Renewable energy in Michigan is significantly less expensive
than new coal-fired power and will cost ratepayers far less than
originally projected, according to a new report from the state’s
Public Service Commission (PSC) and a revised renewable energy
plan filed in February by Consumers Energy.
The reports also show that the state’s energy efficiency
programs are meeting energy needs at a fraction of the cost of
new power generation.
Using figures from actual contracts for energy in Michigan, the
data shatters the oft-repeated contention that renewable power
is prohibitively expensive, according to David Gard, energy
program director with the Michigan Environmental Council.
“Clean energy in Michigan, particularly from wind turbines, is
already less expensive than new coal power, and it’s becoming
even cheaper as the technology improves,” said Gard. He said
renewable energy is also a hedge against unpredictable fossil
fuel prices. “Coal plants lock us into decades of buying
out-of-state coal that could become much more expensive. But
once you build a turbine or install a solar array, the fuel is
free forever.”
Both efficiency programs and increased renewable energy are
required under 2008 laws passed with support from the Michigan
Environmental Council. The laws require public utilities to
generate 10 percent of their energy from renewable sources by
the year 2015. The PSC’s Feb. 15 Report on the Implementation of
the P.A. 295 Renewable Energy Standard and the Cost
Effectiveness of the Energy Standards says the utilities are on
track to meet that 10 percent goal by 2015.
In a separate rate filing in late February, Consumers Energy
reported that meeting the renewable energy law’s requirements
will cost only one-third of its original projections. As a
result, the utility plans to reduce the program’s annual cost to
ratepayers from $78 million annually to $23 million, almost
certainly meaning a reduction of the renewable energy surcharge
on ratepayers’ bills.
The PSC’s report also showed:
- The levelized cost of renewable energy is $98.68 per
megawatt hour (MWh). That is about 25 percent less than
energy from a new conventional coal-fired power plant, at a
projected $133/MWh.
- The cost of energy optimization (energy efficiency
measures) was $13.25/MWh, making new coal power literally 10
times more expensive than meeting the same goals through
efficiency savings.
- There is no indication that the renewable energy law has
yet had any impact on electricity prices in Michigan.
- In 2007, 2.9 percent of Michigan’s electricity came from
renewable sources. By 2009, that number had risen to 3.7
percent.