This newsletter was originally published on June 2, 2017.
First state update to PURPA rules in 25 years expands opportunities for distributed generation, offers lifeline to renewable baseload plants
The Michigan Public Service Commission this week issued an order that updates the state’s rules governing the implementation of the federal Public Utility Regulatory Policies Act (PURPA). The Commission’s order, which was the first update to the state’s PURPA rules since they were initially implemented in the early 1980s, changes how the state calculates avoided costs and modifies the terms of the Standard Offer tariff that is used for small generators. Together, these changes substantially improve opportunities for distributed generation systems of up to 2MW, and provide a needed lifeline for larger hydro and biomass facilities whose power purchase agreements with Consumers Energy were about to expire. A decision in a similar case involving DTE Energy is pending.
Specifically, the Commission’s order changes the proxy for determining avoided costs from a coal plant to a new natural gas plant, reflecting the changes taking place in the electricity system. Importantly, the Commission also revises the calculation for capacity credits offered to Qualifying Facilities (QFs). If the utility projects a need for capacity additions within a ten-year planning timeline, the capacity values of a natural gas combustion turbine are used, providing a higher payment to QFs for providing capacity to the grid. If no capacity additions are anticipated within the next ten years, capacity is then compensated according to the MISO planning reserve auction price. These changes will likely prolong the life of existing hydro and biomass plants whose PPAs were set to expire and where the previous PURPA calculations made their future uncertain.
In addition, the Commission also substantially revised the Standard Offer tariff used for distributed generation resources. Most significantly, the Commission extended the length of contract terms from five years to 20 years and increased the size of projects eligible for the Standard Offer tariff from 100 kW to 2 MW, changes that could dramatically expand opportunities for deployment of distributed generation systems in Michigan. The Standard Offer contract also adopts the same methodology for evaluating avoided energy and capacity costs, clarifies that project owners – and not the contracting utility – own renewable energy credits associated with the project, and sets a standard compensation rate related to avoided line losses, among other updates. The Commission also called for a biennial PURPA review to ensure state rules keep pace with the continuing changes in the market.
Finally, the Commission determined that additional information is needed to finalize the compensation schedules for PURPA projects, and is seeking input from the parties involved in the case relating to capacity, capacity factors, heat rate, project fuel costs, and capital costs, including the amount of the investment cost attributable to energy (ICE). A final decision incorporating this information is expected next month.
Michigan EIBC applauds the Commission for these updates to state PURPA rules, particularly the changes to avoided cost compensation and the needed modifications to Standard Offer tariffs. The changes reflect the spirit of PURPA to encourage development of distributed resources and help to modernize the state’s rules governing distributed generation systems.
Trump’s decision to leave Paris Climate Accord draws pushback by leading CEOs
President Trump formally announced yesterday his intention to withdraw from the Paris climate accord, a voluntary set of measures developed in 2015 that has been endorsed by 195 countries. The decision sets in motion the process outlined in the Paris agreement for withdrawing from the treaty, which could take up to four years to complete.
Trump’s announcement met with significant pushback from a range of sources, including a joint statement from the leaders of France, Germany, and Italy, and broad concerns from leading CEOs in the U.S. Apple CEO Tim Cook, Goldman Sachs CEO Lloyd Blankfein, Google CEO Sundar Pichai, and Microsoft CEO Mark Zuckerburg all released statements condemning the move, while Disney CEO Bob Iger and Tesla CEO Elon Musk resigned from the President’s Business Advisory Council in protest. The decision was also reportedly opposed internally by Secretary of State Rex Tillerson, former CEO of Exxon Mobil, and Gary Cohn, director of the National Economic Council and former President and COO of Goldman Sachs, as well as Ivanka Trump.
The move comes as polling shows 70% of Americans support staying in the Paris deal, including a majority of Democrats, Republicans, and independents. Among those who identified as having voted for President Trump, slightly less than half supported the agreement, with 25% opposing the treaty and the remainder not having an opinion.
In addition, survey research from the Pew Research Center finds that a majority of Americans say that increasing the use of renewable energy sources should be a top priority for the country’s energy policies. In addition, the Pew study found that fifty-four percent of Americans believe regulations are the best way to increase investment in advanced energy, as opposed to relying on economic markets alone.
While there is a lot of analysis on the impact of Trump’s decision, the reality, as Michael Liebrich of Bloomberg New Energy Finance points out, is that with or without the provisions contained in the Paris deal, “a number of clean energy technologies are beyond the tipping point,” and will continue to take market share away from fossil fuels. In addition, other countries, as well as cities and states here in the U.S., are likely to continue with energy and transportation policies that continue and accelerate the transition to advanced energy – moves in line with corporate and consumer demand for more advanced energy resources.
Wind energy expected to grow in Michigan following political setbacks
Wind farms are increasingly becoming a part of the landscape in Michigan’s Thumb, which includes Huron, Tuscola, and Sanilac Counties. However, in early May, voters in Huron County rejected proposals to allow the development of two new wind farms, dealing a blow to wind energy in Michigan.
Speaking on Michigan Radio’s Stateside program, Pruss explained that while some residents of the Thumb are experiencing “turbine fatigue,” residents in other areas of the state are excited about opportunities for new wind development.
As residents and corporations continue to support advanced energy, and as wind energy remains the cheapest new generation source available, utility companies and others are making increased commitments to advanced energy. It is clear that there are still opportunities for wind energy to grow.
Member companies Michigan Energy Options and 5 Lakes Energy develop tool for UP IRP
Michigan EIBC member companies Michigan Energy Options (MEO) and 5 Lakes Energyteamed up to develop the “State Tool for Electricity Emissions Reduction” for the Upper Peninsula to model energy usage and assist in the integrated resource planning and economic development in the region.
The tool, which the team is calling STEER-UP, automatically calculates the lowest-cost advanced energy plan, while taking into account policy options, load, price forecasts, and publicly available data for existing electric generating units in the Upper Peninsula.
“This analysis is timely given the growing perception among energy experts that the U.P., though a part of Michigan, is an island unto its own when it comes to generation resources, transmission and distribution and, related, the unique challenges it is facing,” said John Kinch, Executive Director of MEO.
Through funding from the State of Michigan Energy Office, MEO and 5 Lakes Energy originally created STEER-UP as an open-access Integrated Resource Planning model for analyzing strategies to implement the Clean Power Plan. Although the implementation of the Clean Power Plan has been stayed by the U.S. Supreme Court, STEER-UP will still have relevant applications to energy planning for the Upper Peninsula, according to David Gard of 5 Lakes Energy. The tool will help facilitate access to data and inform conversations about important public policy, energy planning, and economic development issues and decisions in the UP.
Michigan Energy News:
- Huron County passed a moratorium on new commercial solar development until the passage of a regulation ordinance.
- A solar installation at a library in Bay City is expected to save $50,000 in energy costs over the next decade. The installation was part of the Solarize Michigan spearheaded last year by the Institute for Energy Innovation.
- Ann Arbor officials are considering installing solar panels on municipal buildings and developing residential solar options.
- Solar power can work in the UP. Researchers are surveying a community in the western UP about local interest in solar.
- Consumers Energy is teaming up with SunPower to offer a 100 home pilot project involving solar energy for homeowners.
- A number of residents spoke out against wind at town hall event in Caro last week. The event was hosted by State Representative Gary Glenn.
- Consumers Energy announced plans to spend $440 million this year on natural gas infrastructure upgrades.
- UMERC is moving ahead with plans to build two new natural gas power plants in Marquette and Baraga Counties in the UP.
- The state of Michigan is offering rebates to generate energy savings through the replacement of inefficient equipment.
- The Lansing Board of Water and Lights faced a cyberattack that cost the utility $2M. The cyberattack temporarily disabled the company’s internal network and required it to pay a $25,000 ransom.
- A bipartisan bill backed by Michigan Senators Stabenow and Peters will encourage clean vehicles and increase fuel efficiency.
- GM was accused in a class-action lawsuit of using software to cheat emissions tests in the company’s diesel pickup trucks.
National Energy News:
- President Trump named three nominees to the Nuclear Regulatory Commissionand needs the Senate to confirm them by July in order to avoid a shutdown.
- The DOE will move forward with regulations on refrigeration products, pool pumps, residential central air conditioners, and heat pumps after reviewing Obama-administration regulations.
- Ohio is attempting to regulate “submeter” companies that resell electricity in apartments and condos.
- Kansas regulators rejected a proposal to merge Great Plains Energy and Westar Energy for the second time. Utility officials say they are exploring other options.
- South Dakota utility regulators suggest setting separate generation credit ratesutilities pay to small power generators for wind and solar.
- Some states are creating their own ‘clean power plans’ with policies to limit carbon emissions, lower pollution, and increase investment in advanced energy.
- A report is showing an industry-wide trend toward more complex net metering and rate design.
- General Electric’s Energy Financial Services exceeded $15 billion in renewable energy investments.
- SolarWorld is joining a trade case brought by Suniva that seeks to impose tariffs on imported solar.
- A bill in Missouri that would have charged solar customers additional monthly feeswas voted down.
- An Iowa airport is planning on renovations including adding solar panels and a geothermal system.
- According to the CEO of Xcel Energy, the utility has “no problem with reliability” when it comes to wind.
- An Iowa researcher says his design for concrete wind towers passed the stress test and will be a viable option for turbines up to 460 feet tall.
- Northwest Ohio officials are asking lawmakers to repeal new restrictions on wind farms, citing a report that says the rules would prevent nearly $1.6 billion in economic development.
- A bill being considered by the Ohio House of Representatives would provide aperpetual subsidy for two coal-fired power plants in the state.
- Development has begun on the first ever net-zero residential community in Wisconsin.
- The Trump administration announced a goal to privatize three-quarters of the high-voltage transmission grid in the Northwest to save money.
- An Arizona utility is studying two identical grid-scale batteries at different locations to test the technology.
- Michigan EIBC member company Invenergy chose General Electric to provide cybersecurity for its generation fleet.
- The University of Wisconsin-Milwaukee is partnering with a research group backed by the National Science Foundation to research microgrids with the goal of improving energy access.
- The Federal Transit Administration granted the San Francisco Bay Area $650 million to electrify a train system.
- The U.S. government filed a civil lawsuit accusing Fiat Chrysler for illegally using software to bypass emission controls in 104,000 diesel vehicles sold since 2014.
- As part of a plan to expand electric vehicle charging stations, an Ohio utility is partnering with Nissan to offer a $10,000 discount on the 2017 Nissan Leaf.
- Pennsylvania utility regulators are reviewing policies governing third-party electric vehicle charging stations because existing rules might be discouraging investors from building for-profit charging stations.
Michigan Energy Events:
Join Michigan EIBC, the American Association of Blacks in Energy (AABE), and Advancing Women in Energy (AWE) in Detroit for an Advanced Energy Networking Reception hosted by CLEAResult on June 16. There will be a brief program with remarks by Carla Walker-Miller, President and CEO of Walker-Miller Energy Services and President of The AABE Michigan Chapter and Liesl Eichler Clark, President of Michigan EIBC and board member of AWE. Register here.
Join Groundwork Center and the Great Lakes Renewable Energy Association at Northwestern Michigan College June 23-25 in Traverse City for a conference designed to mobilize clean energy investments in homes, businesses, and communities. The conference includes a free film screening, panel discussions, keynote speakers, and a fair. For more information, click here.
The 2017 PlugVolt Battery Seminar is scheduled for July 18-20 in Ann Arbor. Industry leaders, policy decision-makers, and key stakeholders from more than 80 companies are expected to gather at the PlugVolt Battery Seminar to learn more about the challengers and opportunities for energy storage systems in grid/utility storage and automotive applications. Register here.
The Michigan Public Service Commission will host a technical conference on the future of electric vehicle charging on August 9 at the public service commission office, 7109 W. Saginaw Highway, Lansing. Subject matter experts interested in participating in a panel are asked to submit a letter of interest, resume and summary of expertise to Al Freeman at the commission offices or by e-mail to email@example.com.
The 1st Annual Sustainable Detroit Forum is scheduled for October 25. The event will consist of interactive learning, keynotes, and short presentations. Acoustic musicians will perform during breaks. Proposals for presentations will be accepted for Sustainable Projects, Personal Green Stories, and Lessons Learned/Greatest Failures. Proposals are due July 14.
National Energy Events:
Smart Cities Technologies in Wisconsin is taking place on June 6 in Milwaukee. Organized by the Midwest Energy Research Consortium and the City of Milwaukee, this workshop will explore how cities like Milwaukee are adopting Smart Cities Technologies.
TRC is hosting a two-day conference on Developing Solar on Landfills and Brownfields on June 12-13 in Chicago. The event brings together landowners, who will learn about how to turn their brownfield liabilities into clean energy assets, while solar developers will learn how to choose and develop on brownfields.
Greentech Media’s Grid Edge World Forum 2017 will be held in San Jose, CA on June 27-29. As the only conference exclusively focused on emerging distributed energy system, this event highlights the trends, opportunities, and innovation happening at the grid edge.
A web site from the Michigan Public Service Commission provides details on the laws, which took effect on April 20. For more information, or to sign up for notifications, visit www.michigan.gov/energylegislation.