Supporting the Advanced Energy Industry during the COVID-19 Crisis

As the state government navigates the ongoing COVID-19 crisis and identifies ways to support small businesses, put people back to work, provide added resiliency for Michigan’s economy, and continue to support a rapid transition to advanced energy technologies, the advanced energy industry should be an important part of any policy agenda.

In 2019, the advanced energy industry in Michigan represented 125,000 jobs and nationally, jobs in the industry were growing faster than the rest of the economy. The COVID-19 pandemic has largely halted the advanced energy industry’s growth, resulting in postponed or cancelled projects, delayed timelines, the closing of businesses, and the loss of jobs. Since the onset of the COVID-19 crisis, Michigan’s advanced energy industry lost more than 5,400 jobs, and that number is likely to grow. Nationally, the advanced energy industry lost more than 106,000 jobs in March alone and job losses could grow to nearly 500,000 if no additional action is taken.

Challenges

Wind and solar developers, rooftop solar installers, energy efficiency contractors, energy storage developers, electric vehicle charging companies, combined heat and power providers, advanced energy manufacturers, and companies throughout the advanced energy industry are facing cancelled or delayed projects and work. In some cases, companies have reported challenges around accessing needed materials in the supply chain. Just as importantly for the long-term viability of companies, many have seen a decline in the demand for their products and services and challenges to their business procedures and operations due to the pandemic.

• Energy efficiency contractors are facing work stoppages, delays, and cancelled projects. Access to sites, including residential properties and shuttered commercial and public facilities, has been limited.
• Wind and solar developers have been forced — in many cases — to limit construction on existing projects or have faced delays in real estate acquisition, survey and title work, permitting, siting, municipal ordinance review, and environmental inspections.
• Combined heat and power (CHP) projects, designed to increase efficiency of businesses, have been put on hold as businesses reevaluate their operational priorities.
• Rooftop solar installers have had to halt operations and delay projects, also facing local permitting and approval challenges.
• Electric vehicle charging companies are seeing decreases in expected demand for electric vehicles, supply chain disruptions, delays in construction timelines for charging stations, and a potential decline in interest of site hosts.

Supporting the Advanced Energy Industry

To limit job losses in this sector and enable the advanced energy industry to get back to work, state policy actions will be crucial. Given that 78 percent of Michigan advanced energy businesses are small businesses, continued support for small businesses through state and local grant programs, access to PPE, and guidance on safety practices will be crucial for the sector.

State policy makers can take additional actions to protect jobs, regrow the industry, and increase the deployment of advanced energy solutions, which will not only help in the short term, but position the advanced energy industry to be a pillar of the economic recovery to come. In particular, policy actions that help advanced energy companies get back to work safely, remove market barriers, or increase access to finance will be valuable. Below are a series of policy actions that can be taken to facilitate — when the time is right — the reopening of the advanced energy economy in Michigan and its long-term recovery.

Note: This list is focused on state actions and does not contemplate the potential existence of additional future federal funding (e.g., through a future stimulus package).

Administrative Actions

Short term

• Guidance: Provide detailed and centralized guidance to businesses on how to operate safely with clear social distancing guidelines.
• PPE supply: Ensure sufficient access to PPE for companies working in the advanced energy industry, especially those with direct customer interaction.
• Virtual capacity building: In collaboration with the Michigan Township Association, Michigan Association of Counties and Michigan Municipal League, provide training and education for local governments to expand virtual services and meeting options.
• Remote inspections and approvals: As appropriate and possible, allow virtual activities including, but not limited to permitting, inspections, environmental review, execution and filing of documents, and recording of deeds.
• Energy work in unoccupied buildings: Encourage energy efficiency and renewable energy contractors to undertake projects to improve indoor air quality, energy efficiency, and renewable deployment in unoccupied buildings such as schools, universities, municipalities, churches, state buildings, and office buildings.
• Charging infrastructure timelines: Explore relaxing timelines for state funded electric vehicle charging infrastructure.

Long term

• Energy efficiency for state buildings: Direct the Department of Technology, Management and Budget to undertake all energy projects in state buildings or state-occupied buildings that immediately save tax payer dollars or are budget neutral. This should include strategies that leverage private finance options.
• Repurpose funds for electric vehicles: Support vehicle electrification by repurposing the Volkswagen settlement funds to support 100% electric vehicles as part of the mandate of the new mobility office.
• Taxation workgroup: Establish a workgroup to develop recommendations to provide clarity on taxation for utility-scale solar systems, providing revenue certainty for local governments and predictability for project developers.
• Convene philanthropy: Convene Michigan’s philanthropic community to develop a joint initiative to support the rapid deployment of renewable energy solutions.
• Renewable energy on public land: Make state public lands available for renewable energy development by supporting coordination between the Department of Natural Resources, Department of Corrections, Department of Transportation, Department of Technology, Management and Budget, and other relevant agencies.
• Energy resiliency initiative: Launch an energy resiliency initiative focused on the development of the energy storage industry supply chain and deployment in Michigan.

Legislative Actions

Short term

• Virtual hearings: Allow open virtual committee hearings to allow the legislature to continue engagement with stakeholders on critical issues.
• Distributed generation cap: Lift the cap on the distributed generation program for rooftop solar by passing SB 597 (McBroom)/HB 5145 (Markkanen), providing certainty for solar companies looking to rehire employees.
• Distributed generation size limits: Remove arbitrary size limits for rooftop solar as in SB 596 (Barrett)/HB 5143 (Rabhi).
• Increase financing availability: Allocate funds to Michigan Saves to support its continued use of a loan loss reserve to attract favorable private financing for energy projects across Michigan.
• Energy efficiency targets: Expand energy efficiency targets beyond 2021 for municipal electric utilities and electric co-ops and build on existing energy efficiency targets for investor owned utilities.

Long term

• Consumer rate protection: Increase the Utility Consumer Representation Fund (overseen by the Utility Consumer Participation Board) to allow more oversight of utility rate increases by consumer protection advocates.
• On-bill financing: Require utilities to deploy on-bill financing programs for energy efficiency and renewable energy upgrades.
• Hosting capacity maps: Require Michigan’s utilities to create and make publicly available hosting capacity maps for use by communities and interested third-parties to create market opportunities and enhance community self-determination.
• Commercial PACE financing: Expand commercial Property Assessed Clean Energy (PACE) financing by revising the commercial PACE financing statute to make capital more accessible for Michigan businesses.
• Residential PACE financing: Establish residential PACE financing to provide increased financing options for energy efficiency and renewable energy projects.

Regulatory Actions

Short term

• Virtual inspections: Encourage and enable virtual inspections and testing for distributed energy resources, especially smaller distributed generation systems.
• Virtual energy efficiency assessments: Encourage and enable virtual energy efficiency assessments and installations.
• Virtual meetings: Continue to allow video hearings, workshops and cross-examinations. To improve participation, provide staff and stakeholder training on best practices for virtual interactions.
• Net metering timelines: Given the unprecedented recent stay-at-home orders, extend timelines for contractors and customers to qualify for net metering programs.
• Energy waste reduction and demand response targets: Order utilities not to discriminate against, or unreasonably postpone, plans for energy waste reduction, demand response programs or other advanced energy technologies.
• Energy waste reduction program flexibility: Maintain energy waste reduction requirements, but give utilities more flexibility on how to spend program dollars to enable prioritization of and increased incentives for activities that can be conducted safely (e.g., exterior efficiency measures, home energy reports, behavioral efficiency, digital marketplaces).
• Demand charge relief: Provide demand charge ratchet relief for shuttered businesses or for companies retooling to respond to COVID-19 that may experience new peaks in energy use.
• Interconnection timelines: Avoid delays in the interconnection process.
• Prioritize MI Power Grid workgroups: Issue a policy statement that reaffirms the Commission’s commitment to the goals of the MI Power Grid initiative and prioritize high impact regulatory activities that support grid modernization. 

Long term

• On-bill financing: Require utilities making billing system upgrades to enable implementation of future on-bill financing programs.
• Hosting capacity maps: Require Michigan’s utilities to create and make publicly available hosting capacity maps for use by communities and interested third-parties to create market opportunities and enhance community self-determination.
• Extend and expand electric vehicle pilot programs: There should be favorable consideration of extensions for utility electric vehicle pilot programs and such programs should also be expanded to continue to spur the market.