Center for Economic Analysis

Introduction

Among the potential ballot proposals that will face Michigan voters in the November 2012 election is one requiring an increase in the amount of renewable energy in Michigan’s electricity portfolio. The ballot proposal reads as follows:

“§ 55 Michigan’s Clean Renewable Electric Energy Standard

It is the policy of Michigan to promote and encourage the use of clean renewable electric energy sources. Clean renewable electric energy sources, which naturally replenish over a human rather than geological time frame, are wind, solar, biomass and hydropower.

Beginning no later than 2025, at least 25% of each electricity provider’s annual retail electricity sales in Michigan shall be derived from the generation or purchase of electricity produced from clean renewable electric energy sources. The foregoing clean renewable electric energy standard shall be implemented incrementally and in a manner that fosters a diversity of energy generation technologies. Facilities used for satisfying the standard shall be located within Michigan or within the retail customer service territory of any electric utility, municipally-owned electric utility or cooperative electric utility operating in Michigan.

Consumers shall be charged for electricity from clean renewable electric energy sources in the same manner and on the same basis as for electricity from other sources.

To protect consumers, compliance with the clean renewable electric energy standard shall not cause rates charged by electricity providers to increase by more than 1% in any year. Annual extensions for meeting the standard may be granted, but only to the extent demonstrated to be necessary for an electricity provider to comply with the foregoing rate limitation.

The legislature shall enact laws to promote and encourage the employment of Michigan residents and the use of equipment manufactured in Michigan in the production and distribution of electricity derived from clean renewable electric energy sources.
Any provision or portion of this section held invalid or unconstitutional shall be severable from the remaining portions, which shall be implemented to the maximum extent possible.”

Energy policy changes of this magnitude will have a series of impacts such as environmental impacts, land use impacts, transmission impacts, and changes in the power generation portfolio for Michigan among others. This report focuses on the investment and job impacts that would be the result of increasing Michigan’s renewable energy generation to 25% of total electricity by the year 2025. While other impacts may be significant they will require future analysis. The authors of this report were contracted to assist in assessing the impacts based on their previous research in the economics of renewable energy, cluster analysis, and energy resource quantification. Previous research includes assessing the potential for onshore wind in Michigan, assessing the potential for offshore wind in Michigan, serving as consultants to the Michigan Energy Wind Resource Zone Board, assessing the efficacy of renewable energy policies and in biomass feedstock assessment among other decision support and impact assessment research.