The Prospects of Renewable Energy in Michigan

by Slawomir Gyrga

Michigan lags behind state leadership in deployment of wind energy. The state currently has nearly 130 megawatts (MW) of installed wind energy, but is ranked 22nd in existing capacity. Michigan has the potential to install 7,460 MW, which would place it 14th in this category. Governor Jennifer Granholm has been publically supportive of renewable energy in general, but the state missed an opportunity to stimulate growth in this sector by passing a weak renewable energy mandate in 2008.The Michigan legislature conceded to utility concerns rather than thinking creatively about how to jumpstart a failing auto industry and the infrastructure that supports it. (Michigan, believe it or not, actually has a decent manufacturing base for the solar energy industry.) Michigan can still have an impact, but a lot of the wind energy industry’s manufacturing plants have already been sited in other states, a missed opportunity for a state that is facing factory closures and a rapidly shrinking economy.

    Until we have stricter term limits for elected officials I don’t think we’ll see the change we need. Career politicians have been reluctant, historically, to support tough new laws, especially when it requires their constituents to foot the bill. National efforts to mandate or encourage renewable energy investment have fallen victim to this practice, most notably in the southeast and in states with abundant stocks of fossil fuels. Despite this trend, and an even more troublesome “protectionism” in the oil and gas industries, 28 states have pioneered mandates that require utilities to include renewable energy sources in their generation portfolio. The fossil fuel industry has been getting away with ecological murder for decades by not having to pay for externalities, costs that, if added to the price of basic utilities, would reveal the true cost of present consumption habits. This omission, which amounts to a price distortion, combined with government support in the form of Federal subsidies and tax incentives, creates an unfair competitive advantage for the fossil fuel industry. It is amazing that a mature industry – harmful to human health to boot – continues to receive subsidies from the U.S. government, tantamount, in fact, to providing coupons for the purchase of cigarettes or fast food. Anyone who has a few minutes to look at the research budget for different energy sources supplied by the U.S. government will immediately discover a fundamental imbalance in its energy priorities.

    Yes, currently, the deployment of renewable energy is expensive. It also requires cost-intensive upgrades to our nation’s transmission and grid systems. However, strip the fossil fuel industry of government tax breaks and force energy providers to pay for externalities and all of a sudden a level playing field obtains. The price of energy is going to increase regardless of whether the energy generation is coming from renewable or fossil fuel sources. Everyone needs to understand that. The general public may look at fossil fuels and think they are inexpensive, but the true costs are being paid for with our tax dollars, via subsidies, personal health insurance, environmental remediation, and other vehicles. Similar to shopping at Wal-Mart, clinging to traditional fossil fuels allows you to see savings on your receipts, but who is really paying for the lower prices?

    Moving to a “green” economy is going to hurt only in the sense that it will force uncomfortable behavioral changes. People will have to reevaluate their lifestyles, which eventually will put pressure on manufacturers. We saw this briefly in 2008 when gasoline prices spiked. Statistics revealed that consumers avoided SUVs and car manufacturers scrambled for more efficient models and began to advertise economy cars heavily. Examples such as these will trickle through our economy and change our lifestyles. Is it a bad thing? I really don’t think so. On the contrary, this pressure will spur greater investment in public transportation, a renewed interest in urban living, and more energy efficient appliances and technology, for example. Will hundreds of truck drivers lose their jobs? Probably. Instead, maybe they’ll work on trains or install solar panels for a living. Truck drivers aren’t entitled to drive trucks, in my opinion. We shouldn’t avoid necessary policy changes because of a fear of job losses. Find a new job, partner.

    To return to the case of Michigan, yes, Michigan can participate in the green energy economy. It is feasible, for example, to locate offshore wind turbines in the Great Lakes, which would be a logical manufacturing niche for the state. Offshore wind energy has tremendous potential precisely because it harvests strong and unimpeded wind resources and at the same time can potentially avoid complicated permitting processes and NIMBY resistance. Right now such installment isn’t very economic, though; especially, since the onshore market is fairly unsaturated. Not until after the good onshore sites have been developed and our country levies a carbon tax should anyone expect to see a significant investment in the Great Lakes offshore market. Right now, the renewable energy industry expects offshore wind to be two to three years away, with the first projects coming on line off the northeast coastline. Since it takes years to develop a project and a long lead time to successfully ramp up manufacturing lines, however, it does make sense for the Great Lakes states to continue to study the potential for it.

    It was reported in this week’s news that the United States installed and generated over 8300 MW of wind energy in 2008. This is no doubt a terrific accomplishment, but I’m nearly certain that my excitement will be attenuated at best after seeing this growth graphed next to overall demand. New global energy demand continues to outpace renewable energy deployment, and that is a problem. The renewable energy industry needs strong policy signals from Federal and state authorities in order to invest the necessary capital and reverse our dependence on fossil fuels. It won’t be easy, it won’t be comfortable, but it is necessary.

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