Michigan Sees Big Rewards from Nascent Clean Energy Policies

A couple of weeks ago, Michigan Governor Rick Snyder paid a visit to the Traverse City home of Elizabeth and Chris Kushman. He was there to take a look at the energy-efficiency upgrades the couple undertook with the help of an innovative program called TC Saves. The program not only offers low-cost home-energy assessments—explaining to homeowners where and how their homes leak energy—it also, importantly, provides zero-interest loans for energy-efficiency retrofits, like the ones that are helping the Kushmans save more than a $1000 a year.  

The Governor called the energy-efficiency program a “great win” for everyone. Not only are the Kushmans saving money, but the project reduces pollution and energy use, and is keeping “two contractors with 7-10 workers very busy,” says Michigan Land Use Institute’s Jim Duzlo.

Energy efficiency and renewable energy have been a homerun for Michigan’s economy, as exemplified by the Kushman’s experience in Traverse City.  Two studies published recently—one by the state Public Service Commission and the other by the Michigan Energy Innovation Business Council— show how the benefits of thousands of retrofits and installations add up across the state.

The Public Service Commission’s report, issued in late November, demonstrates a whopping $4.88 worth of benefits for every dollar state utilities invested in energy efficiency in 2010. Think about that: $4.88 for every dollar invested. What other type of investment brings this kind of rate of return, especially in a recession-plagued year?

Michigan’s energy efficiency and renewable energy standard, Public Act 295, made these impressive results possible. By requiring the utilities to use energy efficiency to offset the need for more expensive energy sources, the law has helped Michiganders cut their electric use by an impressive 0.75 percent in 2010, according to the report. The $133 million utilities invested in energy-saving improvements that year—underwriting high-performance lighting and equipment in Michigan’s residential, commercial and industrial settings—will yield $554 million in savings over their lifetimes.

That’s a serious chunk of change. And you can add to that impressive accomplishment this list of benefits: Instead of shipping hundreds of millions of dollars out-of-state to buy fossil fuels, Michigan energy-efficiency programs have kept that money in the local economy. The investments have created “jobs for the installation of energy efficiency measures by skilled contractors, energy efficiency audits, product sales, and other associated work,” the PSC found. Energy efficiency programs, the agency reported, “should help minimize the debt burden of consumers, reduce utility uncollectible expenses, and strengthen the competitive position of Michigan businesses.”

The other part of Michigan’s clean-energy equation—renewable energy and advanced energy storage—has resulted in significant gains for the state as well. PA 295 requires that utilities use clean renewable energy to generate an increasing proportion of the electricity they sell.  The utilities are on track to meet the 10% standard by 2015, and are employing Michiganders and at a lower cost than would have resulted from building a polluting coal plant.  So far, the costs for renewable energy have been significantly less than the amount it would have cost customers to get the same amount of power from a new coal plant.  Moreover, 24 projects have already been built with Michigan workers.  If the utilities use Michigan labor and Michigan-made equipment to build the next 45 projects in the pipeline, they will earn extra credit under the PA 295 rules. 

But that’s just the beginning.  Because Michigan has the know-how and infrastructure to lead in manufacturing, industries such as solar and wind power, and advanced batteries, have the potential to create 13,848 direct and indirect manufacturing jobs in the state, according to a February report published by the Michigan Energy Innovation Business Council.

Michigan and Michiganders need more of the jobs, tax revenues and financial savings that PA 295 is creating.  That’s why it was surprising and perplexing when Representative Franz (R-Onekama) proposed legislation (HB 5447) last month that would repeal the renewable energy and energy efficiency provisions of PA 295.  Thankfully, the legislation was met with a chorus of opposition from business and public interest organizations alike.  The clean energy economy has been a boon for Michigan, so the suggestion of abandoning this progress is clearly out of step with the mainstream vision for Michigan’s energy future.

Energy efficiency and renewable energy are key components of rebuilding Michigan for the 21st Century.  There has been a significant investment in this endeavor, on the part of policymakers and the private sector, and the investment is paying off.  It’s time to double down, not to waver or to retreat.