Michigan’s Renewable Energy Law Levels Off Next Year. What’s Next?

Expanded renewable energy law, long-term utility planning or targets set by the governor are all on the table.

Michigan’s renewable energy standard has helped spur utility investments in clean energy over the past decade, but that may end after next year when the state targets level off at 15% renewable generation.

There’s growing consensus among clean energy advocates and lawmakers that Michigan needs to press forward, either eliminating carbon emissions or fossil fuels from its electricity portfolio by 2050.

But how the state gets there and the role of renewable energy standards are unclear, particularly as renewable prices fall and utilities make voluntary pledges to clean up their generation. Michigan set a 10% renewable portfolio standard in 2008 and extended it under sweeping 2016 energy reforms to require 15% of the state’s electricity to come from renewable sources by 2021.

“We’ve seen the RPS in Michigan being an important component of how the overall energy mix is created,” said Liesl Eichler Clark, director of the state Department of Environment, Great Lakes and Energy. “In the meantime, the increasing speed with which we’ve seen the price of renewables drop has been a really important part of the equation. We’re seeing market economics play out in a different way.”

These “market forces,” Eichler Clark added, are “requiring utilities to make different decisions.”

Here are three possible paths the state could take to ramp up renewables and curb emissions in the coming decades.

Path 1: 100% by 2050

Last month, Democrats in the state House and Senate introduced bills to grow Michigan’s renewable portfolio standard to 100% by 2050, with increasing targets in 2025, 2032 and 2040. Despite a growing number of Democrats endorsing it, the plan faces long odds in Michigan’s Republican-controlled Legislature.

The current 15% standard is “laughably low,” said state Rep. Yousef Rabhi, D-Ann Arbor, the lead sponsor of a bill that sets a 100% target. The bill, HB 5420, has 29 Democratic co-sponsors. A year and a half ago, a similar bill Rabhi introduced had one co-sponsor.

“That, to me, is a sign that this idea that we need to set a 100% goal for ourselves at least by 2050 is ripening,” he said. “It’s aggressive but it’s entirely doable.”

The Michigan Environmental Council “strongly supports” the 100% requirement, said Charlotte Jameson, the organization’s program director for legislative affairs, drinking water and energy.

“We know we need to get to carbon neutrality by 2050. The low-hanging fruit in that is really the power sector,” she said. “For climate change it’s incredibly important we continue to push for that goal.”

Another scenario that has surfaced in Michigan in recent years is growing the renewable standard through a ballot initiative.

In 2012, voters rejected a 25% by 2025 target, a campaign that drew strong opposition from the state’s largest utilities. Presidential candidate Tom Steyer backed the early stages of a campaign in 2018 to raise Michigan’s renewable energy target to 30% by 2030, which was withdrawn.

While no such plans have been announced, a ballot initiative is a possibility absent Republican action.

Path 2: Utility planning

Meanwhile, Michigan’s two largest utilities have made recent pledges to significantly cut power-sector carbon emissions, and are laying out early plans with state regulators to get there.

The 2016 energy reforms created a new process for utilities to file long-term energy plans. These integrated resource plans, subject to approval by the Michigan Public Service Commission, largely signal how utilities plan to invest.

For example, Consumers Energy’s plan, which was approved in June, calls for a significant ramp-up in solar and large carbon reductions. DTE Energy’s plan, which has faced pushback from clean energy groups and an administrative law judge, is before state regulators this month.

In a deal with organizers of the 2018 ballot effort, DTE and Consumers also agreed to hit 25% renewables by 2025 by including the targets in their integrated resource planning.

Ed Rivet, executive director of the Michigan Conservative Energy Forum, which advocates free-market approaches to clean energy, said renewable targets are no longer needed. They may have been necessary to jumpstart Michigan’s renewable portfolio when it was first adopted in 2008, but now economics are driving utilities to renewables, he said.

“Technology and costs of renewables are driving the development now far more than the necessity to mandate it in policy,” Rivet said. “I’m very confident we will continue to blow past a modest RPS without ever having to put it into law. It’s more of a tool that was useful in the past, but it’s not so necessary going into the future.”

Moreover, utility customers — including large power users — are demanding more renewables, he added.

“That just checks a lot of boxes for [utilities] to just keep moving down this path, and so they’re going to,” Rivet said.

Rabhi disagrees.

“I don’t really see the need for the resistance” to higher targets, he said. “If they’re doing it anyway, let’s enshrine it into law. What are you afraid of?”

Jameson is also skeptical of a purely free-market solution. While economics are still driving coal plant retirements, DTE Energy, for example, is in the process of building a new $1 billion natural gas plant in southeastern Michigan.

“It’s not a given that in Michigan — despite commitments around carbon reduction — that economics are going to completely push them in the right direction because natural gas is relatively cheap,” Jameson said.

Path 3: Administrative action, smaller bills

In 2019, newly elected governors in the Midwest signaled their support for stronger clean energy policies. Minnesota Gov. Tim Walz and Wisconsin Gov. Tony Evers, for example, each announced 100% clean energy goals for 2050.

Sources say a similar announcement is likely this year from Michigan Gov. Gretchen Whitmer, who has also taken several administrative actions to address climate change. Also: Whitmer appointed two members to the Michigan Public Service Commission in 2019, both with backgrounds in clean energy advocacy.

Eichler Clark said “there is a ton going on behind the scenes” in the Whitmer administration, including “lead by example” directives to state agencies to cut energy usage, issuing requests for renewable energy projects on state land, and creating a new office on climate and energy. Whitmer has also pledged the state will meet emission-reduction targets set in the Paris climate agreement.

“It’s not sexy, but I think it’s really an example of where the state is leading with efforts that we’re doing,” Eichler Clark said.

Outside of administrative actions that chip away at clean energy progress but aren’t necessarily binding on utilities, advocates are focused on more specific near-term bills that encourage rooftop and community solar and electric vehicle infrastructure. A Senate committee is scheduled to take up multiple small-scale solar bills next week.

Rivet agreed that addressing issues over solar net metering are more pressing. Also, state regulators can set price signals through laws like the Public Utility Regulatory Policies Act (PURPA) that will attract developers more than a renewable portfolio standard, he said.

However, skepticism over major energy changes remains among some lawmakers, including revisiting the 2016 energy law that was several years in the making and backed by significant lobbying.

“There’s some institutional memory of how laborsome of a process that was,” Rabhi said. “Some are hesitant to revisit that.”


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