Where will Michigan get its energy in 2030?

Michigan citizens may be hearing a great deal of power-plant technology, carbon emissions and renewable energy standards this fall if a ballot proposal to require a larger share of state electricity come from renewable sources makes the statewide ballot. Prior to that determination being made, Bridge Magazine asked representatives of a large Michigan utility and environmental group to consider the question:

"Where will Michigan get its energy in 2030?"

Energy balance,
not radical ideas,
is policy for future

By Timothy J. Sparks/Consumers Energy

Today’s modern electric system is a technological marvel that provides the ultimate “just in time” service: Power plants generate electricity that moves at the speed of light through the transmission and distribution lines, and then is used instantly by customers.

The electric system does that every second of every day, 365 days a year, year in and year out.

At Consumers Energy, we work hard every day to provide our customers with safe, reliable, and affordable electric service. Obviously, having enough power to meet the needs of our 1.8 million customers is crucial. Our company motto is “Count on Us” and we know that our customers count on us to provide the electricity they need to keep their businesses running and bring comfort and convenience to their homes.

Consumers Energy believes a balanced portfolio of diverse energy resources is the best way to meet the needs of Michigan families and businesses today and in the future. In fact, our company developed the Balanced Energy Initiative, which is a comprehensive plan for meeting the projected electricity needs of our customers for the next 20 years.

This plan features diverse energy resources. They include energy efficiency programs, demand side management (reducing power use on peak customer demand days), new renewable energy sources, and investments in the company’s existing fleet of power plants.

A balanced approach -- without an over-reliance on a single supply source, fuel or technology -- mitigates the significant uncertainties associated with future fuel prices, advances in technology, emission control regulations and costs, and other factors.

This approach is comparable to a prudent and responsible plan for personal investments, because it effectively manages risk and is a flexible strategy. Flexibility is key to our balanced approach. Why?  Because the economy, markets, technologies, and the customer demand for electricity are constantly changing.

Today’s best projections for the customer demand for electricity in 2030 and the most economical ways to meet that demand 18 years in the future are just that, projections. While we have to prepare for the future, we also have to remember that a number of factors will shape and reshape the electric marketplace over the next 18 years.

Go back 18 years. In 1994, no one could have forecast the deep recession that began in 2008 or the recent huge expansion of the nation’s natural gas reserves with “fracking” technology. Nor could they have forecast the effects that those events and many others would have on the customer demand for power and today’s electricity prices.

That underscores the crucial need to maintain a flexible, balanced approach to energy. Michigan policy-makers did that with the 2008 energy law, which established a comprehensive energy policy. Among its provisions, the law sets a reasonable and affordable 10 percent renewable energy standard by 2015.

Consumers Energy already is the largest supplier of renewable energy in Michigan and is building its first wind farm, the Lake Winds Energy Park in Mason County. The company expects to invest $600 million to build Lake Winds and a second wind farm in the future.  

While it supports renewable energy, Consumers opposes a ballot proposal to amend the Michigan Constitution to require 25 percent of the state’s power to come from renewable sources by 2025. 

Locking that mandate into the state constitution would put a $12 billion burden on the state’s customers, and eliminate the balance and flexibility that’s crucial to managing the state’s power system.

Michigan and its economy rely on reliable and affordable electric service.  We can’t allow a reckless experiment to put that crucial service at risk.

Renewable power
getting cheaper;
use more of it

By Hugh McDiarmid Jr./Michigan Environmental Council

A proposed ballot initiative would require Michigan utilities to generate 25 percent of our electricity from renewable sources by 2025.

Opponents’ arguments against the plan include this curious one: It’s too ambitious.

We have a renewable energy standard that requires 10 percent renewable electricity by 2015, the argument goes. We should let that law run its course before taking the next step.

What’s most disheartening about this argument is its implication that planning for our energy future more than 30 months ahead is too far-reaching.

The policies we adopt today will have a tremendous impact on our children, grandchildren and great-great grandchildren. Whether it’s a coal plant, a wind farm or  nuclear plants, our descendants will reap the benefits -- or the consequences -- of our decisions.

So let’s ask: What willMichigan’s electricity generation look like when today’s newborns are receiving high school diplomas?

It’s impossible to predict what our energy mix will look like when those grads take the stage in 2030. But it is incumbent on us that we lay the groundwork for a smarter, more resilient mix of energy choices, based on what we know today.

Energy efficiency must be our first choice, as it is the most cost effective method of meeting energy needs. Efficiency reduces demand, cuts costs and displaces the need for new power plants.

What else do we know?

* We know that coal, which currently generates 60 percent ofMichigan’s electricity, is expensive and getting more so. The cost of coal delivered to Michigan has doubled since 2005. Michiganders spend $1.8 billion annually to import coal from other states.

* We know that Michiganders pay dearly for coal pollution. A study commissioned by the Michigan Environmental Council showed we pay $1.5 billion in health-care costs and damages each year due to pollution from just our state’s nine oldest coal plants.

* We know that a new generation of nuclear power plants -- even if we start today -- are decades from coming on line, incredibly expensive to build, and fraught with political and technical challenges.

* We know that natural gas is currently dirt cheap, and may become a bigger part of Michigan’s electric generation mix. While gas complements renewables well, an over-commitment will make us hostage to future price fluctuations.

* We know that renewable energy in Michigan is coming on line at a cost cheaper than even the most ardent proponents predicted when our 10 percent standard was adopted in 2008. The Michigan Public Service Commission reports that “the cost of energy generated by renewable sources continues to decline and is cheaper than new coal-fired generation.” As an illustration, Consumers Energy has decreased its residential renewable energy surcharge from $2.50 per month to 52 cents in less than five years.

* We know that Michigan’s renewable energy sector is growing. More than 240 Michigan companies are engaged in the wind and solar supply chains alone.

Where does this data lead us in planning for 2030?

It suggests, compellingly, that our cheapest, most stable and least polluting energy sources should be a much bigger part of our electricity generation mix.

The 25 percent by 2025 would do that -- following the lead of dozens of other states. There are other ways it could be done -- but our Legislature and governor have seemed uninterested. So voters will decide.

Smart parents are creating financial plans to see their newborns through 2030 graduation and beyond, investing with the best information currently available.

It is our challenge and our obligation to plan their energy future with the same foresight.

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Ann O'Connell
Tue, 07/24/2012 - 9:53am
What Mr. McDiarmid fails to mention about the ballot proposal to increase the share of energy Michigan gets from renewable sources to 25% by 2025 is that this standard would be embedded in Michigan's state constitution. In contrast, the current requirement for 15% renewables by 2015 was imposed by Michigan's Public Service Commission. It is far, far easier to adjust the timing of requirements based on local permissions and the rates utilities charge their customers by action of the PSC, which is experienced and empowered to regulate the activities of Michigan's utilities than it will be to amend the state constitution. For that reason alone, I would urge everyone to vote against the 25 by '25 proposal this November.
Charles Richards
Tue, 07/24/2012 - 1:47pm
"Efficiency reduces demand, cuts costs and displaces the need for new power plants" This statement is just not true. "Efficiency" does not equal "frugality." As electricity becomes less expensive, people tend to use more of it. "The Michigan Public Service Commission reports that “the cost of energy generated by renewable sources continues to decline and is cheaper than new coal-fired generation.” If this is the case, why would people be required to buy a minimum percentage of their power from renewable sources? Surely, given a choice, people would naturally buy the cheapest power available. No constitutional amendment should be necessary.
Tue, 07/24/2012 - 2:02pm
The power companies talk of base-load. Base-load plants are fossil fuel or nuclear. Michigan has little or no hydro-power for base-load. Non-base-load is renewable energy wind farms and solar plants. Then there is customer base-load demand. When the customer throws a switch it expects the electricity to be there, instantly. Base-load supply, from base-load plants, instantly supplies the customer's want. An investment of 10 % in renewable energy subtracts 10 % from base-load plants. This means, if the wind is not blowing or the sun is not shining, there is no energy to be supplied from the renewable energy plants. To compensate the power companies must buy power out-of-state or let some customers suffer brownouts or blackouts.
Hugh McDiarmid Jr.
Wed, 07/25/2012 - 10:06am
Ann: The Public Service Commission’s role as regulator of our energy utilities will not change if the 25x25 measure passes. The utilities – and their progress toward the 25% -- will continue to be regulated by the commission. The current standard is 10% -- not 15% -- by 2015. It was passed in a bipartisan vote of the Michigan Legislature, not imposed by the PSC. Charles: In a truly free market, the cheapest option might win out. But our utilities don’t operate in a free market – they are publicly regulated companies with near monopolies and rates of return that are guaranteed – not much of an incentive to beat the bushes for the best deals. Cheaper renewable are the best deal for ratepayers, but not necessarily for shareholders or for the utilities themselves who have a lot of institutional inertia to “do it the way it’s always been done.” They’re only investing in 10% renewable because the law requires them to. Furthermore, the utilities have a vested interest in coal. DTE, for example, owns thousands of coal rail cars, a coal shipping terminal in Superior, Wisconsin, fuel blending and storage facilities for other utilities, plus many other coal services, Neil: The proposal leaves 75% for baseload or other types of generation. Iowa is at or near the 25% renewable threshold and has had no significant grid or reliability problems. Neither have other states who are farther along than Michigan. Yes, there are technical challenges in adding significantly more renewable energy to the mix, but they are achievable, and getting more so as the technology and grid management improves.
Ann O'Connell
Tue, 07/31/2012 - 10:16am
Hugh, if renewables, including an adequate provision for base-load generation, were indeed cheaper, the utility companies and the PSC would be moving even faster in that direction than they already are. If this were true, more businesses and homeowners / apartment developers would be installing renewable energy systems. The truth of the matter is that these systems are still quite expensive compared to existing-design coal or natural-gas generation plants and are unreliable sources of "utility grade" power. It is true that most sorts of renewable energy are cheaper now than when the initial target was set. This is primarily due to Federal government subsidies, many of which will expire soon and may not be renewed, and to dumping of solar-voltaic panels and wind turbines by the Chinese in the US market. Michigan residents are already fighting vigorously against several on- and off-shore wind farms around the state. We shouldn't mandate even more unwelcome renewable energy projects at even higher rates for electricity. In addition, it is just plain bad policy to set our utility mix by amending the constitution. For that reason alone, I will adviser everyone I know to vote against this proposal.