Regulators in Michigan accredited a settlement Wednesday compelling utility Customers Vitality to purchase energy from 584 megawatts of photo voltaic interconnected by September 1, 2023, multiplying by many occasions the 153 megawatts at the moment standing within the state.
The settlement ends an extended disagreement about initiatives tied the Public Utilities Regulatory Insurance policies Act (PURPA), which requires utilities to pay regulator-approved “averted value” charges to qualifying photo voltaic amenities. Builders and photo voltaic advocates argued the Michigan utility wasn’t approving qualifying initiatives in a well timed method, whereas Customers stated a rush of PURPA initiatives had “overwhelmed” the utility and compelled it to pay extra for photo voltaic than it will out there.
Per the settlement, Customers will transfer ahead with 584 megawatts of photo voltaic from builders — together with Cypress Creek Renewables, which stated it will develop about 40 % of that capability — who had collectively sunk over three gigawatts into the utility’s PURPA pipeline. Some initiatives, totaling 170 megawatts, will obtain full, present PURPA charges whereas the rest, at 414 megawatts, will get a modified averted value fee. Builders that signed onto the settlement embrace 94 % of the greater than three gigawatt interconnection queue, in keeping with Customers.
The settlement isn’t a surprising one, stated Colin Smith, senior photo voltaic analyst at Wooden Mackenzie Energy & Renewables. Michigan’s controversy echoes related struggles in North Carolina and Montana.
Till comparatively just lately, PURPA acted as a secure supply of money for the photo voltaic trade as builders jammed the queue in states with favorable charges. However many utilities, like Customers, seen the regulation as a nuisance requiring them to purchase up photo voltaic they didn’t want at above-market costs. Now many utilities are pushing state insurance policies that make PURPA initiatives unattractive.
“The overwhelming majority of utilities have discovered that PURPA is a mechanism that may result in manner too many initiatives getting into the interconnection queue,” stated Smith. “Utilities have used contract size, most system measurement limitations and averted value fee methodologies to successfully make it inconceivable to develop initiatives by PURPA.”
Customers had begun doing the identical in Michigan.
That’s meant a downturn for some photo voltaic builders — going too massive on PURPA was seemingly a motivator behind Cypress Creek’s enormous layoffs early this 12 months, for example — however due to economics and different favorable insurance policies, PURPA is not an enormous driver for the general trade.
That doesn’t negate the outsize affect of the settlement in Michigan, although, with Customers agreeing to almost 600 megawatts in coming years. The utility additionally has standing plans to part coal out of its portfolio, add 6 gigawatts of photo voltaic by 2030 and lower carbon emissions 90 % by 2040.
Customers put forth the PURPA settlement in August after working with the photo voltaic trade on an answer. In an emailed assertion, the utility stated it was “happy” with the approval and its decision of “PURPA considerations.” In a Wednesday regulatory submitting on the settlement, the utility added that the settlement will enable it to “focus its full consideration on the implementation of its Clear Vitality Plan.”
Smith stated execution of that plan will expose the true success of the settlement. The announcement comes simply days after Customers finalized an influence buy settlement for 100 megawatts developed by Ranger Energy.
“It turns into a query of whether or not they procure extra photo voltaic,” stated Smith. “Does this assist them attain this aim, and the way a lot further procurement are we going to see in coming years?”