Michigan Passes Energy Legislation; Important Work Remains
By John Delurey and Jenna Warmuth
LANSING, MICHIGAN (November 3, 2023) — Early this morning, the Michigan House of Representatives took steps to update the state’s energy legislation, including its renewable energy standard (SB 271), energy waste reduction targets (SB 273) and guidelines for the Michigan Public Service Commission’s review of utility electric generation plans (SB 502). Additionally, the legislature passed bills that will amend siting and zoning processes to ensure we can successfully deploy new renewable energy resources (SB 5121) and another bill designed to support a just transition for workers into the clean energy future (SB 519).
While some of these policies show promise and represent progress, significant gaps and missed opportunities within the clean energy legislation remain. Vote Solar urges Michigan’s legislators and Governor Whitmer to commit their next efforts towards achieving true energy justice for all residents.
Progress
Despite significant losses along the way, this legislation did maintain some noteworthy wins. The lifting of the restrictive and arbitrary distributed generation (DG) cap from 1% to 10% is a testament to the relentless efforts of advocates, including Vote Solar’s MI Power for All initiative. This change to the solar cap will help Michigan harness federal funding to unlock solar savings for low-income families and put pressure on legislators to include local solar and storage in the final package, including a commitment in the final bill to 2,500 MW of energy storage. These policies are steps toward an equitable clean energy transition.
Additionally, we believe the new targets for renewable energy will lead to an acceleration of solar and storage in Michigan. Currently, the two primary utilities in Michigan – Consumers Energy and DTE – will be just shy of 40% renewable energy by 2030, according to their own resource plans. They will now have to create new plans that increase that commitment to 50% by 2030, although below, we explain why that 50% target might be misleading.
In order to support the advancement of Michigan’s renewable energy portfolio, there were significant renewable energy siting improvements made within the bill package that will remove obstacles for wind, solar, and energy storage facilities with a capacity of more than 100MW. Siting and permitting authority for these facilities will move from local to statewide control, but the legislation retains a process for local input and intervention. These changes will decrease costs and speed up renewable energy adoption.
Shortcomings
However, the celebration is muted by the stark reality that SB 271 falls short in several critical areas. This bill passed despite the objection of environmental justice organizations across the state, including the Michigan Environmental Justice Coalition. When introduced in the spring, the Clean Energy Future Plan contained nation-leading policies on equitable decarbonization and regulatory reform. The version passed this fall is a shadow of what once was, with new harms and downsized ambitions.
This backslide is almost entirely due to Michigan’s utility and corporate influence in the legislative process. A recent story from the Energy and Policy Institute reveals the extent of this influence, painting a picture of a sector that has historically put profits over people. The story is a sobering reminder that the road to clean energy is often paved with obstacles placed by those who fear change to their bottom line. In addition to the energy utilities, large energy users like Dow Chemical also wielded their political power to dilute or eliminate key energy justice priorities. For example, most signs point to Dow dealing a killing blow to policies that prioritized energy bill affordability and overall reliability of the electric grid.
Some of our concerns with SB 271 include:
The illusion of 100% Clean. The promise of 100% clean energy is undermined by the inclusion of biomass and manure as renewable and incineration as clean energy. The bills also create new pathways for fossil gas via carbon capture and sequestration, which is a contentious and unproven technology. Any gas plant in the state – new or existing – that commits to at least 90% carbon capture can continue burning fossil fuels and polluting communities in perpetuity. Michigan is the first state where 100% “clean” would allow for ongoing carbon emissions from fossil fuels.
Shifting renewable standards. We believe that the legislative goal of 50% renewable by 2030 could be misleading, given changes to compliance rules. Utilities are allowed to source Renewable Energy Credits (RECs) from out of state, and certain industrial customers are permitted to buy RECs from anywhere in the continental US. As a result, the actual development of new renewable energy in Michigan might be smaller than the numbers suggest. We expect that the 50% by 2030 goal in SB 271 might, in practice, be at or less than 45%. This is still higher than the status quo but falls well short of the 60% by 2030 goals initially envisioned.
Offramps and excuses. The journey to 100% clean energy will have unexpected twists and turns. We understand the temptation, and even the practical necessity, to provide some flexibility in meeting those targets. SB 271 goes too far in that direction, with two full pages of legislative language describing the offramps and excuses the utilities can use for coming short of their clean and renewable energy commitments. They are able to delay compliance by up to four years should they encounter challenges along the way.
An increased solar cap is still a solar cap. There is absolutely no justification for a legislative cap on rooftop solar. While the solar cap has been modestly raised and should buy us time (our estimates suggest 2031), the cap should be eliminated entirely to fully unleash the potential of renewable energy.
No community solar. The glaring absence of initiatives for community solar denies low-income communities the opportunity to benefit from the transition to clean energy. A relatively modest community solar commitment was removed from the bills at the insistence of utility companies. Unfortunately, this will cost the state dearly in deploying federal dollars and leave many low-income residents without a pathway to solar savings.
Omissions
The people of Michigan deserve a clean, equitable, and affordable energy future. Critical elements that address affordability, energy justice, and community solar were either diluted or omitted, leaving Michigan with unfinished business. While SB 502 takes steps towards regulatory reform and improved customer engagement via higher intervenor compensation and more frequent public hearings, most of the other reforms focus narrowly on the utility Integrated Resource Plans (IRPs). This means that we have new tools for influencing decisions about generation portfolios but still fail to unlock the Michigan Public Service Commission’s ability to address affordability or reliability improvements through crucial mechanisms such as rate cases and distribution system plans. Similarly, while SB 273 takes a step towards prioritizing low-income customers for energy efficiency programs, the bills overall lack any prioritization of clean energy benefits for communities facing structural disadvantage or environmental injustice.
Utility companies have exerted their influence to safeguard their financial interests at the expense of the public and the environment. It is essential for the legislature and Governor to redouble their efforts to ensure that every Michigander can access clean, reliable, and affordable electricity. We call on them to prioritize:
- Empowering Michigan communities to actively participate in and benefit from clean energy by requiring utilities to facilitate community solar programs and providing stronger incentives for ratepayers to install rooftop solar, particularly low-income ratepayers.
- Mandating that the Michigan Public Service Commission consistently consider climate action, equity, affordability, and environmental justice in all their deliberations, especially in rate cases.
- Implementing policies that protect vulnerable households by capping utility bills for low-income families and bolstering compensation for those affected by power outages.
- Requiring comprehensive evaluations of pollution sources, taking into account the full spectrum of cumulative impacts in policy and permitting decisions.
- Banning investor-owned utilities from funneling ratepayer dollars into political contributions and establishing ethical reforms that prevent corporate interests from obstructing a cleaner, more affordable energy system.
Vote Solar remains committed to advancing solar energy and equitable energy policies across the United States, and we are resolute in our pursuit of an energy system that prioritizes justice for all.
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For more information and resources on this issue, please visit our website at www.votesolar.org.
About Vote Solar: Vote Solar is a non-profit organization dedicated to advocating for solar energy in the United States. We work tirelessly to promote policies that remove barriers to solar deployment and facilitate its growth, all while ensuring a just and equitable transition to a clean energy future. Learn more at www.votesolar.org.