Rate Certainty Sets Stage for New Private Investments, Solar Energy Development
Consumer Energy is proposing a plan for renewable energy which won't raise customer's rates.
An order setting rates for renewable energy developers from Consumers Energy will create the certainty necessary to spur private investments and new growth in solar energy while ensuring utility customers’ electricity rates don’t increase.
“The Commission adopted a strong methodology that reflects the value solar provides to Michigan during peak periods,” said Margrethe Kearney, senior staff attorney with the Environmental Law & Policy Center in Grand Rapids, Mich. “This decision makes Michigan more attractive for renewable energy development at no additional cost to ratepayers.”
The Commission adopted new avoided cost rates that Consumers Energy must pay to renewable energy facilities in Michigan for the power those facilities supply to the grid. This completes Michigan’s first update in 25 years of the approach utilities must take under federal law to compensate the owners of qualified clean energy facilities.
Solar industry officials hailed Wednesday’s announcement saying it can help make Michigan a leader in Midwest solar.
“The Commission correctly recognized the significant long-term value of solar to Michigan, and the need to update old rules to capture that value,” said Rick Umoff, director of state affairs for the Solar Energy Industries Association (SEIA). “Solar companies can now ratchet up investment in Michigan’s economy, creating well-paying jobs and providing clean reliable energy to the state.”
Advocates also celebrated the news.
“The Commission’s decision to enable a level playing field for clean energy will launch a new wave of solar development in Michigan,” said Becky Stanfield, senior director of western states at Vote Solar. “Michigan’s leadership demonstrates to regulators and lawmakers across the country how to attract private investments, build a clean energy economy, and create local jobs that can’t be outsourced.”
The Public Utility Regulatory Policies Act (PURPA) was enacted in 1978 to encourage renewable energy development, reduce reliance on fossil fuels, and promote energy independence. It requires utilities to purchase energy from small qualified cogeneration and renewable energy providers and establishes what are known as “avoided costs” and “must-buy prices” that utilities pay to small renewable energy providers. Since its inception, PURPA has spurred more than 16 GW of cumulative capacity across the country.
In June, the Commission established avoided cost calculations based on the costs of energy and capacity from new natural gas facilities, creating an even playing field for independent developers of qualified clean energy projects. The order also simplifies the development and financing process for small projects by establishing 20-year contracts at a standard rate for projects up to 2 megawatts in size. Previously only projects up to 100 kilowatts were eligible.