DTE Energy, Michigan's largest electricity supplier, announced plans Tuesday for a dramatic transformation of its power generation — an 80% reduction in carbon emissions and the shuttering of all of its coal-fired power plants by 2050.
The $15-billion proposal would leave customers of the nation's seventh-largest energy utility receiving 40% of their power from new, natural gas-fired power plants; 40% from renewable energy, made possible by a dramatic increase in primarily wind power; and 20% from nuclear, the company's existing Fermi 2 nuclear plant.
The plan requires major infrastructure investments, and those are always passed on in the utility's energy rates, DTE Chairman and CEO Gerry Anderson said. But the utility says it will have the ability to keep any rate increases "near the rate of inflation" each year, avoiding large spikes in energy costs.
"Climate change is a big deal — I think it's the defining policy issue of our era; certainly for the energy industry, it is the defining policy issue," Anderson said. "Both I personally and the senior leadership of this company believe we have a responsibility and believe the country has a responsibility, to address this."
The utility is also motivated by stark reality: Seven major aging coal-fired power plants that would soon require expensive upgrades. DTE last year announced the shutdown of 11 coal units by the early 2020s.
"The economics argue for retirement," Anderson said. "They are old, and as major investments come up, it simply does not make sense to continue replacing components in these plants when we see their lives as being short."
DTE's proposed 30% reduction in carbon emissions by the early 2020s, and 45% reduction in carbon emissions by 2030, is more than was required by the Obama administration's Clean Power Plan. Implementation of that plan was halted by the U.S. Supreme Court in February 2016, as federal courts heard a lawsuit from 20 states, including Michigan, opposed to the plan. Michigan Attorney General Bill Schuette expressed concerns about skyrocketing energy rates as he joined the lawsuit.
President Donald Trump has downplayed climate change as a driver of energy policy and has vowed to restore the coal industry that suffered under increased carbon regulation and a move to more renewable energy.
"I understand the coal regions have been hard-hit," Anderson said. "(But) a new administration can't turn a 70-year-old coal plant into a 20-year-old coal plant... We have very old assets we need to move on and replace."
Lisa Wozniak, executive director of the nonprofit Michigan League of Conservation Voters, said, “DTE’s plan puts Michigan firmly on track toward clean, affordable and reliable energy, regardless of what happens in Washington, D.C."
The last piece in DTE's transition from coal would involve closing the vast Monroe plant, the second-largest coal-fired power plant in the U.S., completed in 1974. The utility's plan puts that closure off until 2040, and doesn't yet map out what specifically would replace its power generation.
Chris Kolb, president of the nonprofit Michigan Environmental Council, in a statement, called DTE's announcement "great news."
"Renewable sources are now the cheapest ways to produce power in Michigan, so the substantial new investments DTE is making in clean energy will keep electricity affordable and protect customers from future price spikes, since wind and solar energy are free fuels," he said. "These new investments in homegrown renewable power will also create jobs for installers, technicians and manufacturers up and down Michigan's substantial clean energy supply chain."
The plan would require a significant increase in mostly wind power. In addition to the proposed addition of 3,500 megawatts of natural gas-fired energy capacity, the utility proposes an additional 6,000 megawatts of renewable energy capacity — enough to supply the energy for nearly 2 million homes — supplementing the 1,000 megawatts of renewable energy DTE has built since 2009.
Anderson acknowledged that in the Thumb area of Michigan, increasing numbers of turbines in recent years have led to some local push-back.
"We deployed up in the Thumb, where the wind regime was best, and we seem to have hit the limit out there in terms of what people want to see," he said. "There are other places in Michigan that are welcoming us with open arms, so we'll go there."
The company is nearing completion on a 250-acre, 200,000-panel solar energy farm in Lapeer County. But Anderson said, in the near-term, wind will continue to dominate the renewable energy portfolio, because it is "substantially cheaper" than solar energy.
DTE's announcement comes about a month after new energy legislation signed into law by Gov. Rick Snyder late last year took effect. Public Acts 341 and 342 set a goal of 35% of state energy needs coming from renewable sources, including waste reduction. The bills extended the current 10% renewable portfolio standard to 2018, and called for increasing it to 12.5% in 2019 and 15% by 2021. They also set an "Integrated Resources Planning" process for evaluating future energy needs, with greater ratepayer participation and the state Department of Environmental Quality evaluation emissions impacts.
Michigan Agency for Energy Executive Director Valerie Brader, while emphasizing that individual pieces of DTE's plan will need vetting and approval before the Michigan Public Service Commission, welcomed the utility's plans at transformation.
"I'm excited for the potential for a cleaner energy future in Michigan that protects our reliability and protects our affordability," she said.
DTE's plan also calls for reliance upon improved efficiency and energy waste reduction, a strong point of emphasis with Snyder, Brader said.
"Buying your neighbor’s insulation rather than Wyoming’s coal is going to be even more important for our future than where and whether we put up the next wind turbine or solar panel," she said.