By Jim Dulzo
Mike Schmerl is a survivor of the Michigan solar industry’s bad old days. Now, he hopes, some good new days may finally be on the way.
Back in 2008, the veteran electrician was doggedly trying to expand his Traverse City-area company into the solar panel installation business, but it wasn’t working.
“I had a 15-year-old firm, 10 to 15 guys working for me, but I couldn’t find enough solar work to feed even just myself,” he recalled while chatting up the Solar Powering Michigan conference, slated for Sept. 12 at the Hagerty Center in Traverse City. “If it had just been solar, I would have died.”
Happily, before his solar passion proved fatal, he got an offer he couldn’t refuse, and moved to Pennsylvania—where a startup was successfully “going solar.”
“It was a huge difference,” he said of Pennsylvania’s solar policy support compared to Michigan’s. “They had statewide rebates for buying the panels, they had personal property tax exemptions for installing them on your homes. Michigan had—and still has—none of that.
“We went from four guys with cell phones and an attitude to 41 employees in 30 months,” he recalled. “If we had similar opportunities in Michigan, I would have been that guy with the startup. We created new jobs in a new industry.”
Schmerl recently moved back to Traverse City and now consults for, among others, Harvest Energy Solutions, a clean energy installer focused on Midwest farmers. He said the upcoming conference, which he helped plan, is the first of its kind in Michigan and is all about creating new jobs. He’s on a panel about solar workforce development and job opportunities, but the daylong agenda is much broader.
“This is an extension of successful, similarly formatted conferences sponsored by the Midwest Renewable Energy Association,” he said. “They have already had them in Minnesota and Illinois. We are very late to the game here in Michigan; it’s time for us to step up and participate, too.”
Developments in Michigan over the past year suggest that the conference could be arriving right on time.
In Lansing, a working group led by state Senator Mike Nofs with 35 stakeholders from throughout the energy and advocacy sector is considering how to replace Michigan’s successful but expiring “10 percent by 2015” renewables mandate. In the House, a package of bipartisan “Energy Freedom” proposals would make it easier and more lucrative for building owners to install solar systems and share power with neighbors.
The legislative activity follows the Snyder administration’s 2013 finding that adding significantly more renewable energy to Michigan’s mix is technically and financially feasible and that the state does have strong solar potential. It also follows the Michigan Public Service Commission’s finding, after conducting a solar working group process with advocates and utilities, that DTE Energy and Consumers Energy, the state’s top two utilities, could quadruple their tiny, expiring, rooftop-solar pilot programs without significant rate increases.
And, most crucially, the cost of solar panels has fallen dramatically, even as a major U.S. solar manufacturer, Suniva recently announced it would hire hundreds of people to build panels in Michigan’s Saginaw Township. Suniva is providing a speaker for a conference keynote address.
With so many positive factors in play, conference organizers hope advocates, state officials, financiers, industry leaders, and utility staff will network, learn, and start unraveling Michigan’s serious sun block problem.
“We’ve got a lot of work to do,” said Liesl Eichier Clark, a principal at 5 Lakes Energy, a Lansing-based clean energy consulting firm, who also helped shape the agenda.
Noting Michigan is far behind other states when it comes to installing solar systems, she added: “Michigan’s skill set, its values, and its natural resources really compel us to make sure we get to the front of the line.
“We love our lakes and want to protect them. We know how to manufacture things. It is all going to happen eventually, no matter what. But the more we can take advantage of it now…I mean, why wouldn’t we want to do that?” she said.
Falling Costs, Rising Values
Conference partners say the obstacles to accelerating solar development in the state include the myth that solar power doesn’t work well in Michigan’s cloudy, northern climate; utilities’ reluctance to encourage any but their own, small, centralized solar projects; and a severe lack of supportive state and local policies.
In fact, of the 15 solar-friendly state policies listed on a federal website, Michigan has just two: net metering, and property assessed clean energy, or PACE, a public-private approach to low-cost financing.
Michigan’s net metering rules, like those in 42 other states, require utilities to give full, retail credit for customers’ solar power up to the amount of electricity they use annually. Nick Hylla, executive director of the MREA, which funded and created the conference, said these rules are sound and should be working better—especially since Michigan’s comparatively high electricity rates help net metering as higher rates mean higher credits.
“There should be more net metering in Michigan,” he said of a state that, in the six years since the state’s metering rules kicked in, has seen just 1,527 such projects.
“This is an emerging market in Michigan,” Hylla said, “but we don’t need to reinvent the wheel. Half the country has developed that market, with all sorts of different models.”
Massachusetts, for example, has slightly more than 15,000 solar arrays.
He acknowledged that utilities pushed back in several states where net metering, combined with strong state policies, spurred spectacular rooftop solar growth. The power companies argued that rooftop solar reduces customers’ bills so much that they don’t pay their fair share of “fixed costs” like equipment and line maintenance. They have tried, without success, to cut net metering rates, impose hefty monthly per-meter charges, or both, to make rooftop solar financially unattractive.
That has yet to happen in Michigan.
But at last winter’s solar working group sessions, DTE and Consumers argued for a rooftop solar rate far below those that studies by independent researchers and solar advocates routinely produce. The research says solar can help utilities avoid fuel costs, power line energy losses, pricey peak-power purchases on hot days, environmental regulatory costs, and building new power lines, substations, and power plants.
“If the utility commission would perform a valuation study using generally accepted methodologies and really start looking at the true value of distributed generation to the grid, we could get beyond the utilities’ insistence that net metering amounts to ‘cross subsidies’ of solar owners by their other customers,” Hylla said. “Are we going to let our utilities, through some arcane argument, restrict the growth of our clean energy economy? That would be insane, so anything that brings them to this discourse is a good idea.”
Hylla added that, while solar hardware costs have plummeted nationally, Michigan must also cut its “soft” solar costs. That means more efficient—as in more experienced—workers, much more streamlined local permitting, more and more-favorable financing, and better solar-to-grid interconnection services from utilities.
“Soft costs are now 60 percent of a solar project’s budget, and it is up to installers, permitting agencies, financiers, and utilities to solve that,” Hylla said. “That is why we’re bringing together people who have done model projects who can share best practices.”
Schmerl, who’s worked on dozens of systems in Michigan, Pennsylvania, and now, via Harvest, in other Midwestern states, said state and local governments need to act, too.
“Late last year, I installed a large, 43 kW solar array in Alma,” he recalled. “Their permitting is done by the state, and when I pulled a new electrical permit for the project, two new inspection line-items came up: The one for wind, up to 20 kW, was just 10 bucks. But for solar, it was $10 per solar panel. So it was 800 bucks to get the array inspected; if it had been all wind power, it would have been just $20. That’s an example of what we have to change.”
The veteran installer also pointed to murky property tax policies.
“Residential solar systems are subject to determinations that they increase property values,” he said. “I had that happen recently in Grand Traverse County. They raised my client’s taxes past the value of the energy his panels could possibly produce.
“I believe there is room for everyone to benefit from developing more solar power,” he added. “The utilities can realize it is a small concession to make it easy to participate, and I hope municipalities would understand [that not charging property taxes or high permit fees] is a good loss leader, when the end benefit is more job creation and taxation through growth. If we make more jobs, everybody wins.”
Clark, of 5 Lakes, agreed, pointing out that Michigan already has several “solar ready” communities, with quick and uncomplicated permitting, and municipal utilities like Traverse City Light & Power and Cherryland Electric Cooperative that have customers purchasing shares in their joint community solar program.
And while she acknowledged that the Senate work group and House bills are “not connected with the conference, the activity in Lansing demonstrates a rising level of interest in advanced energy development.”
“There’s a phenomenal amount of things happening in clean energy in Michigan right now,” Clark observed. “This solar conference is one piece, and it’s important that all of it is happening and moving that dialogue forward. We want to keep our lines of communication open with the utilities. There are a whole lot more places where we agree than disagree with them, so let’s keep moving forward with the things we agree on.”
Jim Dulzo is MLUI’s senior energy policy specialist. Reach him at firstname.lastname@example.org.