by Bruce Goodman

Earlier this month, I had total replacement surgery on my right hip. Nagging pains that started ten years ago gradually developed into stronger, sharper pains, causing me to walk off-kilter. I knew it was time for corrective action and thanks to my skilled surgeon, I now look forward to a future free of pain. Michigan’s alternative energy development efforts are kind of like that: we are off kilter and surgery is needed. Ever since 1978 and PURPA, standby tariffs in Michigan have taken the incentive out of self-generation projects that make economic sense. This “nagging pain” must be corrected by the MPSC before self-generation developers give up on Michigan. Adding to the pain is the refusal of the major utilities to use their purchasing power to attract an established wind turbine OEM to Michigan. Our legislature gave the utilities a gift of half the RPS action; the quid pro quo should have been to use that gift to bring an OEM to Michigan. Whether it is the MPSC, the Governor, or the legislature, someone needs to find the political will to make this happen, before the utility wind turbine orders are placed. Where is our political team of surgeons?

by Bruce Goodman

After waiting more than two years, Consumers Power has received MDEQ approval of a Michigan air use permit for it proposed new coal fired facility in the Bay City area.  Whether it turns out to be the last project standing is still to be seen.  The LS Power coal project proposed for Midland suspended its efforts to get permitted earlier this year.  The Wolverine Power coal project in Rogers City, once thought to be the leading contender to get the first permit, is waiting.  And the oft-delayed coal project for Holland Board of Public Works still has not surfaced. 

What impact this decision may have on alternative and renewable energy projects in Michigan is unclear.  What is clear is that now Consumers Energy will not have all its political energies focused on the permitting problems it was having with the MDEQ.  However, the “problem” venue will only be shifting, as there is little doubt that ultimately the decision to permit the project will be challenged in the courts.  Meanwhile, it will be interesting to see what steps Consumers Power takes to begin mothballing coal capacity, as it is required to do under the stipulation of  obtaining the new air permit.  Stay tuned.

by Bruce Goodman

The opinion page of the Wall Street Journal recently claimed that “unconventional natural gas” may well revolutionalize the challenges and opportunities for alternative energy. The natural gas previously locked in impermeable shale around the nation is now becoming available due to hydraulic fracturing techniques. Thus the domestic gas supplies are increasing, and at a much lower unit cost than previously thought possible. The author suggests that this makes gas fired electric generation more available to back up intermittent energy from solar or wind generation. That is the optimistic perspective. The more realistic outcome is that cheap natural gas will lead to natural gas generation being preferred ahead of alternative energy supplies, unless some sort of carbon tax makes that option less desirable. After all, the natural gas that was locked up contains the carbon that climate change is all about.

by Bruce Goodman

Yesterday’s AWEA conference in Detroit was very interesting.  It was primarily focused on small wind turbines, and there certainly are a great number of them in production.  There are a multitude of designs, from all over the world.  I was particularly intrigued by the solar/wind power/battery backup/LED streetlight for $5000 per pole. 

The economics of many of the small wind systems do not yet justify their windspread use in Michigan.  However, when I heard Mariah Power talking about how 75% of their production was going to export that made sense.  There was an MSU economics professor that I spoke with who suggested that in his studies he has found that a 20 kw wind turbine might clear the economic ROI hurtles, even in Michigan.  He said that as strange as it seemed, both the smaller units and the larger units (i.e. 2.5 kw and 100 kw) had price points that made them uneconomic at this time.  I heard from a developer of a 2.5 kw unit that his product was already competitive with coal fired generation at $3000 kw.  It was neither the time nor the place to talk about availability or backup.  

Governor Granholm’s opening remarks in the morning were very much a cheerleading effort for Michigan’s  unemployed engineers and manufacturing labor force.  She made many good points about what the state brings to the alternative energy table.

by Bruce Goodman

At its recent meeting in Detroit earlier this month, seven of the eleven states in the Midwestern Governors Association (including Michigan) signed an accord that provides a road map of work to be done to transition the region toward less reliance on fossil fuels. Key elements include:  

• working together on upgrading the region’s infrastructure to facilitate more renewable energy (improvements to transmission lines); •
• reducing electricity and natural gas use; 
• targeting a 25% RPS by 2025 (30% by 2030); energy efficiency building codes;
• a low-carbon fuel standard to encourage locally produced biofuels; and
• restructuring utility regulations to ensure energy efficiency is incorporated into a utility’s profit motive.

It would be interesting to know how much of this can be accomplished by regulation, and how much depends on legislation. To date the region’s efforts at coordinating energy policy has been somewhat uneven.

 by Bruce Goodman

For some time there has been a cry for a comprehensive national energy policy.  Reliance on the free market to drive energy outcomes has led to a place the country does not want to be.  Clean power technology development has been left to others, principally Europe.  Oil imports to feed the nation’s transportation needs have driven foreign policy decisions and created economic insecurity.  Foreign automobile makers are ahead on energy efficiency and energy technology.  Climate change appears to be upon us whether we are ready or not.  The popular answers to these challenges are aimed at new and different price signals to the marketplace—gasoline tax, carbon tax, cap and trade, cash for clunkers, tax incentives, tax credits, tax rebates, grants, feed in tariffs–and some thought it difficult to solve an algebraic problem with only three variables.  Can there be a single “energy policy”?

 by Bruce Goodman

There is little doubt that the energy resources to be developed in Michigan are dependent on the state and national response to climate change and global warming.  Energy and greenhouse gases are inextricably linked.  It is disapointing to see that the international community is unable to coalesce around targets and strategies on glabal warming which is turn would provide direction and guidance for energy policies around the world. 

Meanwhile, in the vacuum that currently exists, the U.S. and the State of Michigan need to take the lead in this challenge.  Author Tom Friedman’s clarion call in his recent writings has correctly linked energy policy and climate change when he calls for a global energy technology revolution to address supply and demand of energy, the decline of natural resources, climate change, energy poverty and biodiversity.  The solution he suggests is abundant, cheap, clean, reliable electrons, with the admonition – “invent, baby, invent.”  Michigan’s contribution to the development of low emission vehicles is the right thing to be doing at the right time.  R&D on electric generation and other transportation components (e.g. jet engines) that will provided by Michigan research (such as the new GE facility) will put Michigan in the middle of the innovation that is needed.