A recent agreement by two Michigan power companies to increase renewables by 2030 is part of a broader trend of using ballot initiatives to boost renewable development, but time will tell the impact of the deal, according to observers following the issue.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
"Friday's announcement may appear outwardly positive for renewable power buildout, but we caution that the announced details do not include penalties for noncompliance," said Timothy Fox, vice president and research analyst at ClearView Energy Partners.
Consumers Energy and DTE Energy on Friday announced that they aim to get 50% of their energy from clean sources by 2030, through a combination of energy efficiency and renewable energy. In exchange for the plan, a ballot campaign called Clean Energy, Healthy Michigan agreed to pull a ballot initiative that would have required at least 30% of electricity sales to come from renewables by 2030.
In 2016, Michigan signed into law a renewable portfolio standard that requires 15% renewable energy by 2021. Under the agreement announced Friday, DTE and Consumers would reach 25% renewable energy by 2030. The companies will outline how they will meet the 50% clean energy goal by 2030 in their Integrated Resource Plans submitted to the Michigan Public Service Commission.
BALLOT MEASURE TO HAVE BEEN ENFORCEABLE
The now-defunct ballot measure may have had lower final targets (30% by 2030) than Friday's deal (50% by 2030), but it would have been enforceable, Fox noted. "We think the utilities' future integrated resource plans may offer the most explicit indicators of whether (and how) the utilities intend to achieve the apparent nonbinding renewable power goal," he added.
As regulated utilities, Consumers and DTE had little choice but to compromise, said Matthew Cordaro, a former Midcontinent Independent System Operator CEO. "Similar deals are being struck throughout the country," he said. "At this point, however, there is a 50/50 chance any of this will come to fruition, since it is politically driven more than anything else and in reality has no practical context."
Eleven states have raised their RPS targets since 2015, Fox noted. "We expect more states with existing RPS programs to raise targets in the future, but we are not aware of any states without a program looking to create one soon," Fox added.
This RPS trend generally reflects the idea of green states getting greener, he explained.
"Renewable power advocates are also attempting to enact higher mandates through November 2018 election ballots in states that may be less 'green-leaning,' effectively extending the battlefield beyond legislative and regulatory proceedings and into the court of public opinion," Fox said.
SIMILAR MEASURES SEEN IN ARIZONA, NEVADA
For example, clean energy advocates are pursuing ballot measures in Arizona and Nevada, in an effort to sidestep more conservative state lawmakers and appeal directly to their constituents, Fox explained.
"Arizona has already demonstrated how policymakers can fight back, however," Fox said. "On March 23, Arizona Governor Doug Ducey, a Republican, signed H.B. 2005, a law that essentially nulls the November ballot initiative by penalizing electric utilities that fail to comply with the higher RPS with an overtly weak annual fine of $100 - $5,000," he said.
Similar issues across the US are either driven heavily by the states, such as in New York and New England, or by a mix of state legislature and demand for renewables from corporations, said Manan Ahuja, senior director of North American power markets at S&P Global Platts Analytics. "DTE is more the case of the latter kind of policy push and corporate demand pull," he said.
The Michigan announcement has been in the making for a while and would change the generation mix in the state quite a bit, Ahuja said. DTE has recently announced a few additional projects to expand their portfolio, including a new 1.1-GW combined-cycle plant to offset planned coal retirements between 2020 and 2023, and 1 GW of additional wind capacity to be brought online by 2022, Ahuja said.
--Kate Winston, firstname.lastname@example.org
--Edited by Mark Watson, email@example.com