Michigan’s energy regulators are circulating a plan they say could help improve the reliability of the power grid and lower energy costs by encouraging utilities to incorporate household equipment such as rooftop solar panels and home batteries into their systems.
The smaller power generation sources could help utility companies such as DTE Energy Co. and Consumers Energy handle the massive expected increase in energy demand from hyperscale data centers, such as the one under development in Saline Township, without costly grid improvements and power plants.
“In the absence of additional regulatory approaches, these new loads could potentially trigger costly additions in traditional generation and transmission capacity,” the Michigan Public Service Commission’s proposal says about data centers. “By leveraging resources that are either already on the system or are relatively quick to deploy, (virtual power plants) can meet at least a portion of these demands for new capacity and mitigate cost pressures and also allow for faster interconnection timelines that would not be possible relying on traditional generation or transmission solutions alone.”
The way utilities typically bill customers discourages them from incorporating small, distributed power supplies into their grids, MPSC’s plan states. Usually, utility companies are allowed to bill for the construction of new power supplies such as gas plants and solar arrays, and to bill for customers’ power use and use of the grid.
That’s why MPSC is proposing to incentivize utility companies to embrace smaller, distributed power generation sources and develop virtual power plants, which are networks of distributed generation sources that can help integrate smaller renewable systems onto the grid.
Virtual power plants can help utilities avoid building costly new power plants or solar arrays because they can respond quickly to changes in electricity demand by doing things like pausing electric vehicle charging, proponents say.
The Michigan Public Service Commission on Thursday agreed to seek comment on the straw proposal that is part of its second phase of the reliability initiative, which started in 2023.
“We share the MPSC’s interest in helping us improve our performance and will be evaluating this proposal,” Consumers spokesman Brian Wheeler said in an email.
Last year, the commission approved penalties and incentives for Consumers and DTE that allowed them to qualify for up to $10 million in penalties or incentives for failing to, or meeting, reliability benchmarks. Still, outages plague Michiganians. More than 500,000 people were without power over the Fourth of July holiday after a major storm sent trees into power lines throughout the state. The MPSC is investigating that widespread outage.
“If phase one was fixing the grid, the order in front of us in the straw proposal that we now seek comment on is about the future of the grid,” MPSC Chair Dan Scripps said during the commission’s meeting Thursday.
“This provides us an opportunity to look at opportunities to save customers money while increasing the performance of the distribution grid on which we all increasingly rely, and I’m excited to hear the comments from those based on the straw proposal included in this order,” he later said.
In December, commissioners started requiring utilities to treat home solar arrays and other distributed energy sources as a resource.
DTE and Consumers filed their first interconnection reports this spring. Both companies said they have seen increases in customers asking to connect home electricity sources, like solar panels and batteries that store solar power. The utilities required multiple reviews for most of those connections, which increased the cost and delayed the projects, MPSC wrote in its plan.
MPSC’s proposed plan calls on the companies to make it easier for customers to install their own solar panels, batteries or other power supplies. In their plan, commissioners proposed putting stricter deadlines on approving distributed energy generation systems. Commissioners also proposed having utilities make it easier for customers to find data on the amount of power they are generating from home systems and how the power is used.
They asked for comments on their plan to be submitted by Oct. 1.
ckthompson@detroitnews.com

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