DETROIT – Energy
efficiency in Michigan recently grabbed headlines. In his March 13 speech,
Governor Snyder stressed the elimination of energy waste as a cornerstone to
moving toward a more renewable future. This speech stems from the fact that
Michigan is on the verge of meeting the Renewable Portfolio Standard targets
that were set in 2008.
The RPS has
been credited with causing the huge growth in renewable capacity, so now that
the 10 percent target is expected to be met by the end of the year, the debate
is starting in earnest as to what will happen in the renewable generation market
in 2016 and beyond.
The
replacement of the RPS is a hot topic that a number of states are debating.
Ohio famously froze their RPS targets to study the impact, arguably showing
economic growth in renewables in that state. New York is considering replacing
the RPS with a funding tool for renewable energy. Texas lawmakers appear to be
in the process of repealing the RPS, which has been met early, raising
questions about the future growth of renewable projects in Texas. Meanwhile,
Illinois and Maryland are standing behind the RPS as a tool for renewable
growth.
Here in
Michigan, the Governor showed that his vision for a path forward to reach 19
percent renewables by 2025 includes reducing or eliminating energy waste
(a.k.a. increasing energy efficiency) to account for 21 percent of the
potential future electricity generation mix; a somewhat convoluted concept
essentially saying that 21 percent of future electricity generation will not
actually exist.
When it comes to RPS, Michigan’s senators and legislators are all over the
map. Governor Snyder has not yet taken an official position on repealing or
renewing it, the minority party Democrats are generally in favor of the
mandates, and the Republicans are showing multiple visions for Michigan’s
energy future that do not specifically include RPS mandates.
Whether Michigan’s energy future holds Integrated Resource plans emissions�
focused credits, or RPS mandates, what all the plans do have in common is a
heavy emphasis on energy efficiency. While this means you can expect to hear
more about power plant efficiency at the generation and distribution level,
beyond that, efficiency for buildings are also likely to get more attention.
How to incentivize greater energy efficiency without mandates (because if
politicians don�t want RPS mandates, why would they pass EE mandates?) is an
open question, but could prove to benefit many companies in the Michigan energy
economy.
Energy efficiency programs offered by utilities typically feature incentives
to upgrade homes and buildings. These programs have typically featured
insulation, windows, HVAC, major appliances, and in some cases lighting, but
the bulk of the current programs in Michigan are focused on insulation and HVAC
� for now. Consulting firms such as Navigant Consulting and CLEAResult help
enact and measure the success of these programs to help utilities meet
emissions or load goals set by politicians. This increased focus and interest
in energy efficiency seems likely to broaden the scope of these programs to
meet new, more aggressive goals.
Through our Clean Energy Roadmap work, NextEnergy has identified about 3,050
entities working in the clean energy economy; of these, approximately 2,400
entities self-identified as participating in the energy efficient building
technologies market (these include HVAC installers, electricians, energy
auditors, insulation and building envelope installers, financing groups, and
others that have identified themselves as focused on energy efficiency). A
closer look at this database shows that the majority of these players are in
HVAC, which makes sense since this is where the bulk of incentives offered
through utilities are focused. However, as the focus shifts to include other
technologies or materials, it seems likely the number of entities are likely to
grow. For example, we are already starting to see more interest in building and
home energy management systems from both companies that provide these products
and utilities that want to use these to potentially reduce the peak load.
The road to a more renewable energy profile in Michigan is
likely to be a bumpy one. But both politics and the economic environment point
to a bright future for Michigan�s energy efficiency focused businesses.
Dave Hurst is Director, Market
Analyst for NextEnergy
