Wednesday, December 19, 2018

DTE Highlights Renewable Efforts, Wins Gas Plant Approval

By Amanda Durish Cook

DTE Energy Q1 2018 earningsDTE Energy is focused on plans to double its renewable energy capacity by the early 2020s and build a new, controversial $1-billion gas-fired plant recently approved by regulators, company executives told analysts during an earnings call last week.

First-quarter earnings fell nearly 10% to $361 million ($2.00/share) compared with 2017, but operating earnings jumped $20 million to $342 million. The utility posted revenue of $3.75 billion for the period.

During an April 25 call, DTE Energy CEO Gerard Anderson revealed more detail about the company’s plan to double its current renewable energy capacity primarily through new wind projects built over the next few years. DTE filed its plan with the Michigan Public Service Commission (PSC) last month.

“If approved, this will drive increased investment in new wind and solar projects,” Anderson said.

DTE last year said it would transition to cleaner energy sources and to reduce carbon emissions by more than 80% by 2050.

The company’s $1.7-billion proposes about 1 GW of new wind and solar projects in Michigan to be completed by 2022.

DTE Energy Earnings Q1 2018 Renewable Energy

DTE Pinnebog wind park in the Michigan thumb region | DTE Energy

“ …This plan is another significant step toward our carbon emission reduction goals, and those goals can be met in a way that continues to deliver reliable and affordable power for our customers as well,” Anderson said.

The plan includes two central Michigan wind farms providing 330 MW of new capacity: Pine River, set to be completed later this year, and Polaris, slated for completion by 2020.

Anderson said the two wind farms will be DTE’s largest and most efficient to date.

The plan also includes an additional 300 MW of new wind capacity by 2020 to support a new voluntary renewable energy program for DTE’s large business customers interested in reducing emissions, Anderson said.

Finally, DTE will complete another two wind farms in 2020/21 that will provide a combined 375 MW of capacity, Anderson said.

He also expects DTE to begin investing in more solar generation in the coming years.

“Along with the increased wind capacity, we’re also planning on adding 15 MW of solar power. Wind today is clearly lower cost than solar in Michigan, and thus we’re really concentrated on wind capacity in the near-term. But solar costs are improving, and we expect that by the mid-2020s, solar will be ready to play a more prominent role in our mix,” Anderson said.

He added that DTE plans to add more renewable energy generation beyond that outlined in the plan submitted with regulators.

Anderson’s comments on solar development come at a time when DTE has twice been accused of withholding interconnection data from independent solar developers seeking to connect new generation to DTE’s grid, as well as overcharging for studies requested to start on new projects. Both Cypress Creek Renewables and a Geronimo Energy subsidiary this month filed similar complaints with the Michigan PSC, claiming DTE’s responses violate a provision of the Public Utility Regulatory Policies Act (PURPA) that qualifying facilities have a right to interconnect with the host utility’s grid (U-20151, U-20156).

DTE representatives did not respond to a request for comment on the complaints.

Regulators Approve Controversial New Gas Plant

Still, DTE’s renewable plans will not match the output of its proposed $1 billion, 1.1-GW natural gas plant to be built in St. Clair County near the Canada border, which Michigan regulators approved Friday after concluding it “was the most reasonable and prudent means of meeting DTE’s future energy needs” (U-18419). The company wants to begin construction in 2019.

“DTE Electric’s recent and planned investments in energy waste reduction, renewable energy and energy storage, when coupled with this highly efficient gas plant, demonstrate that Michigan is a great example of an ‘all of the above’ strategy to meet our energy needs in a reliable, affordable manner that protects the environment,” Michigan PSC Chairman Sally Talberg said in a statement.

During the earnings call two days ahead of the approval, Anderson said he expected a “constructive outcome” in the proceeding.

Environmental advocates such as Sam Gomburg with the Union of Concerned Scientists have questioned the need for the plant, saying DTE’s commitment to the environment rings hollow when pushing such a large fossil fuel plant.

“There is plenty in the record to justify not approving this. [This was] a matter of how much backbone this commission has,” Gomburg said in a telephone interview with RTO Insider.

Gomburg said a combination of renewable generation and storage, energy efficiency measures and demand response could meet DTE’s needs more efficiently and inexpensively. He said DTE’s assessment in justifying the natural gas plant failed to explore alternatives.

“Even using their own tools, we find ways to meet their goal with cheaper options,” Gomburg said.

Gomburg warned about a future spike in natural gas prices or new regulations putting more emphasis on staving off the effects of climate change, making the plant costlier.

“I see a very high risk that ten years from now, as we’re paying this off, we’re [going] to regret this,” Gomburg said. “I see putting all your eggs into this billion-dollar basket as very risky.”

While Gomburg said DTE seems “disingenuous” in its goal to double renewable capacity while planning a large natural gas plant, he didn’t want to denigrate DTE’s goal of reducing emissions by 80% in little more than 30 years.

“I don’t want to say that the goal they’ve put forward is meaningless, but we can do more sooner. What matters is what carbon dioxide and mercury we emit now until 2050,” Gomburg said.

Power Up Michigan, a coalition of nine clean energy groups, said the plant is unnecessarily expensive, fails to create the level of jobs that new renewable sources could generate and is a “failure of innovation” to transition to clean energy sources.

However, in filings leading up to the approval, DTE said those who “suggest that there might be some other combination of resource options that might somehow be preferable from their self-interested perspective” ultimately failed to submit an alternative proposal.

“It again bears emphasis that DTE Electric presented the only specific proposal to meet the power need … established on the record,” the company wrote.

DTE said its analysis found that the gas plant would “appropriately” balance six characteristics, including reliability, affordability, cleanliness, compliance, reasonable risk and flexibility.

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