Michigan Renewables Cheaper than Coal: Another State Success Story

Author: Lewis Milford, Clean Energy Group | Projects: Clean Energy Innovation, Clean Energy Finance

blogphoto power plant solarOnce again, the bad news on clean energy coming out of Washington is matched by the good news showing the success of a state clean energy program.

What was the latest bad news on clean energy in Washington last week? Congress could not muster the will to extend the production tax credit for wind, the primary financing tool for wind projects across the country. Congress’s inaction threatens to derail the future of the wind industry in this country.

What was the latest news from the states on clean energy? It’s about Michigan’s renewable energy law which requires 10% of the state’s power to come from renewable sources. That state policy has helped bring down the price of renewable energy to levels cheaper than coal, and has created millions of dollars in new economic development.

This striking news about the positive economic results from renewable energy development was included in a report from the Michigan Public Service Commission. Like other progress on clean energy at the state level, this report shows why energy officials in Washington need to work harder to cooperate with the states as clean energy leaders, rather than wait for progress out of a stalemated Congress.

Michigan’s 2008 renewable portfolio standard (RPS) law required the state commission to report on how the law was working in practice. The February 15, 2012 report was a report card on the remarkable success of that state’s RPS law. It stands in marked contrast to many of the critics of state renewable laws like Grover Norquist who don’t get their facts straight and claim that these laws are raising rates, force ratepayers to buy more expensive renewable power, and don’t create any economic benefits.

So what did the Michigan energy experts say about the progress of their law after three years in operation?

First, they said the law has generated over $100 million in investments in the state, spurred manufacturing, and created jobs.

Second, the law has led to more than 100 megawatts of new renewable capacity in the state, putting it on track to meet its 10% requirement. So the law is working.

Third, and this might be the most dramatic point made by the Commission, the cost of these new renewable projects – including, wind, solar and hydro – is less than the cost of a new coal plant.

That deserves to be repeated. In contrast to the critics who complain about the high cost of renewable power, according to the Commission, “the cost of energy generated by renewable sources continues to decline and is cheaper than a new coal-fired generation.” The Commission determined that new coal plants would cost ratepayers about 13.3 cents per kilowatt hour. But the new renewable plants under contract were coming in at about 9.1 cents per kilowatt hour.

In other words, renewable power in Michigan is coming in at about 30% percent less than the cost of a new coal plant.

Those figures are truly remarkable and show the dramatic declines in the cost of renewable power because of state renewable laws that create markets for these clean energy technologies.

So while Congress can’t get its act together on clean energy, the states again are showing how they can lead the way. With federal gridlock, it is more important than ever for policymakers and advocates do all they can to focus on the real leaders: the states that continue to make clean energy policy in a smart, bipartisan way.

The Administration should look for new ways to work with the states to make their progress broader and deeper. It is not too late for the Administration to pivot from the stalemate in Washington and pursue a new decentralized clean energy policy with the states all across America.

Michigan and other states are showing the way. Washington just needs to find the right path to this new “clean energy federalism.”