Michigan Renewable Energy Case Study

Transcription

1 Michigan Renewable Energy Case Study NARUC ENERGY REGULATORY PARTNERSHIP WITH GEORGIAN NATIONAL ENERGY AND WATER SUPPLY REGULATORY COMMISSION TBILISI, GEORGIA JANUARY 27-31, 2014 GREG R. WHITE, COMMISSIONER MICHIGAN PUBLIC SERVICE COMMISSION

2 Michigan Renewable Energy Experience Presentation Topics 1. Renewable Portfolio Standard 2. Renewable Energy Credits 3. Wind Energy Resource Zone Process 4. Net Metering 5. Electric Utility Interconnection Photos from

3 Renewable Portfolio Standard

4 Michigan Population 9,883,360 Electric Utility Customers

5 Renewable Energy Standard Goals Diversify Michigan s generation portfolio. Increase energy security through the use of Michigan based resources. Encourage private investment in renewable energy. Cost effectiveness. Provide environmental benefits.

6 Renewable Energy Standard Applies to all electric providers (including investor owned, cooperative, municipal utilities and alternative electric suppliers) 10 % renewable energy by Interim targets in 2012, 2013 and Electric providers will meet these requirements through the purchase and/or production of Renewable Energy Credits (RECs). Renewable capacity targets in addition to REC requirements for two largest utilities

7 Renewable Energy Surcharge Caps Incremental cost of renewable energy is recovered via a surcharge. Renewable energy surcharges are capped by customer class: $3.00 per month per residential meter $16.58 per month per commercial meter $ per month per industrial meter 11 of 72 electric providers have residential renewable energy surcharges. Consumers Energy proposed reduction from $0.52 to $0 DTE Electric reduction from $3 to $0.43

8 Levelized Cost of Renewable Energy Contracts Decreasing Over Time ($ per MWh)

9 Cumulative Renewable Energy by Commercial Operation Date MW 1468 MW MW Capacity (MW) MW Hydro AD.Biomass Landfill Solar Wind MW 48 MW 69 MW

10 Status of Michigan Renewable Energy

11 Renewable Energy Standard Results Over 1400 MW of new renewable energy in Michigan. Costs are less than initially expected and have steeply decreased. 71 of 72 electric providers are expected to meet the 10% standard. Standard resulted in significant private investment in renewable energy projects.

12 Michigan Renewable Energy Future Readying Michigan to Make Good Energy Decisions Renewable Energy Report From a theoretical technical perspective, it would be possible to meet increased RPS targets of as much as 30% (or perhaps higher) from resources located within the State Up to 8721 MW of new Renewable Capacity by 2035

13 Contract Review Expedited review of contracts ~ 30 days MPSC Staff performs audits of the Companies levelized cost calculations MPSC Staff conducts process audits of the Request for Proposal for submitted contract applications Staff reviews actual costs of contracts obtained through competitive solicitations.

14 Renewable Energy Credits (REC)

15 REC Compliance The retail sales number used to calculate the number of RECs needed for compliance is based on one of the following: Previous year s retail sales weather normalized Average of previous 3 years retail sales Allows 3-year banking of RECs for additional flexibility

16 REC Tracking & Certification Commission established a system for REC Tracking and Certification Michigan Renewable Energy Certification System (MIRECS) The registry was developed at no cost to the state of Michigan MIRECS is fully funded by charging user fees to electric providers and renewable energy project developers MIRECS can import RECs from neighboring registries

17 MIRECS (continued) Monthly generation is reported to MIRECS electronically MIRECS automatically generates any incentive credits based on affidavits provided by renewable energy project account holder Commission has access to special auditing tools within MIRECS

18 Compliance Methodology Compliance is based on Renewable Energy Credits

19 1 st Compliance Year (2012) Experience Every electric provider has fully complied Compliance reports are submitted in MIRECS and the following information is verified by MPSC Staff retail sales figures are compared against at least one other source (federal government and other MPSC filings) Location of renewable energy projects is compared against the RPS law Interim step compliance calculation

20 Wind Energy Resource Zone Process

21 2008 Energy Legislation Public Act 295 established Michigan s Renewable Portfolio and Energy Optimization Standards, Net Metering and a Wind Energy Resource Zone process. The main purpose of the Wind Energy Resource Zone process was to identify and enable necessary transmission upgrades to accommodate the wind energy expected to be developed under Michigan s Renewable Portfolio Standard. As required by Public Act 295, the Commission established the eleven member Wind Energy Resource Zone Board.

22 Board Charge Prepare a Report Including: A list of regions in the state with the highest level of wind energy harvest potential. A description of the estimated maximum and minimum wind generating capacity in megawatts that can be installed in each identified region of this state. An estimate of the annual maximum and minimum energy production potential for each identified region of this state. An estimate of the maximum wind generation capacity already in service in each identified region of this state.

23 Expedited Siting: Process The Commission shall grant an expedited transmission siting certificate if it determines that all of the following requirements are met: The proposed transmission line will facilitate transmission of electricity generated by wind energy conversion systems located in a wind energy resource zone. The proposed transmission line has received federal approval. The proposed transmission line does not represent an unreasonable threat to the public convenience, health, and safety. The proposed transmission line will be of appropriate capability to enable the wind potential of the wind energy resource zone to be realized. The proposed or alternate route to be authorized by the expedited siting certificate is feasible and reasonable.

24 Michigan s Expedited Siting Project: Thumb Loop Project ITC Transmission s 140 Mile, double circuit, 345 kv transmission project $510 million cost estimate Located in the area designated by the Commission as Michigan s Primary Wind Energy Resource Zone with the highest wind energy potential (4,236 MW on earlier slide) Source: ITC Newsletter, ThumbLoop.pdf

25 Wind Energy Resource Zone Resources - For more information about the Wind Energy Resource Zone Board and Wind Energy Resource Zones: -Annual Wind Energy Resource Zone Board Reports:

26 Net Metering

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28 Number of Net Metering Customers

29 Number of Net Metering Projects by Technology Type

30 Where we were Pre-Act 295 No explicit legislative authority to establish a net metering program 2005 program was designed using a voluntary collaborative process Very complicated billing generally not net metering for most utilities Billing, metering requirements, agreements were not standard across participating utilities Low customer participation and satisfaction

31 With Act 295 Much Improved Program Excellent program for small generator projects Increased customer interest Expands program with a modified net metering offering for renewable generators up to 150 kw and methane digesters up to 550 kw Standard application and agreement See

32 Current and Past Issues (Growing Pains) Customers (or their solar/wind installer) begin operating their net metering project without fully completing the interconnection process with the utility If the customer s account isn t set up for net metering, the customer will likely lose credits for any kwh their project sends to the grid Time-of-use rate complications Who pays for upgraded meters Some utilities do not like net metering

33 Michigan s Net Metering Program Net metering program size can grow to at least 1% of each provider s peak load The 1% is allocated among three net metering categories, based on generator size 0.5% for 20 kw 0.25% for >20 kw up to 150 kw 0.25% for >150 kw up to 550 kw (methane digesters only)

34 Net Metering Small Projects 20 kw and Under Generally, residential customer projects Customer is billed based on net usage Customer receives a credit equal to the full retail rate for all excess kwh Credit is applied to kwh charges in future months and unused credits carry forward indefinitely Customer will pay monthly customer charge or system access fees No study, testing/inspection or interconnection upgrade fees Generally approved in under 14 days

35 Category 1 (up to 20 kw) Sample Bill Residential Customer True Net Metering Wind Turbine Output During Month (2 kw Turbine): 300 kwh Monthly Usage: 500 kwh Residential Rate Schedule Monthly Rate: Energy Charge: $ per kwh Delivery Charges: System Access Charge: $6.00 per month Distribution Charge: $ per kwh Example Monthly Bill Calculation 500 kwh 300 kwh = 200 kwh billed usage 200 kwh * ($ $ ) + $6.00 = $25.68 (without wind turbine monthly bill would have been $55.21)

36 Modified Net Metering Projects from > 20 kw to 150 kw Typically, agricultural, commercial, industrial, or institutional customer projects Customers pay the full retail rate for electricity deliveries from their electric provider and are credited at the generation portion of the retail rate or a wholesale rate for deliveries of excess generation to the grid For example, one utility s General Service rate: Total retail rate is 12 cents, Generation is about 8.5 cents

37 Modified Net Metering Projects from > 20 kw to 150 kw (2) No charge for the engineering review or testing/inspection Customers pay all interconnection costs, distribution study fees and any required distribution system upgrades Customers with generators up to 150 kw can use their generation on-site (behind the meter) without paying a standby charge

38 Category 2 (>20 kw to 150 kw) Sample Bill Small Commercial Customer Modified Net Metering Wind Turbine Output During Month (50 kw Turbine): 7,300 kwh Meter Info - Inflow: 4,000 kwh Outflow: 3,500 kwh Generator: 7,300 kwh Total Site Usage: Inflow + Generator Outflow = 4, ,300 3,500 = 7,800 kwh General Service Rate Schedule Monthly Rate: Energy Charge: $ per kwh Delivery Charges: System Access Charge: $15.00 per month Distribution Charge: $ per kwh Bill Calculation 4,000 kwh * ($ $ ) 3,500 kwh * $ $15.00 = $ (without wind turbine bill would have been: 7,800 kwh * ($ $ ) + $15.00 = $966.25)

39 Category 2 Sample Bill Demand Rate Commercial Customer Modified Net Metering Wind Turbine Output During Month (50 kw Turbine): 7,300 kwh Meter Info - Inflow: 4,000 kwh Outflow: 3,500 kwh Generator: 7,300 kwh Total Site Usage: Inflow + Generator Outflow = 4, ,300 3,500 = 7,800 kwh Peak Demand: 15 kw General Service Rate Schedule Monthly Rate: Capacity Charge: $12.70 per kw for all kw of Peak Demand Energy Charge: $ per kwh Delivery Charges: System Access Charge: $25.00 per month Capacity Charge: $1.95 per kw for all kw of Peak Demand Distribution Charge: $ per kwh Bill Calculation 15 kw * ($ $1.95) + 4,000 kwh * ($ $ ) 3,500 kwh * $ $25.00 = $ (without wind turbine bill would have been: 15 kw * ($ $1.95) + 7,800 kwh * ($ $ ) + $25.00 = $751.89

40 Modified Net Metering Methane Digester Projects Typically, on-farm projects For projects >150 kw up to 550 kw Nearly the same as the >20 kw to 150 kw program Customers pay the costs of any additional meters, plus standby charges equal to imputed distribution charges as if they bought all their energy from the utility

41 Net Metering - What it s not Most common misconceptions I can make money by net metering Net metering is offered by every electric provider in Michigan I ll install my project, start generating and then apply for interconnection and net metering The net metering credit is calculated by dividing the total bill by the number of kwh

42 Electric Utility Interconnection

43 Electric Utility Interconnection MPSC regulates the process of interconnecting generation to the distribution system for electric cooperatives and rate regulated utilities New administrative rules became effective in 2009 Electric Interconnection and Net Metering Standards:

44 Interconnection Options In Michigan, transmission line voltages are 100 kv and above and distribution line voltages are below 100 kv. (of course there are exceptions ) Small projects there is not a clear demarcation would likely interconnect at distribution voltages with the local utility under the MPSC process Large projects 10 MW or more would likely interconnect at transmission voltages and follow the federal interconnection process

45 Interconnection Procedures There are 5 size categories of interconnection projects. Interconnection procedures contain detailed technical information about interconnecting with a utility, standard applications and interconnection agreements There are five sets of interconnection procedures: 20 kw and less, inverter-based and UL 1741 certified >20 up to 150 kw and non-inverter/ul certified 20 kw and under >150 kw up to 550 kw >550 kw up to 2 MW >2 MW

46 Interconnection Process for Category 1 20 kw and less, Inverter-Based, UL Certified Projects 1. Select generator and project installer 2. Complete and submit interconnection application to electric utility with filing fee $75 for interconnection & $25 for net metering 3. Receive application approval from electric utility 4. Receive and review the Interconnection Agreement from electric utility 5. Install your project according to applicable codes and standards 6. Complete the local inspection 7. Utility meter installation, final inspection & testing, final approval from electric utility 8. Begin generating electricity

47 Complex Distribution Level Interconnections Generation projects larger than 550 kw could result in a complex interconnection process Utility and generation developer may need to install very expensive and highly reliable protective and monitoring equipment to safely integrate the generator on the distribution system A 1 2 MW landfill gas electric generation or anaerobic digester project interconnection will typically cost more than $100,000

48 Questions? Greg R. White, Commissioner Michigan Public Service Commission 4300 W. Saginaw St. Lansing, Michigan USA