A new state analysis finds wind energy is blowing Michigan toward its 10% by 2015 renewable portfolio standard (RPS), and could help reach it 30% renewables by 2035 without reliability or affordability concerns.
The report, “Readying Michigan to Make Good Energy Decisions: Renewable Energy,” was released by the governor’s office this week as the state starts to contemplate what its energy future should look like beyond 2015.
While a ballot initiative to increase Michigan’s RPS to 25% by 2025 was rejected in 2012, this new analysis undercuts many of the arguments used in that election by showing renewable energy costs falling fast while being integrated into the grid.
Wind Energy Gusts Ahead
Michigan’s current RPS was established in 2008 and requires utilities in the state to achieve 10% of electricity sales via renewables through a combination of new generation, renewable energy credits, and energy efficiency measures.
Put simply, the results have been remarkable. The RPS goals are expected to be met by every utility (except for Detroit’s municipal utility, which is winding down service) and has led to 1,400 megawatts (MW) of new renewable energy generation either in operation or under development.
Michigan Renewable Portfolio Standard chart via State of Michigan
A staggering 94% of this new capacity has been wind energy, with approximately half those turbines owned by independent power producers selling electricity through stable power-purchase agreements, and the state is about to join the elite “gigawatt club” by generating more than a billion watts of electricity from wind power.
Michigan Wind, Affordable And Reliable
But all this green growth has come with an affordable price tag. By the end of 2013, Michigan power consumers will have paid $675 million in renewable energy surcharges, but that rate is falling fast. Surcharge collections are expected to be significantly reduced or even eliminated starting in 2014 because project costs have fallen to the point of being equivalent to fossil fuel generation.
Since the RPS has gone into operation, wind energy has been the lowest-cost source of renewable electricity, falling from over $100/megawatt-hour (MWh) in 2009 to between $50-60/MWh in 2013. This drop has mainly come from a doubling of wind farm capacity factors due to improved design, from around 20% in 2008 to around 40% today, at the top of national capacity factor averages.
In addition to falling capacity factors, Michigan’s location within two regional grid markets, MISO and PJM Interconnection, has cut costs. The report notes wind integration costs within these large grid areas are lower than costs for projects outside of them, and MISO reports new forecasting technologies help ensure the influx of wind hasn’t caused any reliability problems – in other words, the lights stay on even when the wind doesn’t blow.
Don’t Forget That Green Economic Boost
Adding all this wind energy has also created an economic boom few government officials could have predicted, but one that has helped the state weather the economic downturn. Consumers Energy and DTE Energy, the state’s two largest utilities, report their renewable energy investments have created 2,500 new jobs.
Wind turbine construction image via Shutterstock
Indeed, an entire green industry is growing up around Michigan’s RPS. More than 200 companies now operate in the state’s renewable energy supply chain, ranging from manufacturers, suppliers, and service providers, and communities hosting renewable projects have increased revenues from taxes and royalty payments. In fact, wind tourism is even a growing industry!
Turns out creating economic growth can be clean and affordable. The RPS “has attracted significant investment to the state and driven job growth,” said Steve Frenkel of the Union of Concerned Scientists. “Meanwhile, renewable energy costs are far lower than originally anticipated and these technologies are performing better than expected.”
Looking Beyond 30% Renewables
Post-2015 RPS negotiations will happen in the state legislature, not at the ballot box where renewable advocates can be outspent by pro-fossil fuel interests, meaning this report’s non-partisan and unbiased analysis could be the starting point for discussion, not slick commercials.
Indeed, Michigan’s next set of targets could aim much higher than just 10% without looking beyond its borders. The report estimates the state has 61 gigawatts of potential renewable energy resources. “From a theoretical technical perspective, it would be possible to meet increased RPS targets of as much as 30% (or perhaps higher) from resources located within the state,” reads the report.
Sounds like a winning argument. After all, what politician wouldn’t want to vote for cleaner air, greener jobs, and more tax revenue?
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