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TCL&P’s Good First Step

Blog Archive | September 3, 2010 | By Brian Beauchamp

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Industry is growing very rapidly, thanks largely to feed-in tariffs that encourage private investment in clean energy generation.

Traverse City Light and Power just took a step toward unleashing a powerful jobs and income machine: It installed a new “net metering” policy, allowing TCL&P’s customers to generate limited amounts of renewable energy and sell it back to the utility.

Those who take advantage of the opportunity will significantly cut or eliminate their monthly electricity bills-surely a fine idea.

But the move is only a first step, at least for those who see clean energy both as a planet-saver and a jobs-maker. The problem with net metering is that it does not motivate very many people to install renewables at home or work: The payback is just too slim. That is why many clean energy advocates, myself included, think that TCL&P and other utilities must move beyond net metering if they are to truly accelerate the rise of renewable energy.

That means adopting “feed-in tariffs,” which, as a colleague of mine likes to put it, are like “net metering on steroids”-they allow people to sign long-term power supply contracts with their utility that allows them not to save, but to makemoney generating renewable electricity.

Michigan’s original net metering policy, created about five years ago, severely limited how much electricity customers could sell back to a utility, the price they could get for it, and the amount of tradable, potentially profitable clean-energy “credits” they could earn for their efforts.

If the goal was to spur the rise of renewables in Michigan, that first net metering law was a perfect recipe for failure. Clean energy advocates said so at the time, and they were right: The number of people across the state who took advantage of the first net metering law could literally be counted on two hands.

Now, the state’s new net metering rules, approved by a more consumer-oriented Michigan Public Service Commission earlier this year, and now adapted by TCL&P, are much better than the original ones. But they are still mostly about allowing customers to save, not make, money.

That’s where feed-in tariffs come in.

We’ve reported on FITs before-herehere, and here. FITs are also at the core of our recent white paper for TCL&P, entitled 20-20 by 202: A Clear Vision for Clean Energy Prosperity.

Feed-in tariffs offer homeowners, small companies, investment groups, and institutions a chance to make money by producing clean energy and selling it at a profitable rate, significantly higher than what net metering offers.

It is this profit motive that makes FITs tremendously popular-and far more effective than simple net metering- wherever they are unveiled.

Germany, which pioneered FITs, is the best example.  Since 2002, Germany has used FITs to double its renewable energy generation and reach its goal of 12 percent renewables. Like some other places where FITs are working so well, Germany recently expanded its program, aiming for 27 percent renewable energy by 2020. The effort has made Germany one of the world’s leading manufacturers and users of solar panels-and in a country that’s cloudier and more northerly than Michigan.

It’s not just dozens of foreign countries that are having FITs, however. The policy is catching on in America, too.

The State of Vermont enacted a feed-in tariff policy in May, for example, and there is already talk of expanding it because, just like in other places, it’s been wildly popular there. Examples of American states and cities embracing FITs are spreading, and the results are unvarying: Huge numbers of people get involved, because they like the idea of investing in renewables-if they can make a few bucks.

FITs offer another, different opportunity to TCL&P, too.

The company traditionally has been a proud clean-energy leader: Years ago, it was the first U.S. utility to put up a truly large wind turbine, which is still spinning away just west of Traverse City. Last year, it adopted a very bold goal of getting 30 percent of its energy from renewables by 2020. But the plan, which depended heavily on building a biomass-fired power plant, died a painful death due to some environmentalists’ claims that burning wood to make electricity would ruin our forests.

So, with the fall of its proposed biomass plan, and with other utilities starting to embrace progressive new efficiency, renewable energy, and FITs policies, TCL&P is in danger of losing its leadership position.

But TCL&P also has an opportunity a lot of other utilities don’t: Because it is municipally owned, it does not have to wait for Lansing to wake up and enact a proper statewide FITs policy-something that could take quite awhile. Thanks to coal-loving lawmakers like state Representative Jeff Mayes, who chairs the House Energy and Technology Committee, FITs legislation has spent three years waiting for even an initial committee hearing.

So while Lansing snoozes, there is nothing stopping TCL&P from acting on its own and catching FITs’ powerful wave of the future. If the muni established even a modest FITs program, it would reconfirm the utility as a leader among Michigan utilities.

Better yet, a successful TCL&P FITs program in Traverse City could be the wake-up call that Lansing needs. Many state lawmakers are in the thrall of utility lobbyists, who constantly tell them that this renewable and efficiency stuff just isn’t right for Michigan. Traverse City’s utility could show them just how wrong they are.

FITs are right for Michigan, or any place that wants more jobs. FITs quickly start the necessary shift from fossil to renewable fuels like sunshine and wind, get people swinging hammers, and offer people a new, profitable, entrepreneurial opportunity.

One thing to remember as the FITs discussion heats up in Traverse City: Despite all the fear mongering, feed-in tariffs, if done correctly, have only a small effect on electric rates. Our 20-20 report, which we’ve checked out with some very knowledgeable folks, figures that building out our entire vision for FITs-based solar energy in Traverse City would cost a TCL&P customer less than the price of a couple premium beers a month.

That’s a pretty good price for putting a lot of people back to work, keeping money in town that usually leaves for coal states, and making new income opportunities for funding-starved schools, community investment groups, and for-profit companies.

So, kudos to the TCL&P board for taking a step toward a clean-energy revolution by approving a net metering program.

Now, let’s take the next step and get FITs!

Policy Specialist Brian Beauchamp leads the Michigan Land Use Institute Energy and Environment program. Reach him at brian@mlui.org.


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