*You can always find past Michigan Climate News stories and subscribe to new ones on Bulletin, and you can keep up with us on Instagram, Facebook, and Twitter! Got an idea for a Michigan climate story? Pitch us here.*
BY NINA IGNACZAK
Last week, the Biden Administration announced its plan to produce 45% of the nation’s electricity from solar by 2045. In 2020, solar accounted for just 4% of the nation’s energy production, according to the U.S. Department of Energy.
The cost of solar panels has dramatically decreased in the past several years. Electricity generation from renewables exceeded coal for the first time in 2020, costs less than electricity per kilowatt-hour, and is projected to keep decreasing in price. According to the National Renewable Energy Laboratory, fossil-fuel-generated electricity costs between 5 cents and 17 cents per kilowatt-hour; solar energy costs between 3 cents and 6 cents for the same amount of power.
In 2020, solar panel shipments were up 33% nationwide; between 2019 and 2020, utility-scale solar capacity increased 29%, and small-scale solar increased 19%.
Analysis attributes the 2020 jump in residential installations to increased interest in home improvement during the pandemic shutdowns. Challenges to solar include high upfront installation costs and weather dependence, among others.
“To achieve the Biden Administration’s goal of the U.S. reaching 45% solar power by 2050, Elevate is focusing on maximizing solar development on rooftops and underutilized lands such as brownfields and right-of-ways,” Tim Skrotzki, a Senior Market Development Lead with Elevate Energy, told me.“This type of distributed generation should be structured to send jobs and benefits directly to disinvested communities.”
We put this guide together to help you understand what this all means for the Mitten State.
Where is Michigan with solar energy in 2021?
In 2019, Michigan ranked 30th among states for its renewable energy consumption as a percentage of total energy consumption at 8.5% — but solar accounted for just 0.37% of that. Renewable energy generation accounted for 11% of all generation, with wind making up three-fifths of the total amount. The state ranked 27th for installed solar capacity in 2020 and 39th for solar electric generation per capita in 2020. Project Sunroof estimates that Michigan is capable of producing 41 megawatt-hours of rooftop solar power per year.
Michigan's performance is consistent with most Great Lakes states (with the exception of Minnesota), which all rank in the bottom half of per capita electricity generation.
According to the Solar Energy Industries Association, Michigan had enough solar capacity to power 83,045 homes in the first quarter of 2021 — out of 4.6 million homes in the state. That’s just 1.8 percent of Michiganders’ homes. Solar companies numbered 188 in Michigan, employing 3,379 people out of 231,000 jobs nationwide. California employed more than 68,000, Florida more than 11,000, and Texas and New York more than 10,000 each.
What incentives exist for Michiganders who want to install solar energy?
Solar incentives in Michigan include a range of financial and regulatory measures, many of which are tied to a municipality or utility. There is no state-level rebate, tax credit, property, or sales tax exemption. The main solar incentives currently available to Michiganders include the Michigan Saves loan program and the federal solar tax credit, which allows those who install solar systems to deduct 26% of the installation costs from their federal taxes.
Low-income people who do not pay federal taxes don’t qualify for the federal tax incentive. Highland Park-based nonprofit Soulardarity to raise funds through Michigan’s Patronicity platform to provide grants to low-income households that install solar equivalent to what they would receive if they had tax liability.
Can Michiganders who generate solar sell their excess power back to the electrical grid?
Michigan allows utility customers — whether they are homeowners, commercial or industrial owners — to sell back some of their excess power generation to the grid. In 2016, the Michigan Legislature ordered the Public Service Commission (MPSC) program to replace Michigan’s original program for facilitating those sales, which was called net-metering and had been in place since 2008. The new program is called a distributed generation program.
Under the new system, the inflow (from the customer to the utility) and outflow (to the utility from the customer) of electric power are calculated separately. Each regulated utility determines its rates for charges and credits in rate cases that come before the MPSC.
Inflow charges are based on the retail rate set in the utility’s rate case. Outflow credits are based on the power supply component of the customer’s retail rate, minus transmission charges. Utilities like this system because it deducts the cost for maintaining the power system grid from customers’ credits. In practice, the new program increased the time to recoup upfront investment costs for a typical rooftop solar customer by about 30% compared with net metering.
The distributed generation system caps the number of customers who can participate to 1% of a utility’s average in-state peak load over the prior five years. That capacity reached 53% in 2019, with 3,000 additional customers and 66,428 kilowatts (kW) of new capacity installed. A group of Michigan lawmakers is working to remove that cap. DTE and Consumers’ Energy accounted for 89% of the program’s capacity in 2019.
What about battery storage?
Battery technology is evolving and prices are declining, but solar batteries are still expensive, costing up to $13,000. They may make economic sense in areas with frequent power outages or without full-retail net-metering (like Michigan). California has the vast majority of small-scale total battery storage power (83%). Michigan began tracking batteries in its distributed generation program in 2020. At the end of 2019, DTE reported 152 customers with batteries totaling 760 kW of storage capacity.
Who is installing solar in Michigan?
What are the obstacles to solar expansion in Michigan?
According to Skrotzki, Michigan has several policy levers it can use to help expand solar, including raising or removing the cap on solar on rooftops, eliminating standby fees that utilities charge for large rooftop solar, and upgrading distribution lines in older cities that allow more solar and create resilience to power outages.
Michigan could also enable community solar, which would allow for third-party solar developers to sell or lease to people who can’t install their own solar, as a bill introduced into the Michigan Legislature in April proposes.
What questions do you have about climate change in Michigan? Please let us know by reaching out to me at firstname.lastname@example.org. NOTE: Please don't reply to this email, it will go into a digital netherworld, never to be seen again. We hope that changes soon!