Renewable energy sources are currently receiving a great deal of attention in Michigan’s electricity markets. Utilities are relying on a mix of solar, wind, and biomass to make up a signification portion of any new generation capacity that they build.
Generous federal subsidies and state mandates have played a significant role in this renewable market boom. Changing societal views on energy and the natural environment have also influenced energy decisions. But, the planned phase out of federal subsidies for renewable wind and solar by 2021[*] will have an impact on the economic case to build renewable generation.
At the state level, Michigan has implemented a state mandate, or renewable portfolio standard, requiring utilities to supply 15% of their electricity from renewable sources by 2021. The two major regulated utilities in Michigan’s Lower Peninsula have also stated their intentions to move well beyond the requirements of the state renewable mandate, rapidly expanding their renewable energy generation capacity as they also close their existing coal-fired generation capacity in an attempt to meet their net-zero emissions targets as described above.
[*]The actual phase out dates for the PTC and ITC can be difficult to determine. As phase out dates approach and interest in construction of wind and solar wanes, the renewable industry and its supporters in the Congress typically push to extend the tax credits and subsidies. For example, in December 2019, Congress once again extended the Production Tax Credit for an additional year and stepped the tax credit back up to 60% of the original credit amount for wind projects that begin during 2020. See: Cooper and Tingle, “House Passes PTC, NMTC Extension Bill” (Energy Business Law, 2019), https://perma.cc/X2NK-K2GX