Opinion | Michigan energy policy should be driven by an energy jobs agenda

Energy policy should be at the forefront of what is likely to be one of the most consequential sessions for legislative activity in Michigan in some time. In her State of the State Address last week, Gov. Gretchen Whitmer called for more domestic manufacturing jobs in batteries, more wind and solar energy development and more infrastructure investment to make Michigan “a hub of clean energy production.”

As Bridge Michigan has reported, the wish list for energy policy is long. It will be essential for lawmakers to find a clear path forward amidst all these avenues so that none of the momentum and excitement going into the legislative session is wasted.

The Michigan Energy Innovation Business Council (Michigan EIBC) suggests there is an obvious unifying theme for Michigan’s energy policy: an energy jobs agenda. Jobs related to renewable energy, electric vehicles (EVs), energy efficiency, batteries and more have been among the fastest-growing parts of Michigan’s economy over the past several years. But in each of these areas, there are outdated policies or a lack of state investment holding back full potential growth. An energy jobs policy platform that focuses on those barriers can deliver on the vision of growing Michigan into a bigger hub for innovative energy technologies.

Renewable energy and storage

Michigan could be the leader in the Midwest for home and business-sited distributed energy projects like solar panels and solar paired with batteries. But strong customer interest in distributed energy has butted against the statutory cap on the amount of distributed energy that a utility must connect to the grid in its service territory. 

As a result, renewable energy installers have warned they may need to pull their businesses out of Michigan because they have no assurance that customers can keep adopting solar and other forms of distributed energy. Consumers Energy just agreed to double the size of its cap, but that only delays the inevitable. With increasing evidence from the experience of years of rooftop solar growth showing that distributed energy helps the grid by providing more independent sources of power, there is no need for this cap. 

A bill to eliminate the cap has had bipartisan support in Lansing but stalled last session in the House Energy Committee. Passing that bill is an obvious first move to keep renewable energy businesses and the jobs they provide in Michigan.

Another piece of legislation that is ready to go would help people who cannot install solar panels themselves because they rent their homes or lack adequate space, among other reasons. In 2021 Reps. Michele Hoitenga (R-Manton) and Rachel Hood (D-Grand Rapids) introduced bills that would create a legal structure for community solar projects, where members of a community can subscribe to a solar project and enjoy lower energy bills in return. 

This legislation deserves another look in 2023 because it would open up a market for community solar projects that have been stymied by legal uncertainty in Michigan.

Michigan’s utilities are generally more supportive of utility-scale renewable energy projects.  DTE and Consumers Energy have been increasingly including new wind and solar in their generation mix. More utility-scale wind and solar is also going to require more energy storage projects, such as batteries that can store renewable energy at times it is plentiful and then discharge it at other times. 

In 2022, Michigan became only the 10th state to adopt a formal energy storage target by doing so in the MI Healthy Climate Plan. That commitment from the governor to deploy 2,500 MW of energy storage by 2030 and 4,000 MW of energy storage by 2040 should be augmented by legislation to ensure the energy storage the state needs gets built here.

Something these utility-scale renewable energy projects have in common is that they are all facing barriers including misinformation, local moratoria, unreasonable local ordinances and lack of support for local policymakers who wish to approve such projects. Solutions to these challenges should provide increased clarity of permitting expectations, greater consistency across township borders, certainty that an approved permit application will not be revoked and support for local governments to ensure a beneficial relationship with the local community.  

Electric Vehicles

The bipartisan push last year to offer incentives for manufacturing EV batteries and other components led to notable successes in the form of planned multi-billion dollar facilities in Michigan from companies like GM, Ford and Our Next Energy. The state’s use of federal funding has helped lead to new facilities from EV charging companies like FLO. 

Lawmakers should keep crafting incentives like those found in Michigan's Strategic Outreach and Attraction Reserve Fund. But another part of an energy jobs agenda has to do with the EVs themselves and the charging infrastructure to support them. Drivers have been adopting electric vehicles at numbers that would have shocked the auto industry just a few years ago. Michigan automakers see where this road is headed and their future looks increasingly dominated by EV models.

Nevertheless, there remains a big gulf between the status quo, where finding charging stations can be a challenge for EV users, and the level of charging infrastructure that will be required to achieve the Whitmer administration’s goal of two million EVs on Michigan roads by 2030. 

The Michigan Office of Future Mobility and Electrification estimates the state will need 100,000 EV chargers over that timeframe. Building that infrastructure will provide a lot of work for manufacturers, electricians, contractors, developers of software that manage EV charging and others. 

Grants for EV charging from the federal government and utility programs that offer rebates for chargers are helping significantly, but may not fully defray the costs of building charging stations everywhere they will need to be, especially away from highways and in rural areas. Lawmakers should include in the state budget additional rebates for public charging infrastructure to ensure the state is on the right path toward transportation electrification.

Energy efficiency

The single-biggest source of energy jobs in Michigan is energy efficiency, which employs over 74,000 Michiganders who do such work as installing energy-efficient lighting, upgrading HVAC systems, insulating homes and commercial buildings and manufacturing efficient appliances, according to the Clean Jobs Midwest 2022 report from Environmental Entrepreneurs (E2) and Evergreen Climate Innovations. 

Among the drivers of this industry is Michigan's energy efficiency standard, which requires the state's utilities to achieve a certain amount of energy waste reduction every year. To comply with this standard, utilities offer energy efficiency programs to their customers, like rebates or more efficient light bulbs or appliances.

But it has been almost seven years since the state legislature updated the energy efficiency standard. Strengthening the standard once again is a no-brainer because it pays for itself — the Michigan PSC has estimated that for every dollar spent on energy efficiency programs, customers will save around $4 in avoided energy costs. 

The legislature should require utilities to achieve higher annual electricity efficiency savings. This beefed-up standard, when combined with new tax credits for energy efficiency projects created by the IRA, can have multiplier effects on job growth.

Another pro-energy efficiency policy has been the use of commercial Property Assessed Clean Energy (C-PACE) financing, allowed by Michigan law since 2010. C-PACE allows commercial properties like retirement homes, office buildings and manufacturing facilities to access loans for energy efficiency and renewable energy projects that are backed by property tax assessments, creating more affordable financing options for those properties. 

The projects themselves generate savings on energy bills that help pay back the loan over time. There have been hundreds of successful examples of commercial PACE financing over the last several years, such as the historic Harrington Inn in Port Huron, which saved millions in electric bills by financing high efficiency building systems like elevators, lighting and HVAC and the installation of solar panels. 

Now it is time to pass a bill to expand the statute underlying commercial PACE so it can apply to more projects. Bills to that effect were introduced to the legislature last session and should be on the agenda to pass in 2023.

This energy jobs agenda can improve Michigan’s efforts to add well-paying jobs in innovative fields while also meeting our goals to move toward cleaner energy. Members of both parties in Lansing should look at making this platform a reality in 2023.