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Michigan Public Service Commission Renewable Energy Overview

Michigan Public Service Commission Renewable Energy Overview. 2011 GLREA Energy Fair Jesse Harlow Engineer, Renewable Energy Section Michigan Public Service Commission harlowj@michigan.gov 517-241-8793

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Michigan Public Service Commission Renewable Energy Overview

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  1. Michigan Public Service Commission Renewable Energy Overview 2011 GLREA Energy Fair Jesse Harlow Engineer, Renewable Energy Section Michigan Public Service Commission harlowj@michigan.gov 517-241-8793 Any views expressed are my own and not necessarily that of the Michigan Public Service Commission

  2. 2008 PA 295, cited as the Clean, Renewable and Efficient Energy Act (Act), requires Michigan electric providers to provide customers with at least ten percent of their electricity from renewable energy sources by 2015. • Electric providers will meet these requirements through the purchase and/or production of Renewable Energy Credits (RECs). • http://www.legislature.mi.gov/documents/2007-2008/publicact/pdf/2008-PA-0295.pdf

  3. MIRECS • Michigan Renewable Energy Certification System • Required by Section 41 of the Act • Launched October 30, 2009 to certify and track all credits • Over 3 million RECs were certified in 2009

  4. Surcharge Caps • Section 45 of 2008 PA 295 caps renewable energy surcharges by customer class: • $3.00 per month per residential meter • $16.58 per month per commercial meter • $187.50 per month per industrial meter

  5. Overview • February 15, 2011 Report • Includes 2009 and 2010 data • Highlights of 2011 Renewable Plan Filings

  6. February 15, 2011 Renewable Energy Report • Sec. 51(5): By February 15, 2011 and each year thereafter, the commission shall submit to the [legislators] … a report that does all of the following: • (a) Summarizes data collected under this section. • (b) Discusses the status of renewable energy and advanced cleaner energy in this state and the effect of this subpart and subpart B on electricity prices. • (c) … specifies the difference between the cost of the renewable energy and the cost of electricity generated from new conventional coal-fired electric generating facilities. • (d) Discusses how the commission is fulfilling the requirements of subsection (4) (annual reports). • And…

  7. February 15, 2011 Renewable Energy Report • (e) Evaluates whether this subpart has been cost-effective. • (f) Provides a comparison of the cost effectiveness of the methods of an electric utility with 1,000,000 or more retail customers in this state as of January 1, 2008 obtaining renewable energy credits under the options described in section 33 (self build vs PPA). • (g) Describes the impact of this subpart on employment in this state. • (h) Describes the effect of the percentage limits under section 27(7) on the development of advanced cleaner energy (10% ACEC limit). • (i) Makes any recommendations the commission may have concerning amendments to this subpart…

  8. February 15, 2011 Report • 74 Renewable Energy Plans Approved in 90 days or less in 2009 • 9 Investor Owned Utilities • 10 Cooperatives • 41 Municipals • 14 Alternative Electric Suppliers

  9. February 15, 2011 Report • Three expected not to achieve the 10% Requirement due to surcharge caps • City of Sebewaing • 0.04% of Michigan’s load • Detroit Public Lighting • 0.5% of Michigan’s load • WE Energies • 2.5% of Michigan’s load

  10. February 15, 2011 Report • Rate regulated Electric Providers required to submit RE reconciliations annually to true-up RE revenues and expenses. • 14 in total for 2009 • 6 Cooperatives • 8 Investor Owned Utilities • All but Consumers Energy and Detroit Edison settled

  11. February 15, 2011 Report • 2007 renewable energy percentage was 2.9% • Annual report data shows that Michigan’s 2009 renewable energy percentage was 3.6% • Approximately 700 MW of new renewables will be commercially operational by the end of 2012 (Just under 6%) • By 2015 the Act requires 10% of the electricity to come from renewable resources

  12. New Capacity by Year

  13. February 15, 2011 Report • Detroit Edison SolarCurrents Pilot Program • Available to DTE retail customers • Solar PV only • Limited to 5 MW capacity • At least half reserved for residential customers • System size limited to between 1 and 20 kW • Contract term of 20 years • Through pre-payment and purchase of RECs, company will pay $2.40/watt up-front with an ongoing payment of $0.11/kWh (~half of the installed cost). • Add-on to net metering; only category 1 net metering systems qualify (20 kW or less). • ~$25M program cost • Approximately 3 MW subscribed at the time of Report • Fully Subscribed as of May 2011

  14. February 15, 2011 Report • Consumers Energy’s Experimental Advanced Renewable Program • Available to CE Retail Customers • Solar PV only • Limited to 2 mW capacity • 6MW of interest before contracts were sent out • Contract term of up to 12 years • Prices vary based on customer class and when system is available (range: 65 to 37.5¢/kWh) • No net metering. Separate generation meter. • Consumers will own energy, capacity and RECs. • ~$10M program cost • Approximately 1 MW installed at the time of Report • Fully Subscribed as of April 2011

  15. February 15, 2011 Report • Renewable Energy and Energy Optimization Effect on Market Electricity Prices • No indication of any negative effects on electricity prices • No foreseeable future effects on electricity prices

  16. Renewable Energy vs New CoalSix 10/09 contracts are representative of the fill-in price

  17. February 15, 2011 Report

  18. Cost of 2008 PA 295 February 15, 2011 Report

  19. February 15, 2011 Report • 10% Renewable Energy Standard’s Impact on Employment • Northern Power Systems’ Saginaw assembly facility expects to employ 137 workers • Consumers Energy’s EARP and Detroit Edison’s customer owned SolarCurrents programs will support roughly 370* FTEs • The renewable energy sector shows a significant potential for future growth *ARRA calculator of 1 FTE = $93,000

  20. Recommendations on amendmentsto the Act: February 15, 2011 Report Stay the course

  21. 2011 Renewable Energy Plan Highlights • Significant cost reductions due to: • Improved efficiencies of wind turbines (35%-36% capacity factors compared to 28%-31% predicted in the original REPs) • Tax credits • Less nameplate capacity needs • Very cheap Market RECs predicted • Approximately $7/REC ($0.007 per kWh)

  22. Consumers Energy’s 2011 Amended Plan • Filed February 24, 2011 • Significant Surcharge reductions • No EARP expansion proposed

  23. Consumers Energy’s 2011 Amended Plan • Approved May 10, 2011 subject to changes: • Expansion of EARP • File revised surcharges in light of EARP expansion • Agreement to file Biennial REP October 14, 2011 • Anaerobic Digester Program and “market based” solar program

  24. Consumers Energy’s 2011 Amended Plan • $20 Million to spend on programs: • Experimental Advanced Renewable Program • New EARP will be at least 2 MW • 15 year contracts • Prices: $0.20 - $0.26 / kWh • $16.5 Million earmarked • CE will continue to investigate an Anaerobic Digester program

  25. Consumers Energy’s 2011 Amended Plan • Plan cost reduction from $5 billion down to $3.1 billion • Incremental cost of compliance (ICC) reduction from $1.5 billion down to $0.5 billion • Yearly ICC collection reduction from $78 million down to $23 million

  26. Consumers Energy’s 2011 Amended Plan • Company-owned needed capacity reduced from 450 MW down to 351 MW • The Company plans to build 3 wind farms • Purchase agreement capacity reduced from 463 MW down to 296 MW • Purchase agreements for the entire 296 MW have been executed • The Company has no plans to enter into any more purchase agreements • Plan was approved in its entirety May 26, 2011

  27. Detroit Edison Biennial REP • Filed June 2, 2011 • Surcharges remain the same • No customer owned SolarCurrents expansion

  28. Detroit Edison Biennial REP • Cost reductions realized but market energy prices reductions shift expenses to surcharges • ICC $1.8 billion • Yearly ICC of $100 million

  29. Detroit Edison Biennial REP • Capacity reductions from 1295 MW down to 1000 MW • Company owned capacity reductions from 609 MW down to 447 MW • Purchase agreement capacity reductions from 686 MW down to 560 MW • 140 MW currently under contract • 245 MW to be under contract within 2011 planning period • 175 MW not yet solicited • Expected Commission decision in Fall of 2011

  30. Jesse Harlow • harlowj@michigan.gov 517-241-8793 • To learn more: • Renewable Energy Report under “Renewable Energy” at:www.michigan.gov/mpsc • Consumers Energy 2009 REP___________________U-15805 • Consumers Energy 2011 Amended REP___________U-16543 • Detroit Edison 2009 REP_______________________U-15806 • Detroit Edison 2011 Biennial REP________________U-16582 • Available under “E-Dockets” at: • www.michigan.gov/mpsc

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