Advancing Technology is Making EVs Increasingly Cost Competitive

By James Bebarski

When looking into the cost and resale value of a new electric vehicle (EV), a prospective buyer might be shocked to find that the bluebook value of the car they are looking at plummets after 3-5 years. Taking such a hit when it comes to resale value may discourage some potential EV buyers, especially because there is no tax credit available to a potential buyer who purchases an EV used. According to a study done by iSeeCars.com, electric vehicles take the no. 1 and 2 spots for vehicles with the highest depreciation over a 5-year period, with the Nissan Leaf at no. 1 and the Chevrolet Volt at no. 2. Over a 5-year period, the Nissan Leaf depreciates by 71.7%, and the Chevrolet Volt at 71.2%.

Those 5-year depreciation figures may seem daunting, but they also account for the early years in EV innovation. Because battery technology has improved so much in recent years, a depreciation rate of 71.7% over a 5-year period makes quite a bit of sense. A Nissan Leaf in 2014 had a battery range of only 75 miles, while a Nissan Leaf built in 2019 has a battery range of 151 to 226 miles - 2-3 times the distance you could get on a charge five years ago. 

According to research by Bloomberg New Energy Finance (BNEF) on battery pricing, “Since 2010, lithium-ion battery prices have fallen 73% per kWh. Manufacturing improvements and more than a doubling in battery energy density are set to cause a further fall of more than 70% by 2030.” Forecasts also predict that between 2020-2030 the decrease in price per kWh will decline at a slower rate, allowing for more price stability for the purchase of a new EV. More price stability at purchase and the perfection of battery technology will certainly lead to improved resale values when you decide to sell your EV and get something newer. This will also encourage the purchase of used EVs by those who can’t afford a new EV.  

As average mileage continues to improve in EVs and batteries become more efficient and cheap, the difference in price between internal combustion engine and electric vehicles will rapidly close. When you account for the decrease in tax credits for certain new electric vehicles and improvements in battery technology, the rate of depreciation for EVs will be much lower by 2030 than it is today. 

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How Does Hydropower Benefit Michigan?

By Karina Allen & Kate Nachazel

Michigan has its roots in hydroelectricity, which has provided reliable energy to the state for over 100 years. Hydropower is an invaluable resource due to its potential to be produced on a small scale and in less accessible locations like in the U.P. Our state also has the geographic advantage of flowing waterways and changing elevations, providing great potential for hydropower. Unlike wind and solar energy, hydroelectricity can still be produced on cloudy days without wind, making it a necessary resource when the demand for electricity is high. Moreover, hydroelectric plants are cheaper to build and maintain than solar, nuclear gas, and wind facilities.

Despite the benefits of this low-cost, low-emissions option, Michigan must face decisions that weigh hydropower’s value to our energy market against the capital costs required to provide much-needed upgrades. As the state looks ahead to secure future energy investments, it is important that our policy allows all forms of energy, including hydroelectricity, to compete on a level playing field.

MICEF fellows Kate Nachazel and Karina Allen are seeking to learn more about hydropower’s value to Michigan’s grid, as well as how our water resources can produce energy more efficiently when paired with other renewables, like wind power. They plan to report on the federal policies that impact the development of hydropower projects, like the DOE Water Power Program, and explore the environmental impacts of retrofitting existing structures to produce hydropower. Finally, they plan to develop policy recommendations targeting hydropower development and its economic feasibility in Michigan and create an educational report to be distributed to the State Legislature.

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Biomass Energy Plays an Important Role In Michigan's Energy System

By Susannah Barnes

As Michigan energy providers work towards creating a more renewable energy grid by 2040, baseload capacity should be at the forefront of their reforms. Currently, Michigan produces most of its baseload generation from non-renewable sources, like coal and nuclear. But other options that positively impact the environment and the economy exist. Biomass energy, or energy coming from plant and animal materials, is an effective source of baseload generation that can benefit Michigan’s economy, while being a more energy efficient option than the status quo. 

Baseload capacity is energy generation that is always “on,” meaning that baseload capacity is an around-the-clock electric power source used to back-up other energy generating sources. These large generators are used in case a less reliable power source fails, preventing any noticeable loss of power. Historically, coal and nuclear have been the most common sources of baseload generation, but their fuel sources can be expensive, damaging to the environment, and have to be transported over long distances. Biomass, on the other hand, insulates Michigan from potential disruption to the energy supply. According to Gary Melow, the Director of Michigan Biomass, biomass fuel is within fifty miles of the plant, ready to be used when necessary. 

Increasing our dependence on biomass as a form of baseload capacity would prove beneficial for the economy in multiple ways. Melow, citing research by the Department of Natural Resources, explains that biomass generation creates a trickle-down effect. It provides 200 million dollars of economic benefit, mostly to rural communities that are near the forest resources necessary to generate biomass power. As the demand for electricity rises, the need for the procurement, processing, and transportation of fuel goes up, creating permanent jobs that pay well. In fact, jobs inside biomass plants are the highest paying jobs in the forest products sector.

Biomass energy has many beneficial side effects as well. Biomass creates markets for woods and other materials that would otherwise just be waste. For the generators of this waste, loggers for example, the cost of disposing of waste turns into revenue for them. They can take something of very little value, like wood chips, and turn it into something of immense value – energy. Materials that would otherwise just be thrown away end up becoming profitable, which lowers the cost of production for companies, and therefore lowers prices for consumers in the long run.

Unlike other forms of energy, biomass is not subsidized. It does not qualify for any production tax credits or investment tax credits authorized by Congress. So instead of paying for the energy directly through energy costs and indirectly through tax credits, consumers are only paying for biomass directly. 

Biomass energy generation is a fantastic baseload option for Michigan. By incorporating more biomass energy into our grid, Michigan will see benefits to the economy and ratepayers while creating a much more efficient energy system that relies on local and abundant fuel sources. 

Susannah Barnes is a Fellow with the Michigan Conservative Energy Forum researching baseload capacity in Michigan. Special thanks to Gary Melow, Director of Michigan Biomass, for his help on this piece. 

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National Clean Energy Week 2018

Renewable energy is working in Michigan! By creating new jobs, spurring innovation, increasing reliability and lowering our electricity rates, clean energy is making Michigan a better place to live, work and do business. To celebrate the many benefits of renewable energy, MICEF requested a proclamation from the governor’s office highlighting National Clean Energy Week which runs from September 24-28. In response, Governor Snyder proclaimed this week Clean Energy Week in Michigan and emphasized the many economic benefits of renewable energy. We will be posting clean energy highlights all week on Twitter and Facebook so follow along with us there and check out the National Clean Energy Week website for more info and resources. It’s going to be a great week!

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Electric Vehicles: Growing Michigan's Economy with Advanced Technology

By Jackson Keith

Detroit has long been the capital of the automobile industry, a beacon of manufacturing, and a stronghold for skilled blue-collar Americans. Throughout the past decade, the city and its workers have been pushed to their limits, often wondering if there truly is a light at the end of the tunnel.  

A push for innovation in technology, coupled with interest from investors and politicians, creates a huge potential for the city of Detroit and its automotive backbone. We know our current methods of transportation are damaging to the environment, and consumers are interested in finding solutions to these problems. Automotive innovation provides the solution we are looking for. 

Autonomous and electric vehicles, (AV) and (EV) respectively, are on everyone’s radar right now. Companies involved in the creative processes are being bought out at top dollar. For example, Cruise Automation, a company producing aftermarket “kits” that convert existing traditional vehicles into autonomous vehicles, was purchased by GM for somewhere in the neighborhood of $1 billion.

What makes these companies exciting though, beyond the tech, is their unique approach to the main goal: creating smarter solutions for a sustainable future. However, through all of the excitement, we must push for free and fair policy discussion on the issue. There should be no favoritism in the market, and the government must not pick winners and losers. 

As recent as last fall, legislation was being introduced at the federal level regarding how to regulate, manufacture, and ultimately govern these futuristic products. Legislation titled AV START ACT (S. 1885) was introduced to Congress by U.S. Senator John Thune (R – SD) and was referred to the Committee on Commerce, Science and Transportation (a committee which Sen. Thune chairs). This legislation contains several guidelines which would aid the production and manufacturing aspects of autonomous vehicles. On November 8, 2017 the United States Commerce Secretary, Wilbur L. Ross, endorsed the bill and even asked for its speedy adoption.

Much of the attraction to this new-age transportation method is in regard to the technology, but what is going to be under the hood? The AVs coming from the “Big Three” could include a spectrum of power trains: gasoline-electric hybrids, plug-in hybrids, full electric, hydrogen fuel-cell electric, turbine-electric hybrids, and more. However, companies are purposely being vague, in order to keep their trade secrets.

Many consumers worry that they won’t possess the same freedoms if they switch to electric. However, according to a 2017 survey conducted by CARMAX.com, 47% of electric vehicle owners say they can make it over 100 miles in their EV before needing to re-charge. This may seem like a big issue to you, but 90% of participants have said that they rarely, if ever, worry about running out of juice. That being said, there are still things that need to be worked on. Mark Fields, CEO of Ford Motor Company, said that Ford plans to use their $4.5 billion electric initiative to release 13 new EV/AV’s by 2020. Piggybacking off what Fields said, Raj Nair, Product Development Chief at Ford Motor Company said, “Areas of interest for us include: battery temperature, rolling resistance, and the autonomy of acceleration.” 

Detroit has long been seen as a force to be reckoned with. Growing up in Monroe County, just south of Wayne County, I have witnessed first-hand the hardships that the city and its citizens have experienced. Nevertheless, the strength of the Michigander prevails. And considering the rise of the technology industry, the influx of thousands of young professionals choosing Detroit over traditional opportunistic locations, such as New York or Los Angeles, there is no denying the sense of excitement and prosperity for the city. It is my hope to live as a young professional in a world where Detroit, Michigan is a leader of innovation across multiple industries. 

Jackson Keith was a member of the Michigan Conservative Energy Forum 2017 Fellowship Program. He is a recent Michigan State University graduate and is currently an associate with the Sterling Corporation. Jackson grew up in Southeast Michigan and is a relentless advocate for innovation and sustainability.

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Friends of Conservative Energy Advocacy

"Friends of Conservative Energy Advocacy" are state legislators and candidates who represent a new breed of conservative leaders in the energy policy realm. They share many of the Michigan Conservative Energy Forum Advocacy Fund's guiding principles, such as free markets, minimum government regulation, and encouraging innovation. These are the means for driving down energy costs, stimulating job and economic growth, and creating a diverse and robust energy industry in our great state. 

We will continue to update this list as we receive responses to our 2018 Candidate Questionnaire.

MICEF-AF “Friends of Conservative Energy Advocacy”

*   MCEF Legislative Champion Award recipient
** MCEF Founder’s Award recipient

MICHIGAN SENATE

Dist.    Candidate                             Party

8          Peter Lucido                         R
12         Michael McCready              R
15         Jim Runestad                       R
16         Mike Shirkey                        R
17         Dale Zorn                             R
21         Kim LaSata                           R
24        *Tom Barrett                       R
28        Nathan Hewer                     L
30        Mary Buzuma                      L
30        RogerVictory                      R
34        Max Riekse                           L
 

MICHIGAN HOUSE

Dist.    Candidate                              Party

4          Howard Weathington           R
6 Linda Sawyer R
26        Al Gui                                    R
35        Theodore Alfonsetti             R
36 Douglas Wozniak R
45        Michael Webber                   R
46        John Reilly                           R
47        Hank Vaupel                         R
59        AaronMiller                           R
60        William Baker                       R
65        Jason Rees                           L
67         Leon Clark                            R
72        StevenJohnson                     R
74        **Mark Huizenga                   R
77        Tommy Brann                        R
82        Gary Howell                         R
96        Susan Kay Kowalski            R
98        Annette Glenn                     R
100       Scott VanSingel                  R
101       Jack O'Malley                        R
110       Gregory Markkanen             R

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New Net Metering Proposal Causes Concern

The Michigan Public Service Commission has issued a proposal for a net energy metering (NEM)/distributed generation (DG) tariff per the requirements of Public Act 341 of 2016. In response to the call for comments, MICEF submitted the below statement regarding the proposal: 

The current MPSC staff proposal essentially creates a new rate structure based on an inflow/outflow model, where inflow is being evaluated consistent with a cost of service approach, while outflow is proposed to be calculated under a PURPA-based avoided cost model. Subsection 6a (14) of PA 341 states: 

Within 1 year after the effective date of the amendatory act that added this subsection, the commission shall conduct a study on an appropriate tariff reflecting equitable cost of service for utility revenue requirements for customers who participate in a net metering program or distributed generation program under the clean and renewable energy and energy waste reduction act, 2008 PA 295, MCL 460.1001 to 460.1211.”

MICEF entered the DG workgroup meetings with the expectation that MPSC staff would engage in a very straightforward process. Namely, and per the plain language of the statute, we expected the Commission to 1) conduct a standard cost of service study, 2) determine if NEM customers are being overcompensated for their actual cost of service to the utility by receiving a kWh-for-kWh credit for energy outflow (i.e. if NEM customers are being “subsidized” by non-NEM customers), and if the Commission found that NEM customers are being subsidized for use of the grid, then the Commission would 3) establish an “appropriate tariff”. 

We are deeply concerned that, to date, a more complex and incomplete process than what the legislation called for has taken place, with the result being an inadvisable approach: substituting a simple tariff instead with the proposed inflow/outflow model that applies different rates to the two directions of energy flow – retail rates for inflow, PURPA avoided costs for outflow. 

MICEF was deeply engaged in education and working with other stakeholders throughout the legislative process that produced the language of subsection 6a (14). The language, the legislative record established during debate on PA 341, and the intent of the Legislature are clear in providing direction to the Commission and staff. The statute does not authorize replacement of NEM/DG with a new, complex rate structure. It states that “the commission shall conduct a study on an appropriate tariff reflecting equitable cost of service for utility revenue requirements…” It is our belief that this mandate has only been half completed. 

At the August workgroup meeting, the staff presented calculations on the inflow side demonstrating that residential solar DG customers have a lower cost of service than non-DG customers, approximately 16% lower. If this were the “end all” of the process, the Commission and staff would instead need to recommend, per the statute, that DG customers be assessed a credit rather than a tariff (or perhaps it would be called a “negative tariff”). Despite this finding, the staff recommendation at the December meeting appears to require DG customers to pay full retail rates for inflow, with no mechanism (credit, negative tariff, or otherwise) to capture the positive value DG customers provide to the grid. 

But the overriding point remains that the mandated cost of service study has not been completed on the outflow side. By proposing the PURPA-based avoided cost model for outflow as an alternative to a standard cost of service study, the Commission is not fulfilling the statutory requirement. It is safe to say that the Legislature expects a full cost of service study to be completed. Likewise, it is difficult to explain how the clear direction of subsection 6a (14) to recommend a tariff based on an equitable cost of service study comes back to the Legislature as a completely new, bi-furcated rate structure that would eliminate net metering as the body understood it when the law was passed, with no recognizable tariff included.

There is a myriad of concerns about moving to this dual-rate inflow/outflow model that were expressed during the workgroup meetings and in written comments submitted to the Commission by numerous stakeholders. MICEF will not restate them here. These concerns only multiplied with the staff’s proposal at the December meeting to use the PURPA rate as the foundation for outflow compensation. PURPA producers and residential DG customers are so structurally different and regulated under substantially distinct sections of laws, rules, and regulations, that equating them for rate purposes is difficult to justify. Based on comments, data, and analysis provided to the Commission over these many months, the result of using PURPA rates will undoubtedly be the inequitable treatment of DG customers. Our view is that the PURPA route should be abandoned. 

Despite the nature of these comments, MICEF remains confident that the Commission can readily address these concerns by focusing its immediate efforts on completing the “other half” of the cost of service study as it relates to outflow. The outcome of that study will provide the information and clarity needed for the Commission to fulfill its obligation under PA 341. An incredible amount of good work has been done through the workgroup process. Completing the cost of service study will allow that work to be brought to its best result. 

This blog post was taken from official public comments submitted by Ed Rivet and Larry Ward on behalf of MCEF on January 10, 2018.

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The Electricity Interstate: Part I

Achieving the goals of our new energy laws
Michigan’s newly minted energy laws (Public Acts 341 and 342) require achieving no less than a combination of 35% renewable energy and energy waste reduction by 2025. Electric Utilities like Warren Buffett’s MidAmerican Energy, which in 2017 is expected to generate over 60% of its electricity from wind farms, have some of the lowest electricity rates in the nation. At the same time, however, local communities in Michigan are voting down new wind projects making it difficult for electric utilities to reach their renewable energy goals and for ratepayers to enjoy low electricity rates. Another pathway to achieving these goals is to import renewable energy from outside the state. This requires more of a “systems thinking” approach to provide low cost, clean, and reliable energy solutions. 

Systems thinking
The power grid, its generators and loads, are a “system” in which each component of the system interacts with the others and they are all interdependent. Systems thinking often results in strikingly different conclusions than one might normally expect when only looking at the individual parts of a system. In a well-designed system the whole can be greater than the sum of its parts. This makes it extremely effective in dealing with problems involving complex things, like electricity flows. Systems thinking in energy means we need to expand our view to take into account a much larger number of interactions, especially including interactions outside our state. It helps that Michigan is already part of the Midcontinent Independent System Operator (MISO), a 175,000 MW, 15-state regional electricity balancing system. 

The benefits of a large electricity balancing system
A large electricity balancing system allows for the possibility of many different electricity supply options. It is the total supply and demand within the balancing system that really matters. With a large grid with strong interconnections variations often cancel themselves out. When needed, you can borrow electricity from another part of the electricity balancing system, which helps to smooth out supply side and demand side variability. It is also much easier to accommodate a larger percentage of variable generation within a large electricity balancing system. In order to more fully take advantage of this relationship with MISO, there needs to be more and stronger transmission ties into the western MISO states, where there is also a lot of cheap - and clean - electricity. Just compare Michigan’s electricity rates with states in EIA’s East and West North Central regions.

HVDC Transmission and the Electricity Interstate
According to the US Energy Information Administration (EIA), in 2016 transmission costs represented only about 11% of the price of electricity, while distribution costs are 32% and generation costs are 57%. The EIA also estimates that electricity transmission and distribution losses average only 4.7% of the electricity that is transmitted and distributed annually in the United States. A High Voltage Direct Current (HVDC) transmission link can transmit 2500 MW of power at 800KV over a distance of 500 miles with a loss of only 2.6%. For lines of about 375 miles and longer, HVDC is cheaper than AC technology. For underground or underwater lines >50 mi HVDC is also cheaper than AC technology.  

Back in the 1950s, the US was connected haphazardly with narrow roads built by state and local governments. President Eisenhower predicted that cars would soon become ubiquitous so he hatched a plan for an ambitious expansion of the nation’s highways. These days we can predict that more low cost variable electricity generation is coming on-line, so why not invest in creating a new electricity interstate much like Eisenhower did to allow for more widespread and efficient car travel? This would provide Michigan ratepayers with access to a larger, cleaner, and more diversified electricity supply.   

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MICEF Visits the National Renewable Energy Laboratory

The Michigan Conservative Energy Forum is a member of the Conservative Energy Network (CEN), a network of 18 state-based conservative clean energy and energy efficiency organizations seeking to educate conservative leaders and the public about the economic, security, and conservation benefits of renewable energy. Twice a year, CEN members get together to share insights, best practices, and strategies for the upcoming months. Our latest gathering was held the third week of July in beautiful Denver, Colorado.

While we were there, we had the amazing opportunity to tour the National Renewable Energy Laboratory (NREL) in Golden, Colorado. As we walked across the campus, our tour guide talked about the many ways that the buildings had been designed to maximize energy efficiency. Many of the buildings on NREL’s Golden campus have achieved either Leadership in Energy and Environmental Design (LEED) status or their energy usage is net zero (and sometimes both). Energy efficiency was a recurring theme of our tour. 

We spent most of our time in the Energy Systems Integration Facility (ESIF) which houses a number of laboratories, the High Performance Computing center, and the control room where experiments across the laboratories are monitored. Our first stop was the Insight Center Visualization Room, where we saw the advanced modeling tools being used for grid research. A constantly changing display of maps, charts, and graphs showed us a possible grid of the future, where energy from wind and solar are fully integrated.

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From there, we went to the Collaboration Room, which has six projectors that illuminate one wall and the floor. In this room, researchers are able to experience in real time the testing and simulation of equipment and technologies ranging from molecular structures to wind turbines. Wearing 3D glasses, we were able to move around in the turbulent wakes of a multi-turbine array and see firsthand how the placement of multiple wind turbines in relation to each other affects their functionality.  

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The tour continued with a look at Peregrine, NREL’s High Performance Computer (HPC). Not only is Peregrine the largest HPC system "dedicated to advancing renewable energy and energy-efficiency technologies", but it is also incredibly energy efficient. It uses warm-water liquid cooling and waste heat capture and reuse to reduce energy use, lower energy costs, and heat the entire ESIF.

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The rest of the tour consisted of looking down into a number of laboratories from viewing areas on the floor above. We saw vehicles, generators, batteries, light bulbs, and appliances. These labs have already produced more than 800 patented or patent-pending technologies and they continue to conduct research and development in thirteen different programs. 

The National Renewable Energy Laboratory "advances the science and engineering of energy efficiency, sustainable transportation, and renewable power technologies and  provides the knowledge to integrate and optimize energy systems." We applaud the work they are doing and are grateful for the opportunity to visit the NREL site and see their innovation for ourselves. 

Note: All quotes are taken from the NREL website (https://www.nrel.gov/) and photos are from the NREL Image Gallery (https://images.nrel.gov/bp/#/).

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A review of 2016 and looking forward to 2017

The Michigan Conservative Energy Forum had a stellar 2016 that culminated in Governor Snyder signing Public Acts 341 and 342 into law, a bipartisan-supported comprehensive energy package that is noteworthy for its efforts to increase homegrown, clean energy. Some of the successes in this package include:

1.  A combined 35% goal of renewable energy and energy efficiency deployment by 2025.

2. An increase in our successfully-met renewable portfolio standard (RPS) from 10% to 15% by 2021, an amendment introduced and advocated for by Senator Dale Zorn, whom eloquently stated, “Let’s show the state and the country that we are serious about green energy.”

3. Additional scope and funding for the Utility Consumer Participation Board to intervene in electric rate cases on behalf of ratepayers.

4.  Effectively maintaining the current solar net-metering program as is until 2020.

While there is still more work to be done on energy policy, these laws continue the positive strides to increase our use of renewable energy and energy efficiency that began with Public Act 295, which passed in 2008. As MCEF looks to our future educational efforts, we are focused on the ratepayer – allowing individuals a voice in the rates they pay and a bigger role in decisions regarding energy production and use.

Specifically in 2017 we look forward to working with policymakers, businesses, and allies to:

  • Ensure Michigan electric ratepayers are receiving commensurate reliability for the prices they pay.
  • Continue the successful solar net-metering program and remove barriers to localized power generation.
  • Champion the development of electric vehicle infrastructure and battery technology, utilizing our states vast expertise in the automotive and manufacturing sectors to do so.
  • Highlight the energy challenges facing Michigan's Upper Peninsula, and propose cost - effective, market-based solutions to ensure U.P. residents have consistent access to reliable and affordable electricity.

Focusing on the ratepayer, specifically including the ratepayer in decisions about Michigan’s energy future was a major theme at this year’s Catalyst Conference, in which we sought to “Chart Michigan’s Energy Future”. With the help of a panel of industry and ratepayer experts, I believe we made the pivotal first steps to do just that. Our third annual conference featured: Moderator Jim MacInnes, Chairman of the Utility Consumer Participation Board and Leadership Council member of MCEF; Marc Pauley, Commodities Manager at Granger Energy Services; Michael Moody, Assistant Attorney General and State Public Administrator; and Tyson Grinstead, Southeast Pubic Policy Director for Sunrun. The panel presentation can be viewed here

House Energy Policy Committee Chair Representative Gary Glenn was our keynote speaker. He did a wonderful job of highlighting the free market’s role in promoting clean and renewable energy as well as the importance of getting the government out of the way of progress. Glenn emphasized that he would work with his committee over the next two years to reduce electricity rates for Michigan consumers. Watch Representative Glenn’s speech here

I believe our Catalyst Conference will be just that – a catalyst for new ideas and a renewed interest in solving the energy challenges that face Michiganders each day. Our goal is and always has been about providing a forum for conservative energy solutions that embrace a cleaner, more affordable and more reliable Michigan energy future. I look forward to this journey and I hope you join us in the conversation in 2017 and beyond.

 

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