Solar Plays Bigger Role in Updated Renewable Energy Plan

The city of Greenville, which installed these solar panels atop its city hall building, is one of the largest customers in the soon-to-be expanded solar energy program.

Consumers Energy will more than double the amount of solar-generated electricity it supplies to customers under a plan recently approved by the Michigan Public Service Commission (MPSC).

In February, we filed an updated renewable energy plan to comply with Michigan’s 2008 energy reform law, which requires 10 percent of the state’s electricity to come from renewable sources such as wind, solar and biomass by 2015.

The MPSC on May 26 approved the updated plan, which would add 3 megawatts of new solar-generated electrical capacity to our renewable energy portfolio. Currently, Consumers Energy purchases about 2 megawatts of solar-generated electrical capacity through its Experimental Advanced Renewable Program (EARP) — just a sliver of the 650 megawatts of renewable capacity we plan to add to meet our 10 percent target.

We are still working out the final details of the expanded solar program, which will ultimately total roughly 5 megawatts of capacity, and expect to file that plan in early July.

Dave Ronk, our director for transactions and resource planning, explains that solar energy is not the lowest cost, but there is an interest from our customers in expanding the program. “This proposal provides a transition from our initial program to hopefully getting solar competitive with other electric generating technologies,” he said.

EARP — which pays residential and business customers to produce electricity from solar energy and deliver it to the grid — was launched in 2009 and has signed contracts to buy the relatively small amount of solar-generated electricity over a 12-year period. The program’s goal is to investigate solar energy’s potential in Michigan’s often cold and cloudy climate while contributing to the broader renewable energy target.

The solar program is currently comprised of 102 customers, ranging from homeowners with small solar installations to businesses with much larger operations. They earn between 37.5 cents and 65 cents per kilowatt-hour (kWh) for producing solar-generated electricity, depending upon when they joined the program and whether they are residential or non-residential customers.

In 2009, Consumers Energy sold electricity for 11.2 cents per kWh. The EARP rates were designed to help customers cover the up-front costs of solar installations and earn a reasonable rate of return, program manager Keith Troyer said.

To add another 3 megawatts of solar-generated electrical capacity, we will have to sign on new customers. Those new customers would earn between 20 and 26 cents per kWh. We are working to contain the cost to our customers of meeting Michigan’s renewable energy standard, which was originally estimated at $5 billion, but is now estimated at $3.1 billion. The lower price tag is due to factors such as changing economic conditions, improved wind turbine technology and the extension of a federal renewable energy production tax credit.

Ultimately, that means lower costs for our customers, who pay a monthly surcharge to offset the cost of Consumers Energy’s renewable energy projects. Under our revised plan, residential customer surcharges will drop from $2.50 to 65 cents per month. Commercial and industrial customers will receive monthly surcharge decreases of as much as 94 percent.

Our updated renewable energy plan also includes the development of a new methane digester program to purchase electricity generated from farm waste.  We will also will explore the possibility of owning or partnering in future solar projects. Renewable energy is a critical piece of our Balanced Energy Initiative (BEI), which is a long-term strategy to meet Michigan’s future energy needs with a variety of fuel sources.

In 2010, about 5 percent of the electricity Consumers Energy supplied to its customers came from renewable sources. We are in the process of doubling that total, which means adding about 650 megawatts of new renewable energy capacity.

Harnessing wind energy remains a major component of the updated renewable energy plan. Our 100-megawatt Lake Winds Energy Park in Mason County is expected to begin operation in 2012, and our 150-megawatt Cross Winds Energy park is slated to begin operation in 2014.

— Todd Schulz