State and Local Policy Database

Michigan

State Scorecard Rank

11

Michigan

27.0Scored out of 50Updated 9/2016
State Government
Score: 4.5 out of 7
State Government Summary List All

Michigan leads by example by setting energy requirements for public buildings, benchmarking energy use, and requiring the use of energy savings performance contracts. The state offers loan and grant programs for energy efficiency investments, including PACE financing. 

Financial Incentives List All

Financial Incentive information for Michigan is provided by the Database of State Incentives for Renewables and Efficiency (DSIRE Michigan) and State Energy Office contacts. Information about additional incentives not present on DSIRE is listed here. In addition to the state-funded incentives on DSIRE and below, Michigan has enabled Property Assessed Clean Energy (PACE) financing and has two active programs. For additional information on PACE, visit PACENation.

LED Conversion Building Retrofit Program: Provides a matching grant for energy-efficient LED conversion projects in commercial and/or multi-purpose buildings that are owned by small businesses and non-profit organizations. The purpose of this grant is to increase energy efficiency, reduce operating costs for building owners, and support local job creation.

Event Sponsorship Funding Opportunity: Provides funding assistance for workshops, conferences, or other events that increase awareness of energy efficiency and/or renewable energy technologies, applications, opportunities, and best practices in the state of Michigan. 

Small Business Pollution Prevention (P2) Loan ProgramProvides loans of up to $400,000 at an interest rate of 5% or less for existing independently owned businesses with 500 or fewer full time employees. Projects that qualify for funding under the P2 Loan Program include those that either eliminate or reduce waste at the business location (source reduction), result in environmentally sound reuse and recycling for the loan applicant's generated wastes, or conserve energy or water on-site. Funding for the P2 Loan Program comes from a revolving loan fund, made possible through passage of the Clean Michigan Initiative in November of 1998. Low interest loans are available to all Michigan businesses including manufacturing, farming, retail and service industries.

LED Street Lighting Program: Offers financial assistance for up to five Michigan communities that are looking to upgrade their downtown street lights to LED lights. This program will pay up to 50% of equipment costs. Applicants for this grant are required to use LED products that can achieve at least 40% energy savings, 50% maintenance savings and 50,000 hours between relamping while providing the appropriate lighting levels.

Green Loan Loss Reserve: This program, offered by the Michigan Energy Office through a third-party contractor, guarantees loans for energy efficiency projects, primarily in multifamily housing.

Community Energy Management Program: This program provides technical and financial assistance to municipalities to reduce energy use and operating costs.

Last Updated: July 2017

Building Energy Disclosure List All

There is no disclosure policy in place.

Last Updated: July 2017

Public Building Requirements List All

Public Act 295 renewed and revised the state's commitment to energy efficiency in public buildings. In the area of state government energy efficiency, P.A. 295 sets a goal of reducing state government grid-based energy purchases 25% by 2015, from a 2002 baseline. The law directs the Department of Management and Budget (DMB), in consultation with the state Energy Office, to perform and oversee a number of tasks related to achieving this goal, including the establishment of an energy analysis program to evaluate each building owned or leased by the state at least every five years, as well as an assessment of the costs and benefits of using the LEED standard when constructing or renovating state buildings.

Executive Directive 2007-22 requires that all state buildings occupied by state employees be benchmarked using the ENERGY STAR Portfolio Manager tool. To date, over 1,000 of the State of Michigan's 6,000 leased or owned buildings have been benchmarked. The Governor has also recently tasked the state energy office, Michigan Public Service Commission, and Department of Technology, Management & Budget to develop a plan to benchmark state-owned buildings. This project is expected to encompass approximately 1,100 buildings and is actively underway.

The Michigan Agency for Energy offered grants to benchmark public buildings including schools, local government buildings, houses of workshops, etc. It is estimated that about 400+ buildings and 30.5 million sq. ft. will be benchmarked under this grant program. Under the Department of Technology, Management, and Budget project 35.5 million square feet has been benchmarked in Portfolio Manager. 

The State Energy Office also offers low-cost services to public building owners and others to determine energy savings opportunities. Services include energy audits, Energy Star Portfolio Manager account setup and a project planning meeting to discuss project financing and implementation. 

In 2016, a total of 1062 state owned buildings were benchmarked, totaling 35.8 million square feet, representing about 88% of total state owned facilities.  

Last Updated: August 2017

Fleets List All

No policy in place or proposed

Note: For state efficient fleet initiatives, policies listed must make a specific, mandatory requirement for increasing state fleet efficiency. State alternative-fuel vehicle procurement requirements that give a voluntary option to count efficient vehicles are thus not included.

Last Updated: July 2017

Energy Savings Performance Contracting List All

PA 625 was passed in 2012 and builds on previous EPC enabling legislation, including PA 122 of 1987, to encourage the use of energy savings performance contracts by state and local governmental units. The Michigan Department of Technology, Management and Budget (DTMB) has begun implementation of the legislation. The legislation designated DTMB as the lead agency in the development and promotion of energy performance contracts in governmental units, requiring DTMB to assemble a list of qualified energy service providers and develop a standardized energy performance contract process and standardized documents. The act also enables the department to charge fees for administrative support/technical assistance from the governmental units that use its services and outlines cost-savings measures that can be implemented including the maximum timeframe by which a measure must demonstrate cost-effectiveness. Municipalities have requested and received Michigan Energy Office technical assistance to plan a large building energy efficiency retrofit project using ESPC.  ESPC training was also delivered. 

The State Energy Office is participating on behalf of the State of Michigan in the U.S. Department of Energy Performance Contracting Accelerator. The goal is to increase the use of performance contracting in the State by targeting the K-12 and local government audiences. Through the Accelerator, the State Energy Office has participated in the update of model documents and testing of the e-Project Builder database. These tools will be made available to ESCOs and to the targeted audience to increase an understanding of PC. A $35 million ESPC was executed at a state correctional facility, substantially exceeding the state's 3-year investment goal for the Performance Contracting Accelerator.

The State Energy Office participates in the Michigan Chapter of the Energy Services Coalition, which provides education and outreach to entities interested in PC. The Chapter held the 4th Annual Awards event in fall 2014 to highlight exceptional PC projects in the State, and to educate other entities about PC. The Chapter set 2015 objectives and initiated planning for a 2nd Quarter educational event on commercial PACE project financing for EE and RE building-related projects.

Last Updated: July 2017

Research & Development List All

The Michigan NextEnergy Center is a 501(c)(3) non-profit organization focused on energy efficiency and battery storage that leases laboratory facilities, business incubator space, and other facilities to support the state's alternative energy industry. NextEnergy partners with Michigan Economic Development Corporation (MEDC) to provide energy related services to companies in the areas of energy storage, energy efficiency, mobility, and advanced transportation related issues for both mature and early stage companies.  The MEDC has established a matching fund, the MATch (Michigan Accelerating Technologies) Energy Grant, for federal funding opportunities in the energy field from a variety of federal agencies.  

NextEnergy also runs the I-Corps Energy and Transportation program in conjunction with UM who is an NSF I-Corp node, and helps with white papers, grant writing, and business plan development.  They also provide services for the MEDC Business Development & Attraction teams with match making and generating leads, and they are working with the Automotive team on advanced mobility and Intelligent Transportation Systems (ITS).   

The Clean Energy Research Center (CERC) at Oakland University in Rochester, Michigan conducts research to help deliver energy efficiency solutions, new clean energy jobs, and provide natural resource, environmental, and economic technologies.  Research includes energy-efficient buildings, solar, CHP, biomass, and wind energy.  The Center was first created in March 2011, funded by an initial grant from the Michigan Energy Office and its private sector partner, Energy Systems Group.

In the past, the state has provided funding for the Michigan NextEnergy Center and the Clean Energy Research Center. While these programs are still ongoing, they do not currently receive funding from the state. 

Last Updated: July 2017

Important Links List All
  • DSIRE Michigan

  • Michigan Agency for Energy (MAE) was created in May 2015 to enable better coordination among the Michigan Energy Office, Michigan Public Service Commission, and other energy-related staff/programs. The State Energy Program is administered by the Michigan Energy Office, within MAE.

Buildings
Score: 6.5 out of 7
Buildings Summary List All

Residential buildings are required to comply with an amended version of the 2015 IECC. Commercial buildings must comply with ASHRAE 90.1-2007 standards, but the state is in the process of updating its commercial building energy codes. The state has conducted a gap analysis and offers training and outreach.

Residential Codes List All

The 2015 Michigan Residential Code went into effect in February 2016 and is based on the 2015 IECC with Michigan-specific weakening amendments.

Last Updated: August 2017

Commercial Code List All

The 2009 Michigan Uniform Energy Code became effective March 9, 2011 and is mandatory statewide for residential and commercial buildings. Commercial buildings are required to comply with ASHRAE 90.1-2007. The state has begun the process of updating the commercial building energy code to the ASHRAE 90.1-2013 standard, which is expected to go into effect September 20, 2017.

Last Updated: August 2017

Compliance List All
  • Gap Analysis/Strategic Compliance Plan: Partnering with the Building Codes Assistance Project, the state has completed a gap analysis and strategic compliance plan, both in 2011.
  • Baseline & Updated Compliance Studies: A code compliance study was completed by DTE and Consumers in 2015 and 2016, following PNNL protocol.
  • Utility Involvement: NA
  • Stakeholder Advisory Group: A group comprised of representatives from home builders, local building code officials, code advocates, and state government officials from Licensing and Regulatory Affairs meets 2-4 times a year.
  • Training/Outreach: No energy code training was conducted in the past year.

Last Updated: July 2017

CHP
Score: 1.5 out of 4
CHP Summary List All

The state has an interconnection standard that applies to CHP and CHP is an eligible resource in the state's renewable energy standard. Three new CHP systems came online in Michigan in 2016.

Interconnection StandardsList All

Policy: Michigan Public Service Commission Order, Case # U-13745

Description: Michigan’s interconnection standard delineates five separate tiers of interconnection, and covers systems of all sizes with the largest interconnection tier – 2MW systems and above. However, utilities are the final arbiters of which types of systems and sizes are suitable for their distribution systems. Fees for interconnection range from $100 to $500, depending on system size.

Last Updated: August 2017

Encouraging CHP as a ResourceList All

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

Deployment IncentivesList All

There are currently no state policies that provide additional incentives for CHP deployment.

Last Updated: August 2017

Additional Supportive PoliciesList All

Some additional supportive policies exist to encourage CHP in Michigan. In 2008, Michigan introduced its Renewable Energy Standard, requiring the state's utilities to generate 15% of their retail electricity sales from renewable energy resources by 2021. The standard allows utilities to use energy efficiency and advanced cleaner energy systems to meet a limited portion of the requirement. Eligible energy efficiency measures include both changes in equipment and changes in customer behavior directly attributable to an energy efficiency program or energy optimization plan. Advanced cleaner energy facilities are loosely defined as electric generating facilities using a new technology, but industrial CHP powered by renewable fuels is specifically identified as an eligible technology. The compliance period for the standard began in 2012.

The Michigan Agency for Energy and the US Department of Energy have partnered to fund the development of a comprehensive plan to optimize the adoption and implementation of CHP in Michigan. The plan will specifically identify and provide solutions to the barriers and market impediments to CHP adoption in Michigan and an initial assessment of these barriers is currently underway.

Finally, development of a distributed generation program is currently underway by the Michigan Public Service Commission and stakeholders. CHP is expected to be an eligible technology to receive incentives through the program. Additionally, the Michigan Public Service Commission formed a working group to assess standby rates and form related recommendations. The final CHP-focused report laid out principles of fair standby rate design. 

Last Updated: August 2017

Utilities
Score: 10.5 out of 20
Utilities Summary List All

Michigan had a history of fairly aggressive energy efficiency programs until 1995, when demand-side management and integrated resource planning were discontinued during the move toward electric restructuring.  Michigan had essentially no utility-sector energy efficiency programs from 1996 until 2008.

Public Act 295 of 2008 (enrolled SB 213) brought energy efficiency programs back to Michigan in the form of an EERS that requires all electric providers (other than alternative electric suppliers) and all rate-regulated natural gas utilities to file energy optimization (efficiency) programs with the Michigan Public Service Commission (MPSC or Commission). Public Act 295 offers multiple options for providers of energy efficiency program administration including administration by the provider, joint administration with other providers, administration by a state agency, or administration by a competitively-selected nonprofit organization.

PA 341 and PA 342, passed in December 2016, extend the current 1% electric and 0.75% natural gas efficiency targets through 2021. The legislation also removes a cap on spending and allows for higher financial performance incentives for exceeding mandated 1% targets.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables.

Last updated: July 2017

Customer Energy Efficiency Programs List All

Legislation passed in October 2008, Public Act 295, reestablished utility energy efficiency programs in Michigan. The state's previous programs had been discontinued in 1996.  Public Act 295 gave the Michigan Public Service Commission (MPSC) the authority to approve or reject efficiency plan proposals. To approve a plan, the MPSC must determine that the plan meets the utility system resource cost test and is reasonable and prudent. In December 2016, the legislature passed PA 341 / PA 342, extending programs through 2021.

Utilities must offer programs to customers in all sectors (residential, low-income, commercial and industrial).  Eligible large electric customers can design and implement an energy efficiency plan for their own facilities and, if approved by their utilities, be exempt from paying the per-meter surcharge.  The utilities may administer the programs themselves, administer the programs jointly with other providers, select a nonprofit to administer the programs, or opt to work with the MPSC-selected program administrator (the Independent Energy Optimization Program Administrator).

Energy efficiency programs are supported by customer rates via a volumetric charge for residential customers and monthly "per meter" charges for commercial and industrial customers.  Each utility specifies these charges in plans that are filed with the MPSC. To the extent feasible, the utilities must use the charges collected from each customer rate class to fund efficiency programs for that rate class. Utilities use customer rate classes to attribute costs to different categories of customers based on how those customers incur costs.

PA 295 had capped spending for each utility at 0.75% of total sales revenues in 2009, rising to  2.0% in 2012 and each year thereafter. However this cap was removed, effective April 2017, in the PA 341/PA 342 legislation package.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables.

Last Updated: July 2017

Energy Efficiency as a Resource List All

Under Act 295, an objective of the “energy optimization” programs is to reduce long-term costs to utility ratepayers - in particular, by delaying the need for additional power plants. A companion bill that passed at the same time (HB5524) incorporates energy efficiency into the integrated resource planning process. The MPSC has the authority to approve or reject the plans. Any utility seeking a “certificate of necessity” for a new power plant, transmission project or major power purchase must have demonstrated the need for the capacity addition through an approved integrated resource plan.

In December 2016, the Michigan legislature passed a comprehensive energy bill package (PA 341 / PA 342) extending energy savings targets through 2021. PA 341 (Section 6t) also enacted a new integrated resource plan (IRP) assessment process. The IRP will serve as the utilities’ short-, medium- and long-range supply-side and demand-side energy capacity planning process. The Michigan Public Service Commission kicked off stakeholder discussions in March 2017 to intiate the IRP assessment process.

Last Updated: July 2017

Energy Efficiency Resource Standards List All

Summary: Electric: 1% incremental savings through 2021.  Natural Gas: 0.75% incremental savings through 2021.

Michigan adopted an EERS in October 2008, when the Clean, Renewable, and Efficient Energy Act was signed into law, requiring all electric and natural gas utilities to provide “energy optimization (EO) programs.” PA 295 required electric utilities to achieve 0.3% savings in 2009; 0.5% in 2010; 0.75% in 2011; and 1.0% in each year from 2012 to 2015. Targets continued each year thereafter at 1% incremental electricity savings relative to the prior year’s total retail electricity sales. Targets for natural gas utilities started in 2009 at  0.1% savings as a percent of annual retail natural gas sales, eventually ramping up to 0.75% in each year from 2012 to 2015. PA 342, passed in December 2016, maintains the 1.0% (electric) and 0.75% (gas) targets through 2021. An earlier 2% spending cap for electric and natural gas utilities was also removed by the legislation.

Each MWh of savings achieved by a utility in a given year qualifies for one energy optimization credit.  Excess credits can be "banked", i.e., can be used to meet up to one-third of the required energy savings in the year following the year in which they were achieved.  Excess credits cannot be banked if a utility has opted to receive incentive payments for exceeding its savings targets in a particular year.

Regulated investor-owned utilities are responsible for 88.9 percent of the statewide electric savings targets; municipal utilities represent 7.8 percent of savings; and electric cooperatives, 3.4 percent. Most efficiency programs are administered by the utilities, although some have opted to fund a state-selected program administrator, Efficiency United, through an alternative compliance payment mechanism specified in Act 295. Although Efficiency United program services are not subject to the statutory savings targets, equivalent contractual targets were imposed by the Commission. Large electric customers, as determined by their peak use, may administer their own programs.

Last Updated: July 2017

Utility Business Model List All

Act 295 mandated that the Commission consider decoupling mechanisms proposed by the state's electric utilities. Consumers Energy and Detroit Edison had decoupling in place (U-15768 and U-15751), but Commission orders on electric utilities were overturned in court on basis of lack of statutory authority (See Michigan Court of Appeals Association of Businesses Advocating Tariff Equity v. Michigan Public Service Commission….April 10, 2012). In light of the Court’s determination, the Commission dismissed all pending cases involving electric revenue decoupling. 

Act 295 also authorized natural gas decoupling, which has been implemented in a series of Commission orders. The Commission has approved natural gas decoupling for Michigan Consolidated Gas Company (Docket No. U-15985), Consumers Energy (Docket No. U-15986),and Michigan Gas Utilities (U-15990). Natural gas decoupling was not overturned in the 2012 court case above.

The Commission has approved performance incentives for DTE-Electric and DTE-Gas for program years 2009 through 2013 (U-16358, U-16359, U-16737, U-17282, U-17602, U-16289, U-16290, U-16751, U-17288, U-17608).  The Commission has also approved performance incentives for Consumers Energy for program years 2009 through 2013 (U-16302, U-16303, U-16736, U-17281, U-17601). The Commission also approved a performance incentive for SEMCO Gas (U-17362) and Indiana Michigan Power Company (U-17353) for progam years 2014 and 2015.                                                                                                                                                                                                        

PA 295 (2008) contains two provisions whereby utilities can receive an economic incentive for implementing energy efficiency programs. First, they are allowed to request that energy efficiency program costs be capitalized and earn a normal rate of return. Second, they are allowed to request a performance incentive for shareholders if the utilities exceed the annual energy savings target. Performance incentives cannot exceed 15% of the total cost of the energy efficiency programs, or 25% of net benefits.The Commission has approved new performance incentives for DTE - Electric and Gas (U-17352, U-17358), and Consumers Energy (U-17351).  The Commission also approved a performance incentive for SEMCO gas (U-17362).  The Commission approved a performance incentive for Indiana Michigan Power Company (U-17353)

Last Updated: July 2016

Evaluation, Measurement, & Verification List All
  • Cost-effectiveness test(s) used: USRCT
  • Uses a deemed savings database: yes (MEMD)

The evaluation of ratepayer-funded energy efficiency programs in Michigan relies on legislative mandates (PA 295). Evaluations are administered by the utilities, and Michigan has established formal rules and procedures for evaluation. The primary measure used in Michigan to determine cost effectiveness is the Utility System Resource Cost Test (USRCT), the only measure required under PA 295. The rules for benefit-cost tests are stated in PA 295.

Last Updated: July 2016

Guidelines for Low-Income Energy Efficiency Programs List All

Requirements for State and Utility Support of Low-Income Energy Efficiency Programs

SB 438, approved in December 2016, extended the state’s 1% annual energy savings requirement for utilities through 2021. The bill does not specify a minimum required level of spending or savings for low-income energy efficiency programs, other than to direct that distribution customers’ funding responsibilities for low-income residential programs be proportionate to the distribution customers’ funding of the total energy optimization (EO) program: “The established funding level for low-income residential programs shall be provided from each customer rate class in proportion to that customer rate class’s funding of the provider’s total energy optimization programs.”

Cost-Effectiveness Rules for Low-Income Energy Efficiency Programs

Sec. 71 (4)(g) of SB 438 appears to exempt low-income programs from demonstrating cost-effectiveness. To demonstrate that the provider’s energy waste reduction programs, excluding program offerings to low-income residential customers, will collectively be cost effective, SB 438 states: “An energy waste reduction plan shall…demonstrate that the provider’s energy waste reduction programs, excluding program offerings to low-income residential customers, will collectively be cost-effective.”

Coordination of Ratepayer-Funded Low-Income Programs with WAP Services

The Bureau of Community Action and Economic Opportunity (BCAEO) within the Michigan Department of Health and Human Services (DHHS) is responsible for administration of the federal Weatherization Assistance Program (WAP) for the state and for overseeing activities of Michigan Community Action Agencies (CAAs). The CAAs, utilities, and other agencies coordinate at the local level with utility EO programs directly supplementing WAP to streamline efforts and leverage available funding.

Michigan also distributes funds through the Michigan Energy Assistance Program, which are grants to non-profit organizations who assist the low income with bill pay. Many utilities coordinate their energy efficiency programs with these organizations to further assist low-income households with their home energy needs.

Last updated: July 2017

Self Direct and Opt-Out Programs List All

Self-direct is available statewide.  Customer(s) must have had an annual peak demand in the preceeding year of at least 1 megawatt in the aggregate at all sites. The customer may use the amount of funds that would otherwise have been paid to the utility provider for energy efficiency programs. They must, however, submit the portion of the EE funds that would have been collected and used for low income programs to their utility provider. They then calculate the energy savings achieved and provide it to their utility provider. The percentage of eligible customers statewide is not calculated, but in 2009 there were 77 large customers who self-directed. By 2014 that number had dropped to 24.

Last Updated: July 2016

Data AccessList All

Michigan has no policy in place that requires utilities to release energy use data to customers or third parties. 

Last Updated: July 2017

Transportation
Score: 4 out of 10
Transportation Summary List All

Michigan has legislation in place that funnels vehicle registration revenues toward public transportation and transit demand management programs. The state integrates transportation and land use planning, devotes a significant amount of funding to transportation, and has complete streets legislation in place.

Tailpipe Emission Standards List All

No policy in place or proposed.

Last Updated: July 2017

Transportation System Efficiency List All

Transportation and Land use Integration: The Michigan Planning Enabling Act of 2008 requires all municipalities to create comprehensive master plans as a guide for future development. In creating these plans, each municipality must consult with adjacent local governments to avoid conflicts in zoning and planning and must also coordinate with all state and federal governments responsible for programs that affect the economic, social and physical aspects of the respective municipality.

VMT Targets: No policy in place or proposed.

Complete Streets: In 2010, Michigan passed HB 135, creating a complete streets advisory council within the state Department of Transportation that was tasked with formulating a complete streets policy for the state by 2012. Municipalities must also address this complete streets policy before finalizing capital infrastructure projects.

FAST Freight Plans and Goals: Michigan has a state freight plan that identifies a multimodal freight network, but it does not include freight energy or greenhouse gas reduction goals. 

Last Updated: July 2017

Transit Funding List All

The Michigan Comprehensive Transportation Fund funnels both vehicle registration revenues and auto-related sales tax revenues towards public transportation and targeted transit demand management programs.

Last Updated: July 2017

Incentives for High-Efficiency Vehicles List All

No policy in place or proposed.

Last Updated: July 2017

Equitable Access to Transportation:
Michigan does not have any state programs in place to incentivize the creation of low-income housing near transit facilities, but it does consider the proximity of transit facilities when distributing federal Low-Income Housing Tax Credits to qualifying property owners. Last Updated: July 2017
Appliance Standards
Score: 0 out of 2
Appliance Standards Summary List All

Michigan has not set appliance standards beyond those required by the federal government.

Last Updated: June 2017