State’s approach to alternative energy source is too costly for most consumers, threatens energy portfolio
Solar-generated electricity should have a place in Michigan’s future, but the state’s current approach needs to be revisited to make it more sustainable and less of a burden for the broader customer base.
Michigan’s approach to solar has helped grow the power source from infancy. But sustaining it under the current program is costly for non-solar users, and threatens the state’s changing energy portfolio moving forward.
The Senate Energy and Technology committee is in the middle of testimony on the Michigan Clean Energy Plan, a bill package that would change some of Michigan’s energy policies.
Of the package’s many components, perhaps most contentious is the proposal in Senate Bill 438 to restructure the state’s “net metering” program, which governs how and at what price utility companies buy back solar energy from residents who own and generate energy from their own solar panels.
In 2008, it was mandated the companies had to install meters and buy back excess power at the retail rate. This bill would fairly change the rate to wholesale.
Retail rates include fees for services such as transmission, delivery and grid maintenance — services utility companies don’t receive and shouldn’t have to pay for. The wholesale rate better reflects the value of the energy coming from residential solar generators.
The bill would also change the billing mechanism so that solar customers must first purchase their energy from a utility company, and then sell back solar energy in a separate transaction.
It is unfortunate solar customers can’t simply produce energy and tap into the main power grid when they need it. But such a system poses risks to the safety of the grid overall, and shifts grid costs that are fixed and worked into the retail rate onto non-solar customers.
The original law encouraged investment in solar, but utilities can generate solar on their own or acquire it in a more cost-effective way than buying it at a premium from residential generators. A recent study from the Massachusetts Institute of Technology shows rooftop solar installations are about 70 percent more expensive than utility-scale solar, even in sunny California.
While the proposed rate change makes sense, customers who installed solar under the retail rate arrangement should be grandfathered into new policies. There’s talk of adding that provision to the bill.
The bill would also remove the mandates for statewide renewable energy, instead letting market value determine what’s most cost effective for consumers.
It’s another contentious proposition, but makes more sense for Michigan, which still relies heavily on affordable fossil fuels to meet its big energy needs.
A separate bill, Senate Bill 437, would maintain the state’s 10 percent allowance for electric choice, meaning 10 percent of ratepayers can look to companies other than DTE and Consumers Energy for competitive pricing.
The bill would also strengthen requirements on alternate providers and limits the ability of their customers to essentially switch back and forth, an important protection of the investments made by utility companies in infrastructure, and critical to planning capacity.
Big changes are in store for Michigan’s energy portfolio over the coming years, and federal mandates stand to increase rates across the board. Solar subsidies don’t need to add to those growing costs.