A bright energy future for Michigan means optimizing opportunities for energy waste reduction, according to Valerie Brader, executive director of the Michigan Agency for Energy.
Brader spoke recently in Grand Rapids about Michigan’s greatest opportunities for achieving Gov. Rick Snyder’s four energy pillars: adaptability, affordability, reliability and protection of the environment.
Michigan is on the brink of adopting a new energy policy, which will replace Act 295 of 2008. It is expected the Michigan Senate will vote on a two-bill energy package, SB-437 and SB-438, following the presidential election, and the Michigan House will take up the energy bills and vote before the end of the year, bringing to a close a more than year-and-a-half debate over how Michigan should proceed in a quickly changing energy landscape.
“As Michigan is entering this phase of making a lot of decisions that we will be living with and that will be determining our energy future for the next several decades, it’s important that we have some of the best information of any state to be able to do that,” Brader said.
She said the state has been preparing by completing a number of models to help determine how different energy scenarios would play out across the state over the short and long term.
Brader said based on the modeling that’s been done related to the carbon rule, the state has found it won’t make a big difference.
“The carbon rule isn’t what determines Michigan’s energy mix,” Brader said. “We could continue (doing) business as usual and be compliant through 2025.”
She added, “Regulations will not be the biggest driver for Michigan’s energy future, at least not the carbon rule.”
Brader said in every scenario that was run, “the more energy efficiency we had, the better.”
Reducing energy waste is using less energy to get the same output.
Brader said the biggest inhibitor to achieving energy efficiency right now is the 2008 law’s 1 percent mandate, which also includes a limit on what utilities can spend.
“Michigan’s law limits the amount of money a utility can spend to meet its requirements to reduce energy waste at 2 percent of total retail sales revenues for the preceding two years,” Brader said. “That ignores the fact that the other resources that may have to be purchased if energy waste reduction is not done may cost much more.
“Gov. Snyder called for getting rid of that cap in his 2015 energy message, and our recent modeling efforts show that if that cap limits the overall amount of energy waste reduction we do, it is likely to cost Michigan billions of dollars.”
Brader said waste reduction also is the most environmentally friendly option for Michigan, even better than building more renewable energy options.
But energy reduction isn’t without some challenges. The state’s biggest utilities, DTE and Consumers Energy, are feeling the pinch of less energy sales.
“We are seeing energy efficiency taking hold, and that is a positive development, but when you are in a time where you need to make a lot of investments with retiring plants, it can put more pressure (on the utilities), so that is another factor we’ve seen change,” Michigan Public Service Commission Chairman Sally Talberg said.
“Historically, when power plants were built in ’50s, ’60s and ’70s, there was tremendous growth. Annually, sales could increase 5 to 7 percent, and now, it’s barely positive in terms of being steady, certainly under 1 percent.”
Brader said looking ahead to 2025, Michigan should plan to get 30 percent to 40 percent of its energy from its cleanest sources.
“The exact right balance will depend on a mix of economics and regulation,” she said.
To achieve an energy waste reduction, everyone in the state has to work together: utilities, businesses and residential customers.
“Michigan has proven it is cheaper to buy your neighbor’s insulation than Wyoming’s coal,” Brader said. “We have saved literally billions of dollars since the program started in 2008. So, this is something every business and resident can do to make Michigan part of a brighter energy future: reduce their own energy waste.”
She gave a couple of examples for residential customers.
“There are a lot of examples — a more efficient furnace can keep your house at the same temperature as an old one with a lot less natural gas; a newer freezer with better seals can mean your grocery store can keep the peas just as frozen with less electricity.”