Greening the Power Portfolio

If Michigan is serious about becoming a leader in America’s race to energy independence, 2007 is the year in which it must begin flexing its muscles.

Whether Michigan will have a Renewable Portfolio Standard (RPS) likely will be decided by the Michigan legislature this year. A Renewable Portfolio Standard is a legislative mandate imposed on electric utilities and other electric suppliers requiring them to supply a minimum percentage or amount of their load with eligible sources of renewable energy. The eligibility of the particular sources is prescribed by the legislation.

Twenty-four states and the District of Columbia have adopted Renewable Portfolio Standards as of February 1, 2007.

Many observers expect Michigan to join the club sometime this year. The RPS is a high priority among the state's alternative energy investors and providers, clean tech industries, environmental groups, and others.

Count me among those who think it will pass. The important question is whether the new policy will stand out as a robust, healthy specimen or a pale, puny stripling among RPS’s around the nation.

If Michigan sets itself a bold, aggressive goal for renewable power, then we will be held remarkable for our boldness. If we are squeamish and underconfident, we’ll be revealed as – oh, I don’t know – squeamish and lacking in confidence.

What's the Hold Up
What, exactly, is under consideration?

J. Peter Lark, who chairs the Michigan Public Service Commission, recently put forward a plan on behalf of Governor Jennifer Granholm that calls for two benchmarks: generating 10 percent of the state's energy from renewable sources by 2015, and 20 percent by 2025. The plan calls for a gradual increase of approximately 1% per year moving from the fossil fuels column to the renewables column.

The RPS is intended primarily to advance investment in alternative renewable power, while mitigating economic risks. It is emblematic of a state’s confidence in its commitment to renewable power. It helps to reassure investors in supply-end power technology that the wholesalers and distribution systems will be there for them when they need it – something that remains a chronically open question in our state.

It’s not an accident that the strategy is growing in popularity, considering the advantages that attach to it.

The Governor sees RPS as a way to increase alternative energy supply and demand. That should translate into new businesses and newly-created jobs.

Who opposes it? Not unexpectedly, utilities don’t care for the idea. Consumers Energy, the state’s biggest provider of electric power, would prefer to see a voluntary transition. The cost of power may go up, they warn, if the RPS becomes law and state adopts ambitious energy goals. In fact, it was long the conventional wisdom that retail prices would rise.

Blazing a Path or Following the Pack
Despite alarmist predictions that new standards would drive up electricity bills, plenty of evidence suggests that savings are just as likely. California, Colorado, Iowa and Minnesota are among the states that report cost reductions from their programs. Other states report no discernible impact one way or the other.

But even in states where prices have gone up, the increases have stayed pretty much under $5 per year per household, according to an analysis by the federal Department of Energy. At $5 a year, we can grumble about it when it happens.

Better yet, we can help to get ourselves lower prices by making sure that long-term contracts for alternative energy are supported by state law. It will only tend to stabilize electricity prices if home-grown Michigan power is made available for purchase in commitments covering the next ten or twenty years. It will also tend to suppress increases in the price of more traditional fuels like natural gas.

Personally, I think that some of the states have set pretty easy, lowball targets for themselves. Texas set itself a goal of 2,880 Megawatts of renewable capacity by 2009. That may have looked like a big pole-vault back in 1999. But in fact, Texas will surpass that exalted figure early this year, just in wind power capacity alone.

It’s encouraging to see Michigan begin to take some real steps toward a 21^st Century energy system. But even if the Lark plan passes intact, we won’t be anything to write home about.

By comparison with other active states, Lark’s proposed benchmarks are solid, but still fairly middle-of-the-road. New York State strives for 24 percent by 2013 – that’s determination. Grand Rapids Mayor George Heartwell has called for 20 percent renewables powering his city by 2008. He advocates a statewide goal of 15 percent by 2015. Gov. Granholm, by contrast, has called for 10 percent by that time. 

Michigan starts from a current renewable power share of 6 or 7 percent, thanks mainly to hydro power, trash incineration projects, and a diversity of small alternative suppliers. So we are talking about adding another 3 – 4 percent in the next eight years, depending on how we define our eligible sources.

Sounds a teeny bit relaxed to me. Of course, nobody wants us to come up short. Still, I’d like to feel confident that the second benchmark will be included, unreduced, in the final package – and without the sort of wishy-washy, weasel-wordy, wiggle room that I suspect may be put in.