Ford CEO Jim Farley announcing clean energy deal
Jim Farley, Ford Motor Company president and CEO, speaks at an Aug. 10, 2022 event at Michigan Assembly Plant Modification Center in Wayne, Michigan, to commemorate an agreement with DTE Energy, which will add 650 megawatts of new solar energy capacity in Michigan for Ford by 2025. Credit: Ford Motor Company

The following commentary was written by Caitlin Marquis, Policy Director at Advanced Energy Economy, and Laura Sherman, President of the Michigan Energy Innovation Business Council. See our commentary guidelines for more information.

One of the biggest renewable energy deals to date came last week when Ford announced it was subscribing to 650 MW of renewable energy from DTE through its MIGreenPower program. The purchase will help Ford lower its carbon footprint, but it is not just the company who benefits. The deal will add new solar power facilities that make the electricity used in the state cleaner—650 MW of new solar would represent a 70% increase in the amount of solar capacity installed in the state, according to data from the Solar Energy Industries Association. It also makes energy more affordable, due to the low costs of solar compared to other forms of electricity generation.

What has been left out of most news reports of this deal is the story of how this opportunity for Ford arose. This history turns out to be important because it shows what Michigan needs to do so more big renewable energy purchases will happen—and if Michigan is going to stay competitive with all the other states racing to win investment in clean energy, they must happen. As the competition heats up, the ability to offer not just affordable but also green power will be paramount.

We have come a long way in a short amount of time. In 2018, DTE's MIGreenPower program was a shadow of what it is today. Most notably, participants who bought green energy through the program were buying from a single wind project and a single solar project DTE pre-selected for the program. Because the menu was limited to these narrow projects offered by DTE, and not open to competition, this renewable energy was very expensive: as much as double the price of solar and 3.5 times the price of wind, the Michigan Public Service Commission (MPSC), the state institution that regulates utilities, noted at the time.

Much more was missing. Major corporations like Ford, GM, Google, Amazon and many more are all buying renewable energy to meet their internal sustainability goals, but they want to purchase energy that is tailored to their specific needs. What that means is, for example, the ability to select the exact amount of solar and wind to buy in Michigan that matches the energy consumed by the company's presence in that state, the exact mixture of solar, wind or other resources that make up the purchase and the ability to choose the length of contract so the company can lock in a price and potentially save money as the market price of energy varies across the contract term.

None of that was present in DTE's program at the time, and while groups like the Michigan Energy Innovation Business Council (Michigan EIBC) pointed out these flaws to the MPSC, DTE pushed back and argued that the MPSC should approve the program anyway. Fortunately, the commissioners did not agree with the utility and rejected DTE's proposal, ordering it to go back and improve the program in line with what Michigan EIBC and others were saying.

“The Commission finds that DTE Electric, as Michigan’s largest electric provider, should be able to comply with the Commission’s directive to provide a menu of options beyond the single option offered through MIGreenPower,” the MPSC ordered.

Some of these improvements, such as more requirements that DTE competitively procure renewable energy projects available for the program to bring down the costs, were approved by the MPSC in 2019 when DTE revised the rejected program. Then, in 2021, Michigan EIBC and Advanced Energy Economy reached a settlement with DTE to expand MIGreenPower to include more renewable energy projects, create a path for communities to adopt community solar in DTE's service territory and further strengthen competitive bidding requirements.

In the wake of losing out on some new manufacturing facilities to other states, Michigan policymakers have been concerned about the state’s competitive edge. Access to affordable energy is one of the most important factors considered by potential employers when looking where to locate manufacturing, but the combination of affordable and clean energy is an even bigger draw.

To stay competitive, Michigan will have to keep revising and expanding its green purchasing programs. The history behind the improvements to DTE’s MIGreenPower that led to the historic deal with Ford shows it can’t be left up to the utility alone, but that stakeholders and regulators need to step in to ensure the programs are open and competitive.