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Myth buster: State data shows Michigan renewable energy beats coal on cost alone

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.
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