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In Michigan's Renewable Energy Battle, Voters May Get Final Say

Steve Leone, Associate Editor, RenewableEnergyWorld.com
June 25, 2012  |  15 Comments

Polls show that Americans like the concept of renewable energy. But cost-conscious American households and businesses are by nature wary of dramatic shifts in strategy. And they're equally reticent to make permanent changes to a state's constitution.

This is the friction at play right now in Michigan as the state gears up for a likely ballot initiative that would mandate a 25 percent renewables target by 2025. While this type of energy policy usually happens through the legislature, it will go straight to voters on Nov. 6 if supporters can secure more than 322,000 valid signatures by July 9.

Supporters hope to have a lot more signatures in hand by that date, and they’re working to get there by lining up business groups and some key office holders. On the other side are the state’s dominant utilities and largest business groups that worry such a bold mandate would drive up electricity prices and set a bad political precedence.

Michigan currently has a 10 percent target by 2015, and the state currently gets less than 4 percent of its electricity from renewable sources. According to initiative sponsor Michigan Energy, Michigan Jobs, the state currently fills 60 percent of its electricity needs from coal — all of it from out of state — and it spends $1.8 billion annually doing so. The group also contends that requiring a more localized, renewable energy mix would spur local job growth, bring $10 billion dollars of investment into the state and would keeping much of that money within its borders.

But others aren’t convinced the effort is needed. Initiative opponents who dubbed themselves Clean Affordable Renewable Energy for Michigan Coalition (CARE), launched a statewide effort Monday to sink the measure. According to the report, CARE will try to make the case that a renewables mandate doesn’t belong in the state’s constitution.

Michigan has been slow in adopting renewable energy, even as the state’s dominant utilities creep toward the 10 percent mark. The state has no large-scale solar facilities either in operation, under construction or under development, and it has less than 400 MW of wind capacity installed — a figure that lags far behind other Midwestern states like Iowa, Illinois and even its southern neighbor, Indiana. Michigan, however, is seen as a viable market for an American offshore wind industry looking to get off the ground. The state has a vast coastline that touches four of the five Great Lakes — Superior, Erie, Huron and Michigan — and large population centers that could be served by large-scale development.

Despite its low installation base and relatively high potential, the state is best known for its strong manufacturing base and a skilled workforce eager to tap into areas of growth.

The potential for job creation plays well across the state, which still suffers an unemployment rate above 8 percent. And in Detroit, Motor City residents have an unemployment rate hovering around 16 percent, among the highest for any U.S. city. But that doesn’t answer the biggest concerns from critics who feel that the estimated $10 billion investment needed to reach that 25 percent goal would sink businesses and residents under the weight of inevitable spikes in electricity costs.

Ballot initiative backers point to states like Iowa, Minnesota and Illinois as proof that more renewable energy doesn’t necessarily mean higher bills, though they do concede that there will be some increase in annual payments. The group cites “studies by independent economists” that predict such a move would cost the average household about $15 extra each year, and that it could eventually usher in lower costs.

The proposal’s wording also includes a stipulation that could soften the economic impact. “To protect consumers, compliance with the clean renewable electric energy standard shall not cause rates charged by electricity providers to increase by more than 1% in any year,” reads the proposal. “Annual extensions for meeting the standard may be granted, but only to the extent demonstrated to be necessary for an electricity provider to comply with the foregoing rate limitation.”

If the initiative is approved by a simple majority of voters, the 1 percent stipulation, according to published reports, could land the measure in court.

From the perspective of the Michigan Chamber of Commerce, the biggest issue is the inflexibility certain to come from a constitutional amendment. This type of issue, they say, is best decided by legislators rather than from inside the voting booth.

"In 2008, Michigan adopted a 'Renewable Portfolio Standard' of 10 percent to be achieved by 2015 as part of an overall state energy policy," said Jim Holcomb, Senior Vice President for the Michigan Chamber, which represents nearly 7,000 employers, trade associations and local chambers of commerce. "Every piece of state energy law is connected and changing one piece can create problems with other parts.

"Unfortunately, during this election season, individuals seeking financial gain are willing to clutter the state constitution instead of pursuing a more thoughtful approach that focuses on the legislative process open to all stakeholders.”

15 Comments

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Chris Kapsambelis
Chris Kapsambelis
July 4, 2012
Actually Bob, I am not advocating doing nothing. NREL did a study indicating that the grid can handle 20% renewable energy by 2020. States passed mandate laws forcing utilities to purchase increasing amounts of renewable energy reaching 20% by 2020. By all indications the grid is unable to handle renewables at less than 10% with minimal to no carbon avoidance. From a science and engineering perspective, this calls for reassessing the goals, instead of escalating. This is the issue in Michigan. While all of your proposed solutions have merit, continuing on a fast track to renewables when it is evident that the high cost is unjustifiable, and carbon avoidance is questionable, seems foolhardy. In the end renewable energy will be universally accepted when it reaches a level of competitive performance with fossil fuel which cannot be done until substantial amounts of carbon can be avoided.
Bob "The Clean Energy Guy" Mitchell
Bob "The Clean Energy Guy" Mitchell
July 3, 2012
Actually Chris, the big gamble is in NOT pursuing renewables as quickly and as forcefully as we can because the one certainty in energy is that fossil fuels are finite! Now, while how long it will take to economically deplete our oil, gas and coal reserves, the fact is that if we keep burning them, they will eventually run out (at least in an economically recoverable way). Also, it's not really so much hoping for technological advances as it is implementing the engineering that is already available to us. For example, if we were to beef up and expand the grid we could go a long way towards addressing the problems of intermittency because while the wind might not be blowing in North Dakota, it probably is in Oregon or off the shore of North Carolina. While the sun may have set in New York, it's in the meaty part of it's power curve in California! Some utility scale storage is already available to us as well in the form of pumped hydro. Other utility scale storage (such as compressed air) is also right on the cusp of being able to be rolled out on a scale that will also be able to address intermittency. In the mean time, large scale implementation of efficiency standards can lower peak demand to make peaker plants less urgent. I also take exception to how you characterize wind and solar as being ineffective and costly. As I pointed out in my previous comment, when you consider ALL costs, fossil fuels are by far the most costly! As a matter of fact, one of solar's main benefits is that it produces the most when demand is the highest! Wind, not so much, but it does blow during the day too, just not at it's peak. With a more robust grid, we could replace many coal fired power plants with molten salt solar thermal plants and ship the power to where ever it is needed. Considering the size of the world's power demand, we don't have time to wait for the perfect at the cost of the good. Bob "The Clean Energy Guy" Mitchell
Chris Kapsambelis
Chris Kapsambelis
July 3, 2012
Bob: All your arguments seem to be based on the principle that someday we will engineer around the present day problems of renewable energy mostly wind. While it is probably true, it is a huge gamble. Fueled by a public that mostly accepts the problems you enumerate with the use of fossil fuel, states, like Michigan, have instituted RPS mandates for large scale grid penetration of renewables that studies, as presented at the MIT symposium, point out a substantial increase in cost and ineffectiveness in carbon avoidance. Increasing federal subsidies, and mandating more renewable energy that fails to perform, only serve to retard the transition from fossil fuel to what might take its place. The extra cost going into ineffective wind and solar should be applied towards research and development needed to engineer around the intermittent problems that have been identified. As long as the system rewards ineffective solutions, there is no incentive for developing the real and difficult solutions we need.
Bob "The Clean Energy Guy" Mitchell
Bob "The Clean Energy Guy" Mitchell
July 3, 2012
Chris Kapsambelis: There is no reason that we can't engineer our way around the issue of intermittent sources of power. We're still early in the game of changing over from the idea of large, central power stations to the distributed power generation. Most of the observations that you mentioned are indeed true at the moment, but they don't have to stay that way! Also, in terms of "who is going to pay for" (renewable energy's intermittent nature), I've got two things to say....(1) when you consider the TOTAL costs of fossil fuels, including the 120 BILLION dollar per YEAR that fossil fuels cost in health care, premature deaths and environmental damage that aren't included in the cost of a gallon of gasoline or a ton of coal, renewables are still a lot cheaper! and (2) with climate change, sea levels rising, increased storm damage, crop failures, etc. the costs of engineering a new power system (that needs to be updated anyway)is a bargain! Even when you factor in fossil fuel backup, utilizing renewable energy is still better for the environment because of the fossil fuel that you don't burn when the wind is blowing or the sun is shining. And while we do still need fossil fuel peaker plants, we aren't in peaker conditions all of the time. Therefore, you're not 100% right on your point that all renewable energy sources need to be backed up by fossil fuel. As the grid is expanded and beefed up, the need for fossil fuel back up will be reduced. Which is a good thing, because, barring some unforeseen technological breakthrough, we're going to someday run out of finite resources (at least in an economically recoverable way). Bob "The Clean Energy Guy" Mitchell
Tim Gulden
Tim Gulden
June 30, 2012
You have captured my point...Germany has this huge variability in electricity generation due to renewables (50% peak production from PV and 50% other sources, even if it was for 1 day) and they figured out a way to do it. This was my point to the above MIT study which complains why we should not use renewables. Lets pool together and spend our energy making the future better for us and the next generation.
Chris Kapsambelis
Chris Kapsambelis
June 30, 2012
The statement "Germany is producing up to 50% of it's peak electricity from renewables" is a misinterpretation of what the Reuters article reports. The 50% occurred midday on a Saturday in May when demand is low. Peak electricity demand occurs on a hot August afternoon when we all of us are running air conditioners. The article further states that the day before, a work day with higher demand, solar only reached a third. Further on the article sates "Germany has nearly as much installed solar power generation capacity as the rest of the world combined and gets about four percent of its overall annual electricity needs from the sun alone". Four percent is the only measure that is meaningful. Further on, there is this quote ""It also shows Germany can do with fewer coal-burning power plants, gas-burning plants and nuclear plants." This is not possible. For an explanation here is another Reuters article: http://www.reuters.com/article/2012/05/18/us-energy-summit-power-gas-idUSBRE84H0C020120518 Until utility scale energy storage becomes a reality, wind and solar energy can only be used by placing thermal power plants on standby whenever the wind blows or the sun shines!
Tim Gulden
Tim Gulden
June 29, 2012
Here is one of many links detailing up to 50% PV production. I Googled - Germany 50 percent solar http://www.reuters.com/article/2012/05/26/us-climate-germany-solar-idUSBRE84P0FI20120526
Chris Kapsambelis
Chris Kapsambelis
June 28, 2012
Acording to this link, Germany gets 6.2% from Wind and 2% from Solar. http://www.renewableenergyworld.com/rea/news/article/2011/03/new-record-for-german-renewable-energy-in-2010
Tim Gulden
Tim Gulden
June 28, 2012
Change can present what seems to be difficult challenges. Germany is producing up to 50% of it's peak electricity from renewables. It looks like there are ways to overcome the generation variability. We need smarter people to figure out solutions versus spending the time to figure out why something will not work.
Chris Kapsambelis
Chris Kapsambelis
June 28, 2012
MIT conducted a Symposium on Managing Large Scale Integration of Intermittent Renewables, where some 75 experts attended. Large Scale Integration was determined to be between 20% and 30%. MIT Professor John Deutch warned policymakers and regulators that intermittent sources will cost more for total operations, and they have to decide who is going to pay for it. 'as renewable capacity has increased, the intermittent nature of wind and solar generation ... has led to operational difficulties and unintended consequences for emissions and economic efficiency.' Here are a couple of excerpts from the findings. 'In addition, fuel efficiencies will decrease when thermal generation plants are operated at partial load. Lower fuel efficiencies increase emissions rates and total costs, potentially diminishing the benefits of renewable generation. Continuously altering plant output also increases the need for operation outside of normal, steady-state procedures and the likelihood of operator error.' '…when thermal generation plants are operated at partial load, fuel efficiencies will decrease, emissions will increase, and total system costs will be raised, thus diminishing the benefits of renewable generation.' Unfortunately, it looks like the more intermittent renewable we add to the grid the less effective they are. We need to look for something the works more effectively! As I understand what the MIT crowd is telling us is that all power plants are capable of variable power output, what they call 'load following'. Natural gas can do it more efficiently than Coal or nuclear. Apparently, as the intermittent renewable energy penetration level increases, grids run out of quick acting natural gas and are forced to also use coal plants. This process negates any savings in emissions while increasing the cost of operation. http://mit.edu/mitei/research/reports/intermittent-renewables.html
richard tuhro
richard tuhro
June 27, 2012
When I moved to Michigan from New York, I thought I left the crazies behind. Guess not. Controling both the cost and the quality of a product by legislation. The last person to leave the state won't have to turn out the lights.
Tim Gulden
Tim Gulden
June 27, 2012
WOW...$15 a year!!! A family of 4 spends this at a fast food restaurant in one day. Are these "coalition opponents" sponsored by the billionaire oil brothers by chance?
ANONYMOUS
June 27, 2012
Being a strict federal constitutionalist, I have no problem with state governments enacting such legislation as long as it is approved by voters. But having said that, I've never seen this type of legislation be successful. There have been similar legislative efforts where I live in California. There was one that required something like 20% of all new cars sold in California by 2001 to be EV's. But by 2001 the percentage of cars sold in California that were EV's was zero. There was also state legislation passed that allowed residential power users to opt for paying higher utility rates in return for being supplied with renewable power. No one voluntarily opted for the higher renewable power rates, so the program was dropped. As the old saying goes, "People vote with their wallets".
Bob "The Clean Energy Guy" Mitchell
Bob "The Clean Energy Guy" Mitchell
June 26, 2012
I'll fess up, I'm not sure that a RPS should be part of a state's constitution, but Michigan does need to step up it's efforts in adopting renewable energy. The sooner they start, the sooner they'll start to reap the rewards! As the article points out, while in the short run adopting renewable energy can cause rates to rise, the rise is small if the adoption is done right. In the long run, renewable energy is actually much cheaper than fossil fuels, especially if you factor in the external costs of fossil fuels that are not factored into a the price of a ton of coal. I don't know what those costs would be in Michigan, but according to the Union of Concerned Scientists, the costs of healthcare, premature deaths and environmental damage done by fossil fuels totals over 120 BILLION dollars per year. Even if you simply divide that number by 50, that's still 2.4 BILLION dollars that people in Michigan pay for fossil fuel that isn't counted in the chamber of commerce's calculations! Bob "The Clean Energy Guy" Mitchell
John Ihle
John Ihle
June 26, 2012
The "1% solution". Too bad we didn't have that in my state, Minnesota, where my electrical rates will be jumping about 11% next year due, primarily, to coal fired investments by my electrical cooperative....and who incidentally refuse to do more on the clean energy side when it's demonstrated that bulk wind can be delivered locally much cheaper than imported electricity. There's alot of ways to make a financial argument for clean energy. Especially on the hedge side and the fact you can lock in rates, not to mention the value of distributed generation vs building new transmission. And there's alot of smart people in Michigan. If you couple the green energy aspect with some sort of community based buy in with respect to structure(s) relative to finance it would be a much easier sell. Perhaps through a bonding mechanism or some finance vehicle to ensure the public gets a piece of the pie. Obviously alot of economic value here, too, when considering how many years these projects go. The value needs to be penciled out for voters not just short but also long term. Ratepayers should get more economic benefit for investing in their energy future if they're going to be paying higher rates and there are likely many ways to acheive mutually beneficial goals. I think it's all about the money for most. Once you can demonstrate there is real, tangible value in green energy the war is almost won. Provided you have a solid marketing campaign and the right people leading the efforts.

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Steve Leone

Steve Leone

Steve Leone has been a journalist for more than 15 years and has worked for news organizations in Rhode Island, Maine, New Hampshire, Virginia and California.
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