Type: Law Bulletins
Date: 12/04/2023

Michigan Enacts Statewide Clean Electricity Standard for Electric Utilities, Joining Minnesota and Others in the Clean Energy Transition

On Nov. 28, 2023, Michigan Governor Gretchen Whitmer signed into law a suite of bills (Senate Bills 271, 273, and 502) that will require Michigan’s utilities to meet aggressive clean energy and climate goals in the coming decades. Collectively, these laws:

  • Establish a clean electricity standard for Michigan’s electric utilities of 80 percent clean electricity generation by 2035 and 100 percent by 2040;
  • Mandate electric utilities have at least 2,500 megawatts of energy storage by 2030;
  • Raise prior caps on distributed generation of solar energy to 10 percent of a utility’s average in-state peak load;
  • Require utilities to make improved energy efficiency investments by increasing Michigan’s energy waste reduction (EWR) standard from 1 percent to 1.5 percent annually beginning in 2026, with additional incentives for utilities to achieve over 2 percent EWR (SB 271) and financial incentives for utilities that exceed 1.5 percent (SB 273);
  • Encourage utility consumers to switch from natural gas to electric power for their household energy needs; and
  • Require the Michigan Public Service Commission to consider low-income residents, energy affordability, and environmental justice communities when approving utilities’ long-term energy and resources plans.

While Michigan’s clean energy by 2040 standard has received significant attention, the state now joins several others that have enacted similar metrics, including Minnesota, which enacted a carbon-free electricity by 2040 standard earlier this year. Minnesota’s new law, which was signed by Governor Tim Walz in February 2023, requires each in-state electric utility to generate or procure electricity generated from carbon-free energy technologies (e.g., renewable and nuclear resources), and provide that electricity to Minnesota retail customers according to the following metrics and timelines:

  • 80 percent carbon-free electricity by 2030 for all electric public utilities — 60 percent for all other electric utilities, including generation and transmission cooperatives and municipal power agencies;
  • 90 percent carbon-free electricity by 2035 for all electric utilities; and
  • 100 percent carbon-free electricity by 2040 for all electric utilities.

While fundamentally similar, the new standards enacted in Michigan and Minnesota contain their own nuances. Most notably, Minnesota’s definition of “carbon-free” electricity includes only technology that generates electricity without emitting carbon dioxide.  Michigan’s new law contemplates the use of both carbon-free electricity (electricity generated without emitting greenhouse gas) and carbon-neutral electricity (in this case, systems fueled by natural gas that use highly efficient carbon capture and storage technologies).

Under the new law, Michigan utilities may be able to leverage carbon capture from natural gas fired sources to meet the new law’s aggressive standards while continuing to use existing generating assets as efficient and reliable sources of electricity for consumers across the state.

Both Minnesota and Michigan’s 2040 laws also consider the potential impacts of these laws on marginalized communities differently. Minnesota’s law implements safeguards for “environmental justice areas.” Specifically, it allows the Minnesota Public Utilities Commission to modify or delay implementation of the carbon-free electricity standards if it determines, in part, that neighborhoods or communities composed predominantly of persons of color or persons below the federal poverty line may be disproportionately burdened by the 100 percent clean energy transition. The Michigan law will require the Michigan Public Service Commission to consider the potential impacts of utilities’ long-term resources planning processes on environmental justice communities, but it does not explicitly tie the clean energy standards and their future impacts to environmental justice communities.

Michigan Senate Bills 271, 273, and 502 are likely the first of many laws transitioning Michigan into the clean energy future.

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