New study details costs, environmental impact of raising Michigan’s Renewable Portfolio Standard

Tuesday, January 13, 2015
by Amy Mast

The University of Michigan today released a study analyzing the real impacts of raising Michigan’s Renewable Portfolio Standard - the policy mandating the percentage of the state’s electric generation capacity that must be provided by renewable power. The study, sponsored by the University of Michigan Energy Institute, analyzes several scenarios, detailing the changes to different power generation sources such as coal and natural gas, the environmental benefits to the state, and the associated costs under each.

Michigan’s Clean, Renewable, and Efficient Energy Act of 2008 mandated 10% renewable power generation by 2015. Twenty-eight other states have similar mandates. Amid intense lobbying and wildly varying cost estimates, Proposition 3, a 2012 ballot initiative to expand the mandate to 25% renewable generation by 2025, failed.

Study author Jeremiah Johnson, an Assistant Professor at Michigan’s School of Natural Resources and Environment, became interested in identifying the true outcomes of RPS expansion. In 2012, Johnson says, “It was difficult for even the very informed voter to understand what the impacts of Proposition 3 would be. We hope that with this study, we can provide a neutral, unbiased view of what such an expansion would mean for Michigan’s energy future and environmental footprint.”

With the help of graduate student Joshua Novacheck, Johnson examined four scenarios for Michigan: 20% renewable power by 2030, 25% by 2025, 40% by 2035, and “business as usual,” a scenario with no change. The study found that the most cost-effective renewable resource in Michigan is onshore wind, although under the highest target there is also a significant contribution from utility-scale solar. 

His most surprising finding? “When you look at the big picture, the costs are more modest than I expected. Even if all federal subsidies for renewables are eliminated, changing the Renewable Portfolio Standard would raise a typical Michigan household’s utility bill by only $2.60 per month for the 25% by 2025 scenario.  Costs of the other scenarios we evaluated were between $1.20 and $6.70 per month,” Johnson said. “Extension of existing federal subsidies for renewables could cut all of these costs in half.”

Changing the state’s Renewable Portfolio Standard would also change the state’s output of carbon dioxide, sulfur dioxide and nitrogen oxides, which are associated with climate change, acid rain, and asthma. In the three RPS expansion scenarios examined, the state’s carbon intensity of power generation is reduced by 13%, 20%, and 33%, respectively. At present, more than half of Michigan’s power comes from coal, and the state’s asthma rate is higher than the national average.

Johnson says an expansion in renewables would have other significant environmental benefits. “It’s not just the carbon-intensity decrease. We saw comparable decreases with other pollutants across the board,” he explained.

Professors Mark Barteau and Thomas Lyon also contributed to the report.

The full report is publicly available at the link.

About the University of Michigan Energy Institute

The demand for economically and environmentally sound energy solutions is urgent and global. The Energy Institute builds on the University of Michigan's strong energy research heritage at the heart of the nation's automotive and manufacturing industries to develop and integrate science, technology and policy solutions to pressing energy challenges. Visit the Energy Institute here.