective on April 20.

According to the MPSC’s seventh annual report on the implementation of the state’s RPS, wind power has been the primary source of new renewable energy in Michigan. Specifically, at the end of 2016, there was 1,575 MW of utility-scale wind in operation in Michigan.

In 2009, wind represented 7% of the energy credits created and increased to a whopping 53% in 2015. Biomass came in second with 15%, followed by landfill gas with 9% and hydroelectric with 8%. Solar, representing fewer than 1% of the energy credits, has remained in last place from 2009 to 2015, according to the report’s data.

“The combined efforts of the electric providers, renewable energy project developers, communities hosting renewable energy projects, renewable energy advocates and many others have contributed to the effective implementation of Michigan’s renewable energy standard,” says Sally Talberg, chairman of the MPSC.

“The standard can be credited with the development of over 1,670 MW of new renewable energy projects, and the average price of existing renewable energy contracts is considerably less than was forecast in initial renewable energy plans,” she adds. The report notes that these new projects represented an investment of roughly $3.3 billion.

For 2015, the estimated renewable energy percentage reached 9.6% – up from 9.1% in 2014, the report says. As allowed by Michigan law, electric providers used banked energy credits and excess energy optimization credits to achieve the full 10% requirement.

Notably, according to the report, 95% of the energy credits used for 2015 compliance were from renewable energy generated in Michigan.

The report says the actual cost of renewable energy contracts submitted to the commission to date continues to fall. The most recent wind power contracts approved by the MPSC have levelized costs in the $45/MWh to $69/MWh range – representing approximately half the levelized cost of the first renewable energy contracts approved in 2009 and 2010.

Weighting the levelized costs of all contracts by the generation in megawatt-hours results in an average cost of $73.83/MWh – substantially lower than the cost of a new coal-fired plant, the report says.

In addition, the combined weighted average cost of Michigan’s energy waste-reduction and renewable energy programs is $34.65/MWh – significantly lower than the cost of all types of new fossil-fuel plants.

“The process is now under way to implement the provisions in the new renewable energy standard as enacted in Public Act 342 of 2016,” says Talberg. “The commission intends to build on the successful activities already in place to guide Michigan’s path to meeting the 15 percent renewable energy standard in 2021.”

The full report can be read here.

According to DSIRE, a government-funded project operated by the N.C. Clean Energy Technology Center, 29 states and the District of Columbia currently have an RPS.

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