After nearly two years of hearings, countless substitute bills, and intense negotiations the Michigan legislature finally approved two pieces of legislation that overhaul and update Michigan’s energy policy.
Much has already been written about the larger elements of the legislation – increasing the renewable energy standard from 10 to 15 percent, preserving net metering and retail choice, and enhancing the energy optimization standard – however some lesser known aspects of the legislation make incremental, but positive, gains for the future of cogeneration. Cogeneration or Combined Heat and Power (CHP) is the simultaneous production of electricity and heat from a single fuel source and can be 40 to 70 percent more efficient than the separate generation of heat and electricity.
There are specific provisions for CHP included in SB 437 and 438.
SB 437 sets criteria to be considered in an individual utility Integrated Resource Plan (IRP) filing with the Michigan Public Service Commission. As a part of the certificate of need process, a utility IRP shall include the projected energy and capacity purchased or produced by the electric utility from a cogeneration resource. By specifically calling out cogeneration as a potential resource to be used by utilities in an IRP, the Michigan legislature has recognized the important role CHP can play in helping utilities to provide reliable and least-cost electric service to their customers.
SB 438, in addition to providing the larger framework for renewable energy and energy efficiency, contains an updated definition for cogeneration. This definition is consistent with federal definitions, and addresses concerns that the previous definition in Michigan law might have artificially constrained the market for future projects.
In order to achieve these incremental, but important policy wins, the Great Plains Institute contracted with Michigan-based policy consulting firm, 5 Lakes Energy, to conduct education and outreach efforts to Michigan policy makers on the benefits and opportunities for increased CHP development in Michigan. In addition, GPI and 5 Lakes worked with regional ally, the Midwest Cogeneration Association, and in-state ally, the Michigan Chemistry Council, to advocate for language that would improve the treatment of CHP in the final legislative package.
Now that the legislation has finally been passed, and will likely be signed by Governor Snyder, we turn our attention to administrative actions and implementation of the package. We will also be looking for additional opportunities to advance CHP policy when a new legislature convenes in January 2017.
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