DTE Energy CEO outlines aggressive renewables plan, backed up by natural gas
The expansion of renewable energy resources at DTE Energy has become central to the company’s strategy for Michigan, backed up by natural gas-fired electric generation as it retires old coal-fired plants.
“We are overwhelmingly in favor of investment in renewables,” said Gerry Anderson, chairman and chief executive officer of the Detroit-based energy company. “We are overwhelmingly in favor of carbon reductions. We have no questions about where we’re headed,” he said in an interview with Daily Energy Insider.
Anderson acknowledged that the company has been criticized by opponents for including natural gas, a fossil fuel, in the company’s long-term strategy but he said 100 percent renewables is not the best solution. The company needs more diversity in its fuel mix.
Gas-fired generation is available around the clock, quickly dispatchable and necessary to offset the intermittent nature of wind and solar power and maintain service when the sun is not shining or the wind is not blowing. “If we could maintain reliability with 100 percent renewables we would absolutely do that,” he said in the interview.
But the energy supply needs to be reliable and affordable and those goals are best achieved by including natural gas in the mix. “For reliability purposes, we need to make the investment.”
The Michigan Public Service Commission (MPSC) is reviewing a DTE request to build a 1,100-megawatt natural gas plant in St. Clair County, north of Detroit. The plant would replace three retiring coal plants. The company is hoping to receive a decision on the $1 billion proposal late this week and break ground in 2019.
Anderson, chairman of the Committee on Environment for the Edison Electric Institute – which represents the nation’s investor-owned electric utilities – outlined the company’s renewables strategy during a quarterly earnings call with analysts on Wednesday.
DTE Energy, with 2.2 million electric customers and 1.3 million natural gas customers in southeastern Michigan, has reduced its carbon emissions by 25 percent in the last decade, making $2.5 billion in wind and solar investments.
The company has submitted its 2018 renewable energy plan to the MPSC, calling for an additional 1,000 megawatts of carbon-free electricity from new wind and solar generation by 2022. In the long run, DTE aims to reduce its carbon emissions 80 percent by 2050.
“These goals are achievable, and achievable in a way that will maintain reliability and customer affordability,” he said. “Reducing our company’s carbon emissions and developing cleaner sources of energy, as I think you can pick up, is a key strategic focus for us and it will continue to be an important area of investment as we transition our generation fleet.”
Regulatory approval of the plan would drive $1.7 billion in investment in Michigan and would double the company’s renewable capacity.
“Michigan, as you know, is in the process of implementing the bipartisan legislation that was passed in 2016 to address the state’s energy transition,” he said. “And this renewable plan that we’ve submitted enables us to achieve the 15 percent renewable standard by 2021 that is laid out in that legislation.”
The company plans to bring the Pine River Wind Park online later this year and the Polaris Wind Park online in 2020, a total of 330 megawatts of new capacity.
DTE also plans to add a new 300-megawatt voluntary wind generation program in 2020 targeted to large business customers who are looking to reduce their carbon footprints.
“That’s hopefully a starting investment because we are seeing some of our large customers come to us and request the ability to increase the renewable mix in their portfolio,” he said. “You’ve seen GM, for example, say they want to be 100 percent renewables by 2050. Well, they’re getting started on those sorts of things as are other large industrial and commercial customers.”
In 2021 and 2022, the company plans to add 375 megawatts of wind capacity.
DTE’s plan identifies 15 megawatts of new solar capacity.
“Wind today is clearly lower cost than solar in Michigan and, thus, we’re really concentrated on wind capacity in the near term,” he said. “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.”
Last year, DTE brought online a 50-megawatt, 250-acre solar project. “That was a relatively big one for us,” Anderson said. “We did it to push ourselves down that path. But when we do the numbers it’s pretty clear that wind today is a superior resource in terms of pricing. So we’re going to lean on wind as long as that difference is there.”
The price of solar generation is falling but Anderson does not expect the price to be competitive enough until the middle of the next decade.
“By that time we will have a pretty large installed base of wind in Michigan so some diversification will be helpful as well,” he said. “We want a diverse mix of renewables but we also want to strike where the price is right so we’re going to wait a bit on large scale investments in solar.”
The company will continue to invest in smaller solar projects as demand requires but it is not planning for 1,000 megawatt-scale installations in the near term. “That will come for solar, but later.”
