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Rep. Law: Let's Turn Green to Gold
Bill would allow profit for homegrown renewable energy in Michigan
July 28, 2008 | By Jim Dulzo
State Rep. Kathleen Law says her bill mimics a German law that has produced "astonishing" jobs growth.
Before she got into politics, Michigan state Representative Kathleen Law (D-Gibraltar) was deep into gamma rays: She was part of a research team that produced them by smashing tritium atoms together with lasers while searching for new ways to generate electricity.
No wonder, then, that Representative Law is pushing another innovative, albeit much less complicated way to generate power: her House Bill 5218. It is the most daring proposal in Lansing for greening Michigan's power supply and generating thousands of new jobs.
Ms. Law wants Michigan to do what Germany did with spectacular results: adopt "feed-in tariffs" that allow individual homeowners and businesses to profit from the renewable energy boom.
Those familiar with Germany's approach say the idea is "daring" only in that it challenges utilities' intention to tie legislative progress on renewable energy directly to laws that would permanently lock in their current customers—thus financing their proposed, expensive, fuel-burning power plants.
For everyone else, observers say, feed-in tariffs are a win: More renewable energy; even less need for new nuclear-, gas-, or coal-fired power plants; lots of new jobs; and sharp reductions of global warming gases and mercury emissions.
Term limits will force Representative Law to leave the House in November. She says she will stay involved in what she sees as civilization's ultimate challenge: reversing global warming before it makes the planet largely uninhabitable for humans, including her grandchildren.
We talked with Ms. Law by phone about a week after the state Senate gutted the already weak House energy reform bill, which originally required utilities to support energy efficiency programs and generate or sell more renewable energy.
Institute: How do feed-in tariffs work?
Representative Law: Feed-in tariffs allow a renewable energy generator, like solar panels or wind turbines, to feed into the power grid and earn a tariff—a pre-set rate. Say I decided to put solar panels on my roof: I find some investment money and do that; I generate power; I sell it directly to Detroit Edison under a long-term contract at a profitable rate; I earn a modest return on investment. Edison must take the power and provide me with a small income—10 to 30 percent on my investment. If I were a homeowner, I'd still buy power from Edison as usual; but the more energy efficiency steps I take, the lower my bill and the larger my return on investment for the solar panel.
How would this affect the state economy?
Rep. Law: Well, it's a huge opportunity for investment capital to come to the 2,000 component manufacturers in the state. Who is building all of these wind turbines you see? They should have a Ford oval on them, or a GM bowtie. They should be manufactured here!
There would be no discrimination as to the size of the installation, the amount of power it produces. It has worked so well in Spain, in Germany. We must do it here.
At the G-8 Summit, the talk about stopping global warming was just words. We need action now. HB 5218 provides homeowners, farmers, and businesses a return on their investment through long-term contracts, non-discrimination on hooking up to and supplying the electrical grid, and easy-to-use, standard contract offer language.This reduces volatility in the industry and encourages capital investments in Michigan that are critical. Ontario is enjoying success and is improving its own standard contract offer language even as we speak.
Explain what happened in Germany.
Rep. Law: Germany's feed-in tariffs began in 2001 and their renewable energy generating growth has been astonishing. The same is true with Spain. Both countries met their 2012 renewable energy goals in 2006; both are now getting 14-1/2 percent of their energy from renewables. Most of EU is now doing the same thing because it is such a jobs builder.
You want to build a market for, and help to mature, the solar and wind industries so they can stand on their own. That has now happened in those two countries, which is why, in Germany, they are talking about restructuring the tariffs—lowering them somewhat because the cost of renewables is going down as their market grows.
But what about that cost? Solar power is still much more expensive than coal or even nuclear power. Wouldn't paying a profitable tariff to hundreds or thousands of small-scale renewable energy operators drive up electricity rates?
Rep. Law: Yes, it would affect my rate. But, look: Electric rates are going up, no matter what. New coal-fired power plants? Hold onto your wallet! New nuclear power plants? Hold onto your wallet big time.
The Michigan Public Service Commission would have oversight. We don't want to gouge the ratepayers. The whole purpose is to protect customers while creating lots and lots of jobs. Once you have the solar panel or wind turbine up, the tariff would establish a payback of the equipment's original cost in about 12 years on a 20-year contract with the utility. That is something a businessperson would invest in; when the profits start coming, they would reinvest in more renewable production.
So what has been the reception to your idea in Lansing?
Rep. Law: The governor and people who know about feed-in are very positive. When I talk to my legislative friends about it, they are very excited. It many ways it has nothing to do with energy, it has to do with jobs creation and investment.
In fact, I have gotten more than one letter from investment capital groups saying if you pass this, we will come to Michigan and invest. It has been well received among knowledgeable circles, including investment companies and the renewable energy community.
But Governor Granholm wants the state Legislature to pass renewable portfolio standards—mandates requiring utilities to get some of their power from renewable sources—first, before getting to feed-in tariffs.
I think energy efficiency standards are the most important thing. That would require utilities to help their customers use energy more efficiently. Before putting solar panels or a wind turbine on your house or business, you must first properly insulate the building and use very efficient appliances. The best bang for the buck for individuals comes through conservation and efficiency. Do those things first, then invest in the generation equipment.
Won't the utilities, which are amenable to renewable energy mandates only if they can eliminate customer choice, fight against something like this? Won't it cut into their generation business?
Rep. Law: Well, there is no doubt they are going to be conservative about this. But I fully expect them to come on board. We have to partner with them. They would be the sophisticated managers of power to the grid. They are the professional electrical engineers who are trained to provide smooth electrical power to hospitals, homes and industries.
Individuals, meanwhile, will be called upon to participate because we are one planet and people. Participation in the energy revolution will be exciting and inclusive. No one entity can do the work necessary to moderate climate disruption to our farms and cities. All hands need to cooperate and work together.
But I have not talked to any of the utilities. My bill has been sitting in the House Energy and Technology Committee since 2007. That's the wrong place; it belongs in the House Commerce Committee.
The thing is not moving because of the delay in renewable portfolio standards, I believe. But renewable mandates don't have anything to do with this bill. My bill is a jobs bill. There are 2,000 businesses in the state that could make turbine parts or panel parts instead of auto parts.
I learned about all of this from Hermann Scheer, the German parliamentarian who pushed feed-in tariffs through the German Bundestag. He's one of Time magazine's green heroes, and he gave me hope. He said to all of us at a meeting: If you want a good, clean bill, don't invite the energy companies to the table. So I didn't.
So what has been the reaction outside of Lansing?
Rep. Law: I'm meeting with business groups, chambers, rotaries, and they all listen closely, get very excited, and ask, Why are we not doing this?
The business community really gets it because they get to participate, to invest. I am going to keep speaking to chambers and ask them to call their senators and reps.
It never fails: Wherever I am speaking, a young man or woman with an accent will usually ask, "What is the problem? In my country the monthly cost increase for our renewable energy is about the cost of a beer!"
So exactly what does your bill propose in terms of rates?
HB 5218 is for small, medium, or large projects. The tariff numbers are changing because rates for everything are changing right now. But it's about 10 cents to 25 cents per kilowatt-hour for solar, for example.
Or it could be a cost-plus percentage; that is what we do with coal and nuclear. We want the rates to eventually come down, or at least stabilize, and at the same time help stop the war for natural resources.
The rest of the world is getting pretty frustrated with our lack of response. We generate 20 tons of CO2 per person. China generates five tons, India two. Without question, we are most responsible for the emission ofglobal warming greenhouse gases, and we are the wealthiest nation.
You've said you view term limits as a bad idea.
Rep. Law: Businesses don't want to deal with a state that has such constant upheaval. The Legislature is constantly full of new rookies. We are never going to move up in our participation in national issues or organizations until that is changed.
I'm thinking about running for the state Senate, but I'm also looking to work in the renewable energy field. Whatever I do, I want to work on something that keeps me relevant to our children, my grandchildren, and their future. It is for all of these people and for the children of all species, I will work.
We have to get serious about the impact of climate change and make plans and changes. When I attended a world wind energy conference a few weeksago, I listened to people talk about their renewable energy programs from Turkey, Pakistan, Spain, all over the world. It was amazing.
With the knowledge I have about global warming, and the little we are doing about it, I want to curl up in a fetal position and weep. But I'm not going to just be a cricket about this. In 30 years my grandson, Tyler, will be 45 and I will be dead. That is why I work so hard for this. We have to move off of fossil fuel. We cannot continue this.
Jim Dulzo is the Michigan Land Use Institute's managing editor. Reach him at jimdulzo@mlui.org.