Consumers agrees to buy half a gigawatt of solar in settlement

In June, Consumers Energy filed an integrated resource plan (IRP) that included a proposed new framework for the utility’s compliance with the Public Utility Regulatory Policies Act of 1978. And, while that IRP was approved, a number of complaints filed by project developers who had not received PURPA contracts were left unresolved.

Yesterday, regulators in Michigan approved a resolution proposed by Consumers Energy under which the utility agrees to purchase a total of 584 megawatts of solar energy under set terms from project developers.

Specifically, Consumers will purchase 170 MW from projects 20 MW or lower in size that are in the interconnection queue as of June 7, 2019, and those projects would be eligible to enter into power purchase agreements (PPAs) at the full avoided cost rate. The remaining capacity, all 414 MW, will be will be awarded (after the 170 MW of full avoided cost PPAs) to projects 20 MW or lower in size that are in the interconnection queue as of the cutoff date, and those projects would be eligible to enter into PPAs at the energy plus Midcontinent Independent System Operator (MISO) planning reserve auction rate.

Here are the developers who are getting a cut of the initial 170 MW, sPower will be awareded 75 MW, Geronimo Energy 40 MW and Cypress Creek will be entitled to replace 10 2-MW projects within the first 150 MW of the interconnection queue as of June 7 with any one 20 MW project in the interconnection queue as of the cutoff date.

Taking the big picture queue of 584 MW as a whole, Consumers will connect 150 MW a year annually, so long as the company deems this process “commercially reasonable.” For context, the reason for the complaints in the first place was that Consumers interconnection queue was backed-up, totaling over 3 GW in capacity. So while 584 MW in addition to the procurement outlined in the new IRP is nice, it represents around 1/6th of the utility’s development backlog.

Considering the company’s initial plan was to just eliminate the timeline for compensation, which would have undoubtedly caused a number of the waitlisted projects to go belly-up, the settlement is at least something. What’s left unanswered is how Consumers plans to deal with its interconnection queue in the future to prevent another massive backlog. This settlement just deals with eliminating the backup currently facing the company and does not address anything beyond 2023. For now, it’s reassuring that some projects will finally get built and developers will get paid.