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Latest state report on clean energy: Costs continue to drop

Wind power at least 26 percent cheaper than coal
Electricity from renewable clean energy sources in Michigan is at least 26 percent less expensive than comparable coal-fired electricity, according to an annual analysis by the Michigan Public Service Commission recently released. 

The report also says that state utilities are going to meet the 10 percent renewable electricity goal by the target date of 2015. 

The report is especially relevant this year, as Governor Rick Snyder and the Michigan Legislature prepare to chart a clean energy strategy extending beyond 2015, when the current standards plateau. Snyder has indicated he favors increasing both the renewable energy and energy efficiency goals, but he has not indicated how aggressively he wants the state to move in that direction. 

The most recent clean energy contracts—primarily wind-powered electricity—are half as expensive as just five years ago, the report concludes. The report uses “levelized cost,” which accounts for initial capital, discount rate, as well as the costs of continuous operation, fuel, and maintenance. Renewable electricity costs are just under $79 per kilowatt hour (KWh). Coal costs are $133, according to the MPSC’s estimate, or $107 using Consumers Energy’s figures. 

But the $79 figure may already be outdated, according to analysts. They note that the most recent wind contracts being inked in Michigan are coming in at costs below $50 per KWh. 

The report also notes that, “The clean and renewable energy sector continues to contribute to employment opportunities in Michigan. In 2013, generating facilities were constructed utilizing Michigan equipment and labor; contracts for utility scale projects, which will employ Michiganders, were approved; and solar pilot programs that utilize Michigan labor for installations continued and expanded.” 

The figures do not take into account “externalized costs” that aren’t reflected in rates—for example, the health care expenses due to coal-burning pollutants are not factored into the figures. 

The costs for clean electricity are so low that Consumers Energy is seeking to eliminate its renewable energy surcharge, and Detroit Edison has lowered theirs from $3/month to 43 cents. 

Will hard data dissuade defenders of the status quo from continuing to claim that renewable energy is too expensive? Of course not. Will it be a critical factor in Gov. Rick Snyder’s eventual proposal—expected late this year or early next—on where to go next with renewable energy development? We suspect so.
-Hugh McDiarmid, Jr.
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