DTE Energy would retire its two remaining coal plants sooner than planned and triple the amount of renewable energy in its portfolio in the next two decades under a plan filed with state regulators Thursday.
The plan projects a $9 billion investment over the next decade, which would “dramatically transform” how the company generates electricity for its 2.3 million customers, President and Chief Executive Officer of DTE Energy Jerry Norcia said in a briefing.
The plan would bring the company’s renewables portfolio to 60% of its capacity by 2040, up from 20% today, according to Norcia, resulting in an 85% reduction in carbon emissions.
The filing kicks off an administrative law proceeding before the Michigan Public Service Commission, which will likely extend into much of 2023. Under a 2016 Michigan law, investor-owned utilities like DTE Energy and Consumers must file Integrated Resource Plans every five years to forecast customers’ power needs and lay out plans for meeting those needs reliably and affordably.
Advocacy groups typically intervene in these proceedings, often pushing for more affordability, reliability and faster decarbonization. In 2022, Consumers Energy settled with interveners in its IRP case, agreeing to end all coal-fired power production by 2025 and to allocate $30 million in shareholder funds to low-income bill assistance.
“Michigan ratepayers’ access to clean and affordable energy depends on what DTE does in this integrated resource plan, so it is essential that DTE do better with this IRP than it did with its previous plan, which shortchanged ratepayers,” Amy Bandyk, executive director of the advocacy group Citizens Utility Board of Michigan, said. “That plan’s forecasts undercut the potential for renewable energy and energy efficiency in favor of a costlier proposed energy portfolio that put DTE shareholders above customers.”
Retiring coal-fired plants earlier
Under the proposed plan, DTE would retire its coal-fired Monroe Power Plant plant, which accounts for 30% of DTE’s generation capacity, 12 years ahead of schedule, going offline in 2028 instead of 2040. The plant is the nation’s fourth-largest coal-fired plant and was recently ranked the third-largest greenhouse gas-emitting power plant in the country.
The plan also calls for taking the coal-fired Belle River Power Plant in St. Clair County offline two years early, in 2026 instead of 2028, and converting it to a natural gas-fired “peaker plant” that can be brought online to cope with times of high electricity demand.
“That’s going to be really important at times we have extreme weather or high demand to make sure that if the sun isn’t shining and the wind isn’t blowing, we can…. (provide) the power that our residential, commercial, and business customers need,” Trevor Lauer, president and chief operating officer for DTE Electric, said in a briefing.
Two “peaker” turbines installed in 1999 already exist near the Belle River Power Plant. Peaker plants are notoriously dirty, according to the nonprofit advocacy Clean Energy Group.
“Continuing to invest in dirty sources to power our lights does nothing to help our kids or adults that suffer from asthma,” Kathleen Slonager, a registered nurse and executive director of the Asthma & Allergy Foundation of America – Michigan Chapter, said in a statement. “We need DTE to do better by investing in clean, renewable energy that improves the air we breathe, leading to fewer asthma cases and emergencies.”
Converting the plants to another gas-fired peaker plant also presents a red flag for Bandyk.
“This year’s volatility in the gas market shows the danger of increasing our dependence on gas for energy needs,” she said. “A smarter, long-term approach would take a closer look at a mixture of renewables, energy storage, demand response and efficiency, which hold greater promise for ratepayers than increasing reliance on fossil gas.”
And since the plan calls for replacing the Monroe Power Plant with a new gas-powered generation plant, the plan is “not as far-reaching” as DTE’s messaging may suggest, according to John Richter, a senior policy analyst with Great Lakes Renewable Energy Association.
“DTE’s plan to close their massive Monroe coal plant in 2035 depends on future technologies which the company admits are ‘not commercially viable today,'” Richter said. “Their modeling assumes the Monroe plant will be replaced with a new gas-fired plant, with carbon capture and sequestration. This would expand Michigan’s dependence on fracked gas, with its environmental impacts and wild fuel price swings.”
Richter said attempts at carbon capture around the world have been financial disasters, and Michigan ratepayers should not be on the hook for a technological gamble with poor odds of success. “Solar and wind plants have a strong history generating power at low and predictable cost,” he said.
Investing in wind, solar, and battery storage
DTE’s plan would incorporate 15,400 megawatts of renewable energy – mainly wind and solar power – and 1800 megawatts of battery storage, enough to power an estimated 4 million homes over the next two decades. That would more than double the amount of storage currently on the grid.
“We strongly believe that the combination of renewables and storage is going to be a very important piece for resiliency in clean energy going forward on a modern grid,” Lauer said.
Lauer said the company plans to build those resources in Michigan to ensure self-reliance, despite moderate amounts of wind and sunlight and a recent move by the Midwest’s regional grid operators to build new transmission lines from wind-rich western states to Michigan and eight other midwest states.
“Since we’re a peninsula, it’s important that we have assets that produce power in the state. Having control of the assets in your own state gives you the certainty that the assets will be available when you need them and not subject to transmission bottlenecks or other concerns that may not have that power arrive in the state of Michigan,” he said.
DTE’s plan calls for building large solar arrays and wind farms to be owned and operated by the utility, which Lauer said is most reliable and affordable for its customers.
“All of our investments will be in large-scale utility solar, which is very economic for our customers,” he said. “We (don’t) have any plans to build any distributed energy resources ourselves, like we’re not going to sell rooftop solar. But there are companies out there that are very active in our territory, and we welcome that.”
Lauer pointed to DTE’s My Green Power voluntary program in which customers can sign up for higher electricity bills to subsidize the utility’s investment in renewables. “Customers are signing up for those because they’re very economical, and it’s a very efficient way to build renewables, both from a land perspective and a cost perspective,” he said.
But in its rate case now before the MPSC, DTE Energy is trying to make it more costly for homeowners to install rooftop solar. The case requests permission to reduce the return it pays solar owners for contributing excess power to the grid from approximately 7.5 cents/kWh to about 3.5 cents/kWh. DTE then sells that electricity to other customers for a retail rate of approximately 16 cents/kWh.
DTE is also asking permission to charge residential solar owners an additional “demand charge” based on the maximum amount of electricity that owner would purchase during the year. Industrial customers currently pay these demand charges.
Advocates want to see more investment in distributed generation like microgrids – small neighborhood scale grids, possibly powered by collectively owned community solar, that they say are key to supporting resiliency and affordability. Community-owned solar is not permitted under Michigan law; a proposed bill package that would enable it has not progressed in the Michigan Legislature.
Affordability vs. clean energy?
DTE officials say affordability is a major component of the new plan, which it says will reduce the cost of its clean energy investment by $1.4 billion compared to its previous plan.
“We did extensive research with our customer base. What we found is our customers want exactly this. They want a balanced plan. They want reliable power,” Lauer said. “They liked the idea that we got baseload generation assets like nuclear and gas, and also love the idea that we’re transitioning to a certain amount of renewables. This plan is… right in line with what I would say the bulk of our customer base wants.”
Independent energy advocate Jackson Koeppel questions DTE’s messaging, which he says falsely pits clean energy against affordability.
“DTE misframes the situation,” Koeppel said. “There are existing crises of affordability and infrastructure quality and safety. And there is a crisis around the rate and equity of access to the adoption of new technologies like energy storage. DTE continues to regard these things as zero-sum. They’re acknowledging that there is actually a connection between more clean energy and affordability, but they’re continuing to frame it as if they are at odds.”
Advocates have long criticized the company for what they say is an outsized amount of money spent on public relations and advertising – money they say could be better spent reducing customers’ costs and investing in the grid to improve reliability.
“We don’t need expensive, happy-talk commercials,” said Kim Hunter, a Detroit resident. “DTE’s energy plan should divert the money from all their video and social media ads to invest in supporting affordable, healthy wind power, community-based solar and rooftop solar.”
DTE has among the worst reliability profiles and highest utility rates in the country. The MPSC recently ordered DTE and Consumers to pay for independent audits of the safety and reliability of their distribution systems.
Richter said DTE’s plan so far does not prioritize profitability. “DTE wants to charge Michigan ratepayers for continuing profits on the $4 billion Monroe plant investment for years after it’s closed,” he said. “DTE says they won’t retire the Monroe plant early without MPSC approval of these ongoing profits, effectively holding their customer’s health hostage.”
“Michiganders are rightly sick and tired of paying the highest rates in the Midwest for the longest amount of time in the dark of any state in the Great Lakes region,” Bob Allison, deputy director of the Michigan League of Conservation Voters, said in a statement.
“We are at a pivotal time in our state’s clean energy future, and DTE must meet this moment with more ambition,” he added. “This is just their proposal; all this most certainly should be hashed out in public hearings where customers who are upset get to engage with the Michigan Public Service Commission to ensure this plan works for all of us.”