Power To The People! Michigan Tech Researchers Say Distributed Renewables Save Utility Customers Money

A study by researchers at Michigan Technical University claims increasing renewable and distributed generation energy sources can save Michigan electric consumers money. The study, entitled “Policies to Overcome Barriers for Renewable Energy Distributed Generation: A Case Study of Utility Structure and Regulatory Regimes in Michigan,” was published in the journal Energies on March 12.

“Michigan utilities are beginning to recognize the benefits of solar (and other renewables),” said Emily Prehoda, lead author of the paper and doctoral candidate in environmental and energy policy at Michigan Tech. “Some utilities are even shifting their portfolios to include large-scale solar and wind generation. However, utilities fear competition from, and actively hinder proliferation of, distributed generation systems (emphasis added) by clinging to the traditional utility model.”

As renewable energy technologies and access to distributed generation like residential solar panels improve, consumer costs for electricity decrease. Making electricity for yourself with solar has become more affordable than traditional electricity fuel sources like coal. The continuing relationship with fossil fuels is detrimental to customers the researchers claim.

Co-authors Emily Prehoda, Joshua Pearce, Richard Witte, and Chelsea Schelly say that in the US, “70 percent of coal plants run at a higher cost than new renewable energy and by 2030 all of them will.” The researchers provide a breakdown of savings per kilowatt hour by county that Michigan residents could achieve if they produce their own electricity with solar photovoltaic panels.

The most significant impacts of distributed generation with solar are in the Upper Peninsula, where residential customers could see savings of approximately 7 cents per kilowatt hour. Assuming the average residential consumer uses 600 kilowatt hours of electricity monthly, that would translate into average savings of $42 per utility bill. In lower Michigan where the cost of electricity is less, the average savings per utility bill would be about $30 per month.

However, not all Michigan consumers can take advantage of the opportunity to self-generate, as some utilities are blocking additional net-metered distributed generation in their areas. “Refusing to allow Michigan customers to have the opportunity to install cheaper and reliable electricity sources deprives the electrical grid of many benefits,” Emily Prehoda says. One such benefit is creating a more decentralized electric grid that would be less vulnerable to attack.

Distributed solar power also helps insulate utility customers from increases in utility rates. The Michigan Public Service Commission granted a rate increase for customers in the lower part of the state of $1.62 per month earlier this year and has a rate increase request pending for Upper Peninsular customers that would raise their bills by about $6.50. The study authors contend adding more distributed renewable energy resources within the state would have the effect of decreasing monthly bills rather than increasing them.

Clearly, continuing to rely on fossil fuels to generate electricity is unsustainable both from the point of view of utility customers and the environment.