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Dec 2, 2014

The Opportunity to Transform the Energy System in Michigan’s Upper Peninsula

 

I recently relocated from the Upper Peninsula of Michigan, where I lived for eight years while an undergraduate and then graduate student at Michigan Technological University. Like many who have spent time in the U.P., I feel a strong connection to the area and want to see its residents thrive. Given the uncertainty surrounding the future of the electricity system in the U.P., now is the perfect opportunity for the region to transform its energy system in a way that is beneficial to all.

The Upper Peninsula holds 30 percent of the land area of Michigan, but just 3 percent of the state’s population. The area has a rich history in the mining industry, especially with iron, copper, nickel, and silver. The U.P. is surrounded by water on three sides, creating challenges for interconnecting with the rest of the U.S. electricity system. Many of the residents live in rural locations, and on average are paying electricity rates that are higher than the rest of the state, and the country.  For example, customers served by Upper Peninsula Power Company see rates of $0.196/kWh, 50 percent higher than the current U.S. average of $0.13/kWh.

Although the population has decreased significantly from the time of prosperous mining in the 1800s and early 1900s, the residents of the U.P.—often referred to as Yoopers—have a strong pride for their location. People of many backgrounds immigrated to the U.P. during the mining era, and one of the largest cultural populations that remains today are those of Finnish descent. The Finnish concept of sisu has become an important part of U.P. culture, and this idea of determination, bravery, and resilience may be especially useful in light of the current electricity challenges in the area.

A Coal Plant Hangs in the Balance

At the core of the current electricity situation in the U.P. is the coal-fired Presque Isle Power Plant in Marquette. It is the largest electricity provider in the region, with a capacity of 431 MW. The largest customers for the plant were the nearby mines, which recently chose to switch electricity providers. The plant’s owners then decided to close it since the demand was significantly lower. However, the Midcontinent Independent System Operator (MISO) determined that the plant is a System Support Resource. This means that the Presque Isle Power Plant must remain open and available in order for MISO to operate the regional transmission system within reliability standards. Therefore, the residents of Michigan and Wisconsin will soon start paying to keep it running, with U.P. residents seeing increases of up to $15 per month on their electricity bills. Meanwhile, to remain open past 2017, the plant will likely need major upgrades in order to comply with EPA regulations, although plans to complete this project have recently fallen through. All of this results in quite a lot of uncertainty for the future of the electricity system in the U.P., especially if the plant does close.

Stakeholders met on October 28 for the U.P. Energy Summit. Although discussions are ongoing and decisions are yet to be made on the future of the Presque Isle Power Plant, these recent events do present an opportunity for U.P. residents and stakeholders to begin a transformation of their electricity system.

Alternatives to Presque Isle

Given the high costs of keeping Presque Isle running, and the looming 2017 deadline to meet EPA regulations, several options exist to maintain a reliable supply of electricity in the U.P. while allowing the plant to close in the near future. Three main options include:

  • Building new centralized fossil fuel generation, potentially using natural gas,
  • Building new transmission lines, further connecting the U.P. with neighboring Wisconsin, and/or
  • Incorporating energy efficiency measures, and building new renewable energy resources.

New centralized generation or transmission lines could take 3–4 years to approve and build, leaving a potential gap in reliable electricity supply for U.P. residents and businesses.  

Before considering any new generation or transmission construction, energy efficiency initiatives could start making an impact on changing the load requirements in the U.P right away. RMI’s work in Reinventing Fire highlighted huge opportunities to improve the efficiencies of our buildings, and use less overall energy and specifically less electricity, while maintaining comfort and having electricity available when we need it. The analysis in Reinventing Fire was performed for the U.S. as a whole, so it is important to consider the current energy use in Michigan and the U.P. compared to other states in the region that share a similar climate. Based on 2009 EIA data, the average home in Michigan uses 123 million BTU of overall energy per year, which is higher than both the regional (115 million BTU) and national (90 million BTU) averages, suggesting a huge opportunity for increased energy efficiency in U.P. homes. However, much of this opportunity is likely in reducing the amount of natural gas and propane used for home heating, which is the largest use of energy for homes in the region. Average electricity use per home in Michigan is actually less than the regional and national averages, but there are still opportunities for increasing efficiency and shifting electric load from peak hours, since electricity in U.P. homes is mostly used for lighting, appliances, and water heating.

Along with efficiency, the situation in the U.P. presents the perfect opportunity to consider renewable sources of electricity. Average wind speeds in the U.P. are only slightly lower than those in Michigan’s Lower Peninsula, where 1,495 MW of wind capacity is installed (there is currently one wind farm in the U.P. with 28 MW of capacity). Compared with the rest of the U.S., Michigan’s onshore wind potential ranks 18th among the states. The U.P. also has a unique opportunity to explore offshore wind power, since it borders three of the Great Lakes: Superior, Michigan, and Huron. The current high levelized cost of offshore wind energy compared to other options means that it is likely not a good immediate solution, but it may become an important part of the U.P. electricity system in the future as costs for this type of technology decline and/or as costs associated with more carbon-intensive options rise.

Unlike wind, the solar resource in the U.P. is quite a bit lower than the national average. Incorporating solar resources may seem challenging due to the northern climate, however the potential solar resource in the area is similar to that of Europe, where Germany recently generated 50 percent of its overall electricity demand from solar for part of a day.

In addition to wind and solar, other renewable options exist in the U.P. For example, the many mines that are now sitting idle could be used as a geothermal energy source. By flooding the mine with water and letting the surrounding rock heat it, a renewable source of energy can be found in a place that has no other practical use (and in fact can have high costs to maintain even though it is no longer operating).  Additionally, there are opportunities to create woody biomass from forestry operations in the region; researchers at Michigan Tech are investigating sustainable biomass options.

Along with considering large-scale renewable resources, the U.P. also has a unique opportunity to implement distributed energy resources. Given the rural nature of much of the peninsula, the use of small-scale, local resources to generate electricity could make economic and technical sense for many U.P. communities. Distributed renewable resources such as solar and wind can provide value to the grid, and be chosen to match the locally available resources as well as the desires of the community residents.

While having the necessary renewable resource potential is one aspect of considering an energy transformation, understanding the costs involved is key. In the past five years, the levelized cost of energy for wind has dropped 58 percent, while the LCOE for solar has seen a 78 percent drop. Even considering the high-end estimate for renewables from the most recent report (since the U.P. is in a more remote part of the country), onshore wind at $81/MWh and utility-scale solar at $86/MWh are on par with natural gas combined cycle at $61–$87/MWh. Wind and solar beat traditional coal and integrated gasification combined cycle (IGCC) plants as well, which have even higher LCOEs. Renewable resource potential and cost are only two pieces to consider, since these different generation options have different operating characteristics, and a whole range of implications need to be considered; looking at the levelized cost comparison and the potential for generating electricity from renewable sources does show that these are promising options in the U.P.

The Path Forward

The current electricity situation in Michigan’s U.P. leaves much uncertainty for the region. Residents could soon see increases in their monthly bills in order to keep the Presque Isle Power Plant running in the near term, and the plant may close within the next couple of years. This situation presents an opportunity now to incorporate efficiency and renewable resources. It won’t necessarily be easy, but the residents of Michigan’s Upper Peninsula can use their sisu spirit and work together with other stakeholders to transform their energy system in a way that provides reliable electricity at reasonable costs. 

Image courtesy of Shutterstock.

 

Showing 1-1 of 1 comments

December 6, 2014

Great article. Having grown up in Michigan, it is good to see someone looking at the potential for renewables in the UP. If Germany can do it - why not Michigan?

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