Energy efficiency in Michigan recently grabbed headlines. In his March 13 speech, Governor Snyder stressed the elimination of “energy waste” as a cornerstone to moving toward a more renewable future. This speech stems from the fact that Michigan is on the verge of meeting the Renewable Portfolio Standard (RPS) targets that were set in 2008.
The RPS has been credited with causing the huge growth in renewable capacity, so now that the 10% target is expected to be met by the end of the year, the debate is starting in earnest as to what will happen in the renewable generation market in 2016 and beyond.
The replacement of the RPS is a hot topic that a number of states are debating. Ohio famously froze their RPS targets to study the impact, arguably slowing economic growth in renewables in that state. New York is considering replacing the RPS with a funding tool for renewable energy. Texas lawmakers appear to be in the process of repealing the RPS, which has been met early, raising questions about the future growth of renewable projects in Texas. Meanwhile, Illinois and Maryland are standing behind the RPS as a tool for renewable growth.
Here in Michigan, the Governor showed that his vision for a path forward to reach 19% renewables by 2025 includes reducing or eliminating “energy waste” (a.k.a. increasing energy efficiency) to account for 21% of the potential future electricity generation mix; a somewhat convoluted concept essentially saying that 21% of future electricity generation will not actually exist.
Cumulative Renewable Energy Capacity in Michigan
Source: Michigan Public Service Commission, Feb. 2014
When it comes to RPS, Michigan’s senators and legislators are all over the map. Governor Snyder has not yet taken an official position on repealing or renewing it, the minority party Democrats are generally in favor of the mandates, and the Republicans are showing multiple visions for Michigan’s energy future that do not specifically include RPS mandates.
Whether Michigan’s energy future holds Integrated Resource Plans, emissions’ focused credits, or RPS mandates, what all the plans do have in common is a heavy emphasis on energy efficiency. While this means you can expect to hear more about power plant efficiency at the generation and distribution level, beyond that, efficiency for buildings are also likely to get more attention. How to incentivize greater energy efficiency without mandates (because if politicians don’t want RPS mandates, why would they pass EE mandates?) is an open question, but could prove to benefit many companies in the Michigan energy economy.
Energy efficiency programs offered by utilities typically feature incentives to upgrade homes and buildings. These programs have typically featured insulation, windows, HVAC, major appliances, and in some cases lighting, but the bulk of the current programs in Michigan are focused on insulation and HVAC – for now. Consulting firms such as Navigant Consulting and CLEAResult help enact and measure the success of these programs to help utilities meet emissions or load goals set by politicians. This increased focus and interest in energy efficiency seems likely to broaden the scope of these programs to meet new, more aggressive goals.
Through our Clean Energy Roadmap work, NextEnergy has identified about 3,050 entities working in the clean energy economy; of these, approximately 2,400 entities self-identified as participating in the energy efficient building technologies market (these include HVAC installers, electricians, energy auditors, insulation and building envelope installers, financing groups, and others that have identified themselves as focused on energy efficiency). A closer look at this database shows that the majority of these players are in HVAC, which makes sense since this is where the bulk of incentives offered through utilities are focused. However, as the focus shifts to include other technologies or materials, it seems likely the number of entities are likely to grow. For example, we are already starting to see more interest in building and home energy management systems from both companies that provide these products and utilities that want to use these to potentially reduce the peak load.
The road to a more renewable energy profile in Michigan is likely to be a bumpy one. But both politics and the economic environment point to a bright future for Michigan’s energy efficiency focused businesses.