LANSING – Michigan faces a range of barriers to successfully implementing advanced energy systems and competing with other states for the economic benefits that come with such an industry, a report released Monday by the Institute for Energy Innovation concluded.

The report comes at a time when interests from across the energy sector are landing in Lansing in hopes of crafting the next long-term energy policy for Michigan. Currently, numerous provisions from the 2008 energy law overhaul, including the state’s renewable energy standard, are scheduled to expire this year and will need updating. And Governor Rick Snyder is expected to give a special message on energy in March.

“As we make the important decisions about future investments in new energy infrastructure, if we don’t make those decisions with reference … to the new regulatory markets, we’re going to miss the boat,” said Stanley “Skip” Pruss of 5 Lakes Energy, at a news conference. He added that nationally, between 80 and 90 percent of all new energy generation is expected to come from sources like solar and wind energy between 2030 and 2040.

The premise of the report, Barriers to Advanced Energy in Michigan, is outlining the state must overcome its transactional, organizational, economic, utility, policy, technology and network, communication and educational barriers if it expects to reap the rewards of the new energy industry.

Specifically, it states, Michigan has a lack of uniformity in permitting and interconnection, and limited use of business models to accelerated deployment; needs to overcome corporate separation between energy manager and financial managers; and needs to remove disincentives for new technologies and business models as well as differences in tax treatment for different technologies. Michigan also lacks access to capital and financing for improvements requiring significant up-front costs, the report indicated.

In terms of policy barriers, Michigan has statutory limitations on deployment, uncertainty about future requirements and definitional issues that fail to consider emerging technologies.

“The focus on adaptability of energy systems is the right focus, and I would hope policymakers keep that at the front of their mind,” said Dan Scripps, president of the Michigan Energy Innovation Business Council (a sister organization of the Institute).

The message somewhat mimics that of DTE Energy, officials of which last week told Gongwer News Service that above all, the state will need to consider crafting energy policy that is flexible and adaptable to the changing tides of the energy market.

But perhaps the key component where the two differ is in what form the state should replace its aging power plants, many of which are expected to shutter in the next decade due to rising operational costs and especially regulations by the U.S. Environmental Protection Agency on carbon emissions.

The report charges that advanced energy technologies are now cheaper than conventional electricity generation technologies and that conserving energy remains the most economically efficient option available. To that end, Scripps said there is a “compelling economic case” to be made that some attention ought to be given to more effectively managing demand by consumers rather than strictly the replacement of energy generation.

And while wind energy is the least expensive generation resource available in Michigan and other states, technological innovations are constantly evolving that reduce energy demand, shift energy loads, improve power quality, strengthen the grid and store intermittent energy from wind and solar sources, the report suggested.

The speakers pointed to states like New York, New Jersey, Rhode Island, Connecticut, California, Massachusetts and Hawaii as models. But Michigan, with its rich history in manufacturing and advanced tooling, stands to be one of the greatest beneficiaries of growth in the energy sector, they said.

“The EPA identified Michigan as a good place to benefit from national energy policy,” Pruss said. “Michigan can lead in the design, engineering and production of these technologies.”

The report noted that manufacturing related to biomass, energy storage, solar and wind contributed $4.9 billion each year to the Michigan economy, while manufacturing energy efficiency products adds an additional $2.3 billion in annual economic activity.

The decision to invest in emerging technologies and keep a flexible energy policy could also pay dividends in terms of investment from other non-energy businesses. Scripps said the lack of certainty in state policy is having a “chilling effect on investment” in Michigan.

More specifically, the report stated that in 2013, 60 percent of Fortune 100 companies and 43 percent of Fortune 500 firms set renewable energy, energy efficiency and greenhouse gas reduction targets. As of April 2014, more than 500 U.S. businesses derived 100 percent of their electricity from clean energy sources, including six companies based in Michigan.

RECOMMENDATIONS: But the report did more than criticize and serve as a call to action. It issued three primary subject areas it recommends Michigan take a look at for overcoming the barriers identified: reduce energy waste; modernize electric generation and delivery; and advance energy in the transportation sector primarily by electrifying transportation.

The report estimated 59 percent of primary energy consumed is wasted, suggesting Michigan increase its natural gas and electric energy optimization standard and eliminate the cap on utility expenditures for energy optimization program, as well as recognize demand response and energy efficiency as energy system resources.

Since Michigan spends $22.6 billion annually on energy imports, the report indicated, Michigan should allow distributed energy resources to compete head-to-head with conventional resources, as well as enable individuals, businesses and industries that want to obtain a greater share of their energy from renewable energy sources to be able to do so.

Finally, the state could better prosper with collaborations between the automobile manufacturers, advanced energy storage companies and universities and national laboratories to increase use of advanced energy in the transportation sector.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com