The Mackinac Center for Public Policy has released a new report detailing how Michigan’s “MI Healthy Climate Plan” (MHCP) will cause the state’s already very high electricity prices to increase significantly and will degrade the reliability of the state’s electric grid, increasing the risk of blackouts.
The main goal of the MHCP is achieving 100 percent carbon neutrality (“net-zero”) across Michigan’s economy by 2050. All electricity generated in the state must come from “clean” and “renewable” sources, such as wind and solar, by 2040—with an intermediate goal of getting to 60 percent generation from renewable sources by 2030. Coal-fired generation will also be entirely phased out by 2030.
In Michigan’s Expensive Net-Zero Gamble: Projecting the Costs of Gov. Whitmer’s MI Healthy Climate Plan, which was completed in conjunction with the Center of the American Experiment and Always On Energy Research, the authors model out two different scenarios for how the Wolverine State will go about meeting these net-zero goals.
The first scenario—Wind, Solar, and Battery (WSB)—seeks to determine the cost of the grid transition using solar, wind, hydroelectric, battery storage, and the state’s existing nuclear power fleet. “This scenario was based on the original legislative proposals that were later amended and signed into law,” the report notes. “They intended to transition the state’s electric grid to wind, solar, and battery backup by 2035. In the modeling scenario, fossil fuels like coal, natural gas or petroleum are replaced with wind and solar generation, plus battery storage. We have retained the modeled spectrum as a means of demonstrating the range of potential costs associated with achieving the governor’s net-zero goals.”
The authors estimate that under the WSB scenario, the costs for Michiganders would be $124.3 billion through 2035 and $385.7 billion through 2050.
Further, they note that they expect the implementation of the WSB scenario will seriously decrease the proficiency of Michigan’s electrical grid, predicting “the grid would fail to meet demand in 2040 for a combined 71 hours over six capacity shortfall events, or blackouts, in five different months. This is based on the actual demand and weather patterns experienced in 2021. Avoiding these blackouts will be even more difficult if electricity demand increases in Michigan over this period, as can be reasonably expected due to increasing electrification and growing use of artificial intelligence and data centers.”
“This shortfall is not isolated or cherry-picked,” the authors continue. “If we use 2020 data to conservatively model projected 2040 demand, a wind, solar and battery grid would fail to meet demand for a combined 142 hours over nine blackout events in three different months. In short, if Michigan policymakers pursue the WSB scenario, more frequent and longer-lasting blackouts are inevitable.”
The second scenario—Lower Cost Decarbonization (LCD)—would be less aggressive than WSB, and “estimates the cost of retrofitting existing large coal and natural gas plants with carbon capture and storage, building new nuclear small modular reactors, nuclear APR-1400s [“a two-loop pressurized water reactor”], and adding a small amount of battery storage.” Under this scenario, the authors estimate a total cost of $206 billion through 2050.
“Implementing a net-zero emissions scheme is expensive regardless of the technologies used to achieve emissions reduction mandates,” the authors explain. “That means both scenarios — WSB and LCD — will substantially increase the cost of electricity for all ratepayers, including schools, businesses and households. However, the LCD scenario is a far lower-cost option to achieve the state’s net-zero goals.”
In further contrast to the WSB scenario, the authors state that “no electricity shortfall would occur in the LCD scenario, according to our model. The reliability provided by allowing existing coal and natural gas plants to produce electricity until they are designed to be shut down achieves this.”
To help stem the costs of either of the two scenarios and keep Michigan’s grid functioning reliably, the authors recommend an “immediate moratorium” of the planned early closures of the state’s coal, natural gas, and nuclear plants, “at least until equally reliable facilities can replace their entire production.”
They also suggest creating a “Reliable Portfolio Standard.” This would “require the Michigan Public Service Commission and public utilities to…factor an ‘all-in cost’ of wind and solar in their energy plans. Doing so would “protect the public by requiring utilities to restore the importance of maintaining grid reliability as their primary goal.”
Finally, they suggest Michigan legislators enact an “Only Pay for What You Get” Act, which would “protect residents and ratepayers by allowing utilities to charge only for the reliable energy they provide. Under the current regulatory system, monopoly utilities can force ratepayers to finance building new generation even if it weakens grid reliability, such as with wind and solar projects.”
“Michigan’s pursuit of net-zero energy targets is a fatally flawed and increasingly dangerous endeavor,” the authors conclude. “It will lead to enormous costs for ratepayers and an increased risk of blackouts…State policymakers should focus on practical solutions rather than burdening families and businesses with skyrocketing electricity bills and jeopardized grid reliability.”
Instead of going all-in on net-zero edicts like the one found in the MI Healthy Climate Plan, Wolverine State policymakers should instead encourage a diversified mix of dispatchable, baseload energy sources that prioritize affordability and reliability. Further, they should promote investments in only those energy sources that can reliably meet demand, particularly during peak usage hours or adverse weather conditions. Policymakers should also reassess state-level incentives for wind and solar electricity generation to ensure they align with actual performance and do not inadvertently increase costs or reduce grid stability.
Heartland Impact can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Cameron Sholty, at csholty@heartlandimpact.org or 312/377- 4000.
