|Jim French, Wyandotte Municipal Services’ director of power supply, right, and Robert Kulick, of Cresit Industries, during a solar panel installation at Wilson Middle School in 2008.|
Jim French was probably destined to work in the electricity business and take big steps toward renewable energy. After all, he’s a graduate of Grand Coulee Dam High School.
Mr. French manages electrical generation for Wyandotte Municipal Services, one of the state’s renewable energy leaders.
If current negotiations work out, the city-owned utility soon will be getting a startling 30 percent of its power from renewable sources—five percentage points more and 13 years earlier than what Michigan utilities will have to achieve if Michigan voters approve Proposal 3 in November.
Prop. 3, known as the “Michigan Energy Michigan Jobs” or “25 x 25” amendment, requires Michigan utilities to get 25 percent of their electricity from renewables by 2025. But even as WMS soars past that goal more than a decade early, the state’s top two utilities are spending close to $6 million of their customers’ money on TV ads attacking it. The ads claim that requiring this move toward a 21st-century electricity system would be too expensive, ignoring Prop. 3’s constitutional cap limiting renewables-driven rate increases to 1 percent a year.
But Mr. French said the main reason his city department is working on renewables is to help slow the inevitable, long-term rise of monthly power bills for its 11,000 residential and business customers.
“Our average residential rate is 13 cents a kilowatt-hour,” he said. “For an average consumer in Wyandotte, consuming 600 kilowatt-hours a month, that’s about three bucks cheaper than DTE.”
We reached Mr. French by phone to find out more about this small, publicly owned utility’s strides toward renewables.
Michigan Land Use Institute: How did you get to 30 percent so quickly?
Jim French: Well, I want to first say all of the resources necessary for delivering that amount of renewable energy are not quite in place yet. But we are negotiating and signing contracts.
A while ago we began looking at different alternatives for getting our power. The first contract, we signed a power purchase agreement with a hydro project on the Ohio River. That was for 2.87 megawatts.
The next contract was signed after Michigan’s first renewable energy standard—Public Act 295—went into effect in 2008. We signed up for a landfill gas project through the Michigan Public Power Agency. We have, there again, just 2.3 MW. And we have about 0.3 megawatts of solar power of our own. And this summer we signed with Blue Creek Wind Park, in Ohio. It’s a 300-megawatt wind farm, and we have 5 megawatts in that project.
Now we’re working on a 10-megawatt project with a biomass plant in Michigan. If we sign up, it will put us over 30 percent renewables.
MLUI: How is this affecting your electricity rates?
Mr. French: The landfill gas and the hydro are the most expensive, which are significantly over the market and more than our own generation costs.
The wind deal is for only 10 years, but it is essentially at current market costs for electricity, so that is not costing us any rate increases. We are still looking for more renewables; it gives us some diversity.
MLUI: Why are you concentrating on renewables in this way?
Mr. French: It was a strategic decision. The impetus came when we started talking to a couple companies that were working on renewables but could not get their finances together. In fact, people knock on our doors all the time with these projects.
We did not turn anyone away; we gave them our criteria, which was a low price, and it was just word of mouth, kind of an open invitation. Some projects just popped up and become available, like the wind farm in Ohio. I mean their price was right at the overall market price, so why wouldn’t we do it? It’s an escalating rate: We’re buying wind power at 3 to 4 cents a kilowatt-hour. It escalates to 6 cents over 10 years.
From a price-risk mitigation point of view, those fixed costs works very well for us. That power supply is locked up for 10 years.
MLUI: Tell us about your current generators.
Mr. French: We have a 15-megawatt natural gas boiler, converted from coal burning. It’s a standby unit, for peak power needs and for reliability.
We also have a pulverized coal unit with 35 megawatts. It can burn natural gas, too. We started using gas there in January; gas prices were going down and coal prices were going up. There are also pressures on that unit due to new coal pollution rules coming out from the Environmental Protection Agency.
We can turn its output up and down very quickly [which works well with variable wind and solar power.] We do sell thermal products out of it: pressurized steam to BASF, steam to Henry Ford Wyandotte Hospital, and high-temperature hot water for district heating for a high-rise and our library.
And we have a 22-megawatt circulating fluidized bed coal burner that is newer than any coal boiler in DTE’s fleet. It has limestone injection, a bag house, very low nitrogen emissions, so it is very clean burning. It puts less than 1 pound of mercury into the air per year.
MLUI: Tell us about your solar projects.
Mr. French: We did our first one in 2008, 10 kilowatts on our middle school roof. We got a grant from the state to assist the project, and the school system incorporated it into the school’s science curriculum. Now they have a working photovoltaic system that they can study.
Then, for an energy efficiency community block grant, we proposed a solar array and said it should qualify as efficiency because, on the hottest days, the sun is usually shining, so solar helps keep demand down for our own generation, which is what efficiency does.
When it came time to ask for bids for the array, we told them that this is what our budget is, you tell us what you can build. We let them use their expertise and creativity to create a project for us.
We ended up with a 212-kilowatt system [.212 megawatts], and that works out to 30 cents a kilowatt-hour.
So we now have 300 kilowatts [.3 megawatts] of solar power.
MLUI: So how did you get to that 300 kilowatts?
Mr. French: Yes, the rest of our solar is being added by our customers using our net metering program.
If a customer wants to install a solar panel, he signs our agreement. We have some grant money and use it to buy down the cost of the installation—we give them a buck a watt rebate on whatever they install.
Also, we help them finance their projects through the state’s Michigan Saves program. We buy down their interest rate to 1.99 percent, plus the state tax credit.
We let customers build a system that offsets as much of their regular usage as they want, but no more. We pay them our residential retail rate, and install a second meter that measures solar output. It shows us how many renewable energy credits their panels are earning, and we buy those credits from them.
So they get 18 cents per kilowatt-hour. They can end up not paying any electric bill and getting a small check every month.
MLUI: How have your customers responded?
Mr. French: We have 11 solar installations completed, four more under construction, and 15 or more in the proposal stage. That’s actually a pretty big percentage in terms of both customers and our energy supply.
We get a good response for the limited amount of marketing we’ve been doing. And there are also a few solar installers out there doing their own marketing.
MLUI: So, what is it about your department that keeps you pointed in these directions?
Mr. French: I like to think of ourselves as creative, as not willing to maintain the status quo, and looking at different ideas and different ways of serving our customers that do so in an environmentally responsible manner, but still control the costs.
Ultimately, we compete with DTE, so it is not like we are doing this at any cost.
MLUI: And how is the Wyandotte community viewing this?
Mr. French: I think our customers’ consciousness, because of some of the press we have gotten lately, is certainly heightened. It adds to our sense of community and sense of pride in the city’s electric utility, because our customers are our owners.
MLUI: You mentioned geothermal earlier.
Mr. French: If you want to install a geothermal heat pump, we will drill the well for you, put that well in a public right of way, like under a sidewalk, and homeowners are responsible for connecting a heat pump to it. We charge a nominal fee for the connection. A Department of Energy report that looked at obstacles to widespread geothermal installations found digging the well is the biggest obstacle.
So, we said, let’s take that portion out of the equation. Simultaneously, the city received federal funding to build 25 new high-efficiency homes and to do 19 efficiency retrofits. They decided to build the most efficient homes they could, targeting low and intermediate incomes. And since we had the heat pump program, let’s put geothermal heat pumps in them to minimize energy costs.
The project won an Energy Innovator of the Year Award from the American Power Association.
It’s a collective effort here. We liked to think we are moving into a leadership role. You can think of the communities within Michigan that are forward thinkers, and we want to be part of the group.
We continue to look for new ways to do things. The overriding thing is to be environmentally responsible at a competitive cost. We’ve got a lot more work to do, but that is where we are today.
Jim Dulzo is the Michigan Land Use Institute’s senior energy policy specialist. Reach him at [email protected].