Michigan Requires 10% Renewable Electricity by 2015

October 8, 2008

Michigan Governor Jennifer Granholm approved an energy package on October 6 that includes a requirement for 10% of the state's electricity to come from renewable energy sources by 2015. Senate Bill 213 requires utilities to obtain renewable energy credits (RECs) equal to 2% of their electricity supply in 2012, increasing each year until the number of RECs equal 10% of their electricity supply in 2015 and thereafter. Aside from currently existing contracts for wind power and a few other exceptions, the RECs must be generated by renewable energy systems located within the state or within the service territory of the state's major utilities. The bill provides triple credits for power generated by solar power systems and partial extra credits for renewable power generated from equipment manufactured in Michigan or from systems constructed by a Michigan workforce, as well as for renewable power generated at peak times or generated at off-peak times but stored and provided to the grid at peak times. The RECs will be certified, tracked, and traded under a system to be established by the Michigan Public Utilities Commission (PUC). The bill also allows the use of industrial cogeneration to meet up to 10% of the renewable energy requirement. Other advanced energy systems, load management programs, or energy efficiency programs could be used to meet that portion of the requirement, but only with PUC approval.

In addition to the REC requirements, utilities with 1-2 million retail customers must have 200 megawatts (MW) of new renewable energy capacity in their energy portfolios by the end of 2013 and 500 MW of new renewable capacity by the end of 2015. Utilities with more than 2 million retail customers must add 300 MW of renewable capacity by the end of 2013 and must add another 300 MW by the end of 2015, for a total of 600 MW of new renewable power capacity. To encourage wind power development, the bill establishes a framework to designate wind energy resource zones, to determine transmission needs for those resource zones, and to expedite the state's approval of needed transmission lines. The bill also requires the PUC to establish a statewide net metering program, allowing customers with renewable energy systems to earn credit for power fed back into the electrical grid.

SB 213 also mandates electric utility plans for energy efficiency and load management, as well as energy efficiency plans for natural gas utilities, with requirements for electric utilities to reduce their electricity sales by 5.5% by 2015, and for natural gas utilities to reduce natural gas usage by nearly 4% by 2015. The PUC could even decouple revenue from sales for natural gas utilities with aggressive energy efficiency programs. Large customers can also opt out of the energy efficiency programs if they institute their own self-directed energy efficiency program. The bill also establishes an energy efficiency program for the Michigan State government, with a goal of reducing grid-based energy purchases by 25% by 2015. As a complement to SB 213, SB 1048 provides a 10% tax credit for energy efficiency improvements to homes. See the governor's press release and the texts for SB 213 and SB 1048.