Governor Snyder has begun a process to deliver comprehensive energy policy recommendations by December 2013. How we address energy policy has broad impacts on climate, economic competitiveness, employment and job skills, environment, and health. What should be our major policy focus within Michigan? Can we find the right balance given divergent opinions? Our expert panel will discuss implications for goal setting, strategies, new technologies, and the legislative process.

1. Michigan Energy Forum:
Michigan Energy Policy 2013
April 4, 2013
© Ann Arbor SPARK

2. Policy Issues Shaping
Michigan’s Energy Future
Michigan Energy Forum
April 4, 2013 presented by
www.mieibc.org 2

3. About MiEIBC
The Michigan Energy Innovation Business Council (MiEIBC)
is a business organization representing companies in Michigan’s
growing advanced energy sector. MiEIBC’s mission is to grow
Michigan’s advanced energy economy by building an active statewide
network of advanced energy companies, fostering opportunities for
innovation and business growth and offering a unified voice in
creating a business-friendly environment for the advanced energy
industry in Michigan.
The Institute for Energy Innovation is the not-for-profit sister
organization to MiEIBC. Its mission is to promote greater public
understanding of advanced energy and its economic potential for
Michigan, and to inform the public and policy discussion on
Michigan’s energy challenges and opportunities.
The business voice of advanced energy in Michigan.
www.mieibc.org

4. Advanced energy globally
Advanced Energy Today:
$1.1 TRILLION
global industry
Advanced Energy Today:
$200 BILLION
Global revenue from
2012 installations
The business voice of advanced energy in Michigan.
www.mieibc.org

5. Advanced energy in Michigan
$7.2
BILLIONBILLION
annual economic impact of advanced energy
$1.8
manufacturing
economic impact of Renewable Energy
Standard
$2.5
BILLION
ratepayer savings under EO program, 2011-
2015
The business voice of advanced energy in Michigan.
www.mieibc.org

6. More than 1 GW of renewable
energy installed since passage of
rgy projects based on the contracts and solar programs approved by the Commission through 2012. 9
PA295
projects based on the contracts and solar programs approved by the Commission through 2012.9
Figure 4: Cumulative Renewable Energy Capacity by Commercial Operation Date
Figure 4: Cumulative Renewable Energy Capacity by Commercial Operation Date
 RES responsible for
1400.0
1400.0 development of more
1182 MW
1182 MW than 1.1 GW of
1200.0
1200.0
964 MW 964 MW
renewable energy
1000.0 1000.0 generation capacity
Capacity (MW)
since 2009
Capacity (MW)
Hydro
800.0 Hydro
800.0 AD.Biomass
600.0 Landfill
AD.Biomass  Michigan placed 8th in
600.0 Solar Landfill the nation in new wind
400.0
400.0
Wind Solar development in 2012,
200.0
48 MW 69 MW Wind with 611 MW of new
17 MW
0.0 200.0
48 MW 692012
MW
generation coming on
2009 2010 2011 2013
0.0
17 MW line
2009 2010 2011 2012 2013  But what happens in
The breakdown by renewable energy technology type for all renewable energy projects based 2015?
acts and solar programs approved by the Commission through 2012 is shown in Figure 5.
The breakdown by renewable energy technology type for all renewable energy projects based Michigan.
The business voice of advanced energy in
www.mieibc.org
Figure 5: Renewable Energy Capacity by Technology Type

7. Key drivers of Michigan electricity
policymaking process
• The variability of
renewable resources
• Advanced energy costs
continue to decrease
dramatically
• Need to remove market
barriers and reallocate risk,
regardless of choice
The business voice of advanced energy in Michigan.
www.mieibc.org

8. Addressing variability concerns
The business voice of advanced energy in Michigan.
www.mieibc.org

9. Integration of advanced energy
• Significantly higher adoption of
renewables possible with existing
technology – up to 99.9% at costs
comparable to today’s power
prices
• Need electric system that is as
well-equipped to handle
variability in supply as it is at
managing variability in demand
• Greater incentives to incorporate
demand response and efficiency
measures a key element of
moving to user-focused system
• New FERC Order 745 creating
new economic opportunities for
integrating demand response
The business voice of advanced energy in Michigan.
www.mieibc.org

10. Cost of renewables is falling
rapidly – and far faster than
expected
The business voice of advanced energy in Michigan.
www.mieibc.org

11. Innovation driving new possibilities
 Capacity per turbine
increased 23%
 Energy production
per turbine
increased almost
55%
 Economical wind
production now
possible in 60%
of Michigan’s
total land area
 On-shore wind
potential using 2012
technology is 478%
of 2011 total
electricity delivery
in Michigan
Then: 2008 Technology Now: 2012 Technology
The business voice of advanced energy in Michigan.
www.mieibc.org

12. Need to address market barriers
and risk allocation – regardless of
choice • How can we reinvent rate design
in a regulated environment to
discourage utility price
discrimination, customer
cherry-picking, and cost-shifting
in retail competition?
• Can we reform anti-competitive
utility and regulatory barriers
for advanced energy without
retail choice?
• How do we shift risks from
ratepayers and onto the
decision-making utility or
improve the ability of the MPSC
to include risk considerations in
its decisions?
The business voice of advanced energy in Michigan.
www.mieibc.org

13. New energy realities require a
new energy paradigm
Renewable energy is rapidly approaching “socket parity” on
a cost basis with the retail price of electricity
 When it’s cheaper for businesses and individuals to generate
their own electricity than to purchase it from their utility, we
need a whole different way of thinking about our electricity
system
 What does this look like, who pays stranded costs, how to
maintain overall reliability, what’s the appropriate regulatory
response?
 As we approach parity, will we continue to approve new
investments that will become stranded assets for which we must
pay?
 KEY ISSUE: Need to change the electricity model before the
current one breaks voice of advanced energy in Michigan.
The business
www.mieibc.org

14. Dan Scripps
MiEIBC/ Institute for Energy Innovation
dan@mieibc.org
presented by
www.mieibc.org 14

15. Perspectives on Energy Policy:
The Transportation Dimension
John M. DeCicco
University of Michigan  Energy Institute &
School of Natural Resources and Environment
Michigan Energy Forum
April 4, 2013

16. World Energy Supply
Renewables 2%
Nuclear
5%
Hydropower Oil
6%
33%
Natural Gas
24%
Coal
30%
Source: BP Statistical Review of WorldEnergy 2012, estimates for 2011 2011
Source: BP Statistical Review of World Energy 2012, estimates for
16

17. Evolution of U.S. Energy Supply
1850 1900 1950 2000
As of 2010:
37% oil, 25% natural gas, 21% coal, 9% nuclear,
4% hydro, 4% biomass and other sources.
Source: ExxonMobil Outlook for Energy 2009;
U.S. DOE/EIA Annual Energy Review
17

18. Michigan's Energy Supply
Other Renewables 1%
Biomass
5%
Oil
Nuclear 29%
11%
Natural Gas
27% Coal
27%
Source: U.S. Energy Information Administration, data for 2010
Source: BP Statistical Review of World Energy 2012, estimates for 2011
18

19. President Obama's
Energy Security Trust
Proposal
Although trust idea is new, the
strategy is not.
Every president since Nixon has
promised America freedom from
foreign oil; see The Daily Show:
www.thedailyshow.com/watch/wed-june-16-
2010/an-energy-independent-future
R&D is certainly crucial.
This October will bring the 40th
anniversary of the oil embargo
that sparked the Energy Crisis.
What has been learned and
where has successful innovation
actually occurred?
19

20. Global Oil Reserves-to-Production (R/P) ratio
50
Reserves/Production (years)
45
40
35
30
25
20
1980 1985 1990 1995 2000 2005 2010
Source: BP Statistical View of World Energy 2011 20

21. Projected U.S. Oil Production
Source: IEA World Energy Outlook 2012, Figure 3.18
Innovation does occur in mature energy markets, but investment
cycles are very long and price volatility is inherent.
21

22. Family Haulers Then and Now
1975 Mercury Marquis
• 6.6L V8, 150 hp
• Rudimentary pollution
control
• Seat belts
• 11 MPG
2005 Ford Freestyle
• 3.0L V6, 203 hp
• Ultra-low emissions
• Sophisticated safety
features throughout
• 24 MPG
22

23. Trends in Design-Related Impacts of U.S. Automobiles
23

24. Relative Technology Benefits and Costs
Projected cost impacts and GHG reductions for efficiency-optimized
midsize cars in 2035 relative to a 2005 baseline
An evolutionary path can carry BATTERY
80% the U.S. automobile fleet quite ELECTRIC
Increase in Cost
far with manageable costs of
technology and minimal risks for
60% customer acceptance.
PLUG-IN
40% HYBRID
H2 FUEL CELL
GASOLINE
20% Baseline
HYBRID
Vehicle DIESEL TDI
GASOLINE GASOLINE TDI
0% 
0% 20% 40% 60% 80%
Reduction in GHG Emissions
24

25. Comparing some of the green
leaders of model year 2012
Source: AutoEcoRating.com 25

26. A Need for Caution on Alternative Fuels
 Liquid hydrocarbons remain hard to beat
 Issue is how to mitigate risks: economic, environmental
 Beyond higher efficiency, addressing CO2 is an upstream issue
 Alternatives lack a compelling value proposition for
the foreseeable future
 Lower fuel costs not nearly enough to balance high up-front
technology, infrastructure and convenience costs
 If an option is not commercially viable based on core business
case, subsidies and mandates are unlikely to help
 Is the quest to "get off of oil" but a fool's errand that
wastes resources without addressing real problems?
 "The Stone Age didn't end for lack of stone …"
(Ahmed Zaki Yamani, Saudi oil minister 1962-86)
 The end of the Stone Age was not centrally planned!
26

27. Reinventing book cover
27

28. Google car
28

29. Automated transportation
 A postmobility paradigm shift is approaching
 Information technology will truly touch the "car" for first time
 21st century humans are too bad to drive and too good to drive
 Path and form of disruptive change impossible to predict
 Likely with greater connectivity leading to some combination of
autonomous and intensively networked mobility systems
 Compelling value propositions
 Free up drivers' time and attention
 Do for crashes what's been done for air pollution
 Enable step change in energy efficiency
 Will facilitate rather than require electrification
 Challenge: business and institutional innovation will be as
essential as technology innovation
29

30. Importance of scalable market value
 Transportation energy demand is vast
 Growing slowly in US, other mature economies
 Growing steadily in developing economies
 Dominant modes that drive energy demand are
automobiles, line-haul trucking and air
 Speed and distance favor energy dense liquids
 Urban mobility (including rise of megacities) is
creating a need for new systems
 Disruptive change
 It's not a matter of whether, but when and how
 Info tech will trump "clean" tech
30

31. Conclusions
 Policy premised on "getting off of oil" is oh so '70s
 Hasn't worked over past 40 years
 Have market fundamentals really changed?
 Evolutionary technology change
 Has greatly mitigated environmental problems through a steady (but
sometimes contentious) process of policy-guided engineering
 Potential is far from exhausted, and progress can be made on the
new challenge of CO2 emissions through a similar strategy
 A transformative transportation strategy based on connected
vehicles is difficult to predict, but can set the stage for:
 Biggest change in transportation energy since Edwin Drake struck oil
 Biggest opportunity for new value creation in mobility services since
Henry Ford developed mass production
 A chance for Michigan to reassert itself as one of the world's leading
centers of not only technical innovation but also production and the
rich and widely shared economic rewards that can bring
31

32. Thank you!
John M. DeCicco, Ph.D.
Research Professor • University of Michigan Energy Institute (UMEI)
Professor of Practice • School of Natural Resources and Environment (SNRE)
University of Michigan, Ann Arbor
http://www.snre.umich.edu/profile/decicco
http://energy.umich.edu/
Some recent articles:
Factor Analysis of Greenhouse Gas Emissions from Automobiles
http://ssrn.com/abstract=2205144 (working paper)
Cars Should Tune in Sooner, Plug in Later
http://autoecorating.com/tune-in-sooner/ (blog post)
Renewable Fuels: Due for a Reality Check
http://goo.gl/PfMuN (op-ed on The Hill)
32

33. Readying Michigan to Make
Good Energy Decisions
Steve Bakkal, Director
Michigan Energy Office
John Quackenbush, Chairman
Michigan Public Service Commission

34. Governor Snyder’s Special Message on Energy
and the Environment:
– Foundation: Adaptability
– Pillars
• Reliability
• Affordability
• Protecting the Environment

35. Governor Snyder outlined information needs in
the following areas:
- Energy Efficiency
- Renewable Energy
- Electric Choice
- Other Additional Areas

36. Timeframe – Input Phase
• Press release announcing 7 Public Forums: January 25th
• Launch Website www.michigan.gov/energy: January 28th
Questions posted on website
Website open for preliminary submissions until April 25th

37. General questions we seek input on:
1) What information do energy policy makers need to consider in
order to make good energy decisions?
2) What existing data or studies are available for Michigan
policymakers to consider when evaluating Michigan’s energy
policy after 2015?

38. Public Forums…
University Center Detroit
Lansing Monday, March 4 Monday, March 25
Thursday, February 14 Delta College NextEnergy Center
Library of Michigan Lecture Theater
Marquette
Grand Rapids Kalamazoo Friday, April 12
Monday, February 25 Monday, March 18 Northern Michigan University
Grand Valley State University Western Michigan University
Loosemoore Auditorium Fetzer Center – Kirsch Traverse City
Auditorium Monday, April 22
Northwestern Michigan
College

39. Remaining Phases
May-June: Outlining reports in each program and laying out plan
for development of information that is not yet available.
July- September: Compilation/development of information.
October-November: Release of draft reports for public feedback.
November-December: Finalize reports and release final
versions.

40. Electric Energy Efficiency

41. Gas Energy Efficiency

42. Status of Renewable Energy
Source: Renewable Energy Credits generated or acquired each year as reported in electric provider renewable energy annual
reports, PA 295 contracts and Commission Staff projections.

43. Electric Choice

46. • Scheduled Presentations
• Public Participation
• Written feedback: www.michigan.gov/energy

47. Next Michigan Energy Forum:
Energy and the Built Environment
May 2, 2013
© Ann Arbor SPARK