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MPSC report: Michigan’s distributed generation program grew 37% in 2021, adding 3,709 customers

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Continuing years of increased growth, participation in Michigan’s distributed energy program rose by 37% in 2021, according to the Michigan Public Service Commission’s annual distributed generation (DG) report.

Participation has grown every year since 2006, and the MPSC’s 2021 Distributed Generation Report released today found that the program added 3,709 new customers, with the total number of customers in the program at 14,262, with 14,446 DG installations. That’s up from 10,553 customers and 10,718 installations in 2020.

The total electric generation capacity of these installations was 124,749 kilowatts (kW) at the end of 2021, an increase of 33,760 kW from the year before. There are DG installations in every Michigan county.

In Michigan’s distributed generation program, customers generate their own electricity, mostly through solar projects, to lower their electric bills by reducing the amount of energy they buy from their utility. Under state law, utilities may limit participation in the program at 1% of their five-year average peak electricity load, with half of this amount allocated to smaller, residential-sized systems, and the other half for larger projects. Two Michigan utilities have agreed to allow enrollments above the 1% limit: Consumers Energy Co. doubled its program size, and Upper Peninsula Power Co. (UPPCO) agreed in a settlement to triple its size to 3%.

In addition to Consumers and UPPCO, the two newest Michigan utilities with Commission-approved DG tariffs are, Alpena Power Co. (effective Jan. 1, 2022) and Northern States Power Co. (effective Jan. 1, 2023), along with DTE Electric Co., Indiana Michigan Power Co (I&M) and Upper Michigan Energy Resources Corp.

Among the report’s highlights:

  • Consumers Energy and DTE Electric, two of the state’s largest utilities, account for 91% of total DG program capacity.
  • Of DG program installations, 97% are solar projects, far outpacing wind turbines, hydroelectric generation, or methane digesters.
  • Category 1 DG projects, 20 kW or smaller, account for 76.8% of the total program installed capacity. Consumers Energy had 27.3 megawatts (MW) or 37% of program space remaining in this category, and DTE Electric had 14.8 MW or 27%, at the end of 2021. For Category 2 DG projects, 20 kW to 150 kW, Consumers Energy had 18 MW or 49% of program space remaining and DTE Electric had 19.9 MW or 73%.
  • The space remaining in Category 1 programs of up to 20 kW at the end of 2021 was 66% for Alpena Power; 29% for I&M; 81% for Northern States Power; 31% for UPPCO, and 69% for UMERC.

Michigan’s 2016 update of its energy law required the MPSC to phase out the former net metering program and replace it with a new DG program. The report notes that under the DG program, which credits outflow generation at a lower rate, it is advantageous for customers to use as much of the energy they produce on-site as possible.

Once a utility's DG program is in effect, no new customers can join the net metering program, but current net metering customers can continue under that program's guidelines for 10 years from the day they enrolled. The net metering program is referred to as the legacy net metering program.

With the lower outflow credits and the declining costs of battery storage, DG program participants are increasingly pairing their generation with battery storage. At the end of 2021, electric providers reported 2,304 DG participants with battery storage installations for a total battery storage capacity of 12,941 kW.

The DG report also notes that:

  • As part of its ongoing MI Power Grid initiative, the Commission in October 2022 approved updated and standardized rules for interconnecting distributed energy resources in Case No. U-20890, and submitted them for review to the Legislative Service Bureau and the Michigan Office of Administrative Hearings and Rules for formal approval.
  • The Commission also evaluated DG rate design elements in a study requested through Senate Resolution 241 of 2020. MPSC Staff issued a report in December 2021 highlighting a range of issues related to distributed energy resources. The Commission, in a July 2022 order in Case No. U-20898, posed several questions related to community solar ownership, utility ownership of generation on the customer side of the meter, and microgrids. Six organizations later filed comments, which are currently under review.

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