Advanced Energy Perspectives

This post originally appeared in the Michigan EIBC blog.

This year has seen some of the most significant moves yet to realize cleaner energy in Michigan. Now, customers of Michigan’s largest utility, DTE Energy, will find it easier to “go green” due to a settlement between DTE and groups including the Michigan Energy Innovation Business Council (Michigan EIBC) and Advanced Energy Economy (AEE). The settlement improves DTE’s voluntary green pricing program — in which companies from GM to the Detroit Zoo, as well as residential customers, can subscribe directly to wind and solar projects — by making it more affordable and more competitive.

It’s no secret that Fortune 500 companies want more advanced energy. Over the past five years, these companies have signed contracts for more than 24 GW of large-scale renewable energy, pursued thousands of onsite solar installations, and embraced newer technologies like battery storage. The role of organized competitive wholesale markets as enablers of advanced energy procurement by large buyers is, however, a bit of a trade secret. Which is too bad, because policymakers could meet the needs of businesses and accelerate the transition to a cleaner economy all at once by expanding and reforming these markets. Here’s how.

The substantial growth in renewable energy in the U.S. comes from two sources: purchases made by utilities and retail suppliers to comply with mandatory targets such as state Renewable Portfolio Standards (compliance purchases), and purchases from customers that go beyond these targets (voluntary purchases), usually in pursuit of sustainability goals. These two types of purchases in combination drive renewable energy development in the U.S., but how they interact gets tricky, especially as states ramp up their clean energy targets to 100%. How do voluntary purchasers get what they pay for – and states reach their ambitious targets – in a way that’s fair for both? It’s all about “additionality,” and to date, states have taken different approaches.

For years, large companies in California have been calling for expansion of Direct Access (DA), California’s limited retail choice program for commercial and industrial customers. Retail choice allows customers to shop around, rather than relying on their local electric utility. It also allows large customers to meet sustainability commitments by procuring more renewable energy than the utility provides. Such corporate purchases have driven development of renewable energy in markets that allow retail competition, and for that reason AEE and the Advanced Energy Buyers Group have jointly supported the expansion of DA in California. That expansion could be coming, if recommendations contained in a California Public Utility Commission (CPUC) report on extending DA to all nonresidential customers are acted upon by the California Legislature. But the expansion is more likely to happen – and happen faster – if some misplaced worries in the CPUC report were put to rest.

Florida, the Sunshine State, has always had good reason to develop solar power, but has still lagged behind other states. More recently, the case for Florida solar has strengthened even more. The price of solar has fallen by 36% in Florida over the last five years. This low-cost, fixed-price resource is particularly attractive to companies with commitments to renewable energy, including General Electric and Disney, while cities like Orlando, Sarasota, and Tallahassee that have established 100% renewable energy targets. Despite the economics of solar and commitments from companies and municipalities, Florida has not taken the lead on solar. The recent approval of a major solar program for customers of one utility will not do it all, but it’s a good start.