Facts, not hysteria, on the cost of renewable energy in Michigan
Jul 10, 2012
by Hugh McDiarmid, Jr.
There was a flurry of media attention last week when the Michigan Energy, Michigan Jobs coalition turned in 530,000 petition signatures Friday. If approved, the group’s ballot initiative will allow voters to decide whether to require the state’s electric utilities to generate 25 percent of their electricity from renewable sources by 2025. Many of the reader comments under the stories complained bitterly that the plan would force expensive electricity on customers.
“Watch your utility bills go up and up and up,” predicted a Detroit News commenter.
“…an example of an extreme group of tree huggers wanting to suck more money out of our wallets” wrote another.
“Liberal enviro nut jobs want Michigan residents to vote to raise their electric and gas bills by 33 percent” wrote a Detroit Free Press critic.
The hysteria wasn’t confined to newspaper readers. The head of the Michigan Chamber of Commerce launched a Twitter misinformation crusade, tweeting that the plan “would raise electric rates by 25%” and warning darkly of power shortages and vast landscapes barren of all but solar panels.
So let’s get clear on the actual cost of renewable energy in Michigan rather than the talking points of opponents:
- According to the Michigan Public Service Commission’s 2012 analysis, the average cost of wind energy in Michigan is $94.27/MWh (recent contracts not yet factored into the average are in the $64/MWh range, which will drive this figure even lower)
- Cost of electricity from a new coal plant is $107/MWh (utilities’ estimate) or $133/MWh (Public Service Commission’s number). Says the PSC: “…the cost of energy generated by renewable sources continues to decline, and is cheaper than new coal-fired generation.”
- Since 2008, Consumers Energy’s charge on residential bills for renewable energy has decreased 80 percent – from $2.50/mo to 52 cents/mo. Meanwhile, they’re seeking more rate increases to cover the increased cost of coal delivered to Michigan, the price of which has doubled since 2005.
- In testimony earlier this year before a Michigan Senate committee, a vice-president with DTE Energy said “Technology advances and design enhancements are driving increased efficiency and lower long term costs for renewable power. From our first wind farm power purchase contract in early 2009 to the one we signed this past August, wind energy prices have dropped 47 percent.”
- The DTE official continued: “Renewable energy prices have fallen much lower than we would have predicted just few years ago….These investments (in renewable energy) are real, they are big, and they are having a positive impact in Michigan communities right now.”
- Finally, the proposal caps increased annual costs related to renewable energy at 1 percent. In the unlikely event that clean energy exceeds that 1 percent, utilities are allowed more time to reach the 25 percent goal.
A 25 percent renewable mix still leaves 75 percent for natural gas, coal, nuclear or whichever of the conventional fuel sources one wishes. And it will provide a measure of stability, with its perpetually free fuel costs, in an unstable market.
The truth is, renewable electricity in Michigan is already less expensive than new conventional electricity would be. And the price is dropping.
from our blog, Michigan Distilled, @
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