Michigan State Information

CHP Installations
Total of 13 CHP systems, producing a little over 52 MW, are known to be in operation in Michigan. A brief discussion on the breakdown and analysis of the types of installation is provided below.

Some of the installations in Michigan are also identified in our searchable database. The database provides information on the names of the plant owners or operators, plant locations and power generation capacity for each installation. If you are aware of other CHP installation sites within Michigan, please submit the information to us with this user-friendly input form.

CHP Market Potential
One DOE study has been conducted to assess the potential commercial and institutional market on a State-by-State basis. This study estimates a total market potential for electric production in Michigan to be in the range of 2,400 to 7,500 MW. In addition, there is a potential for 22,000 CHP system installations for multifamily homes. A brief discussion on the market potential for CHP systems in Michigan is provided below.

The market potential in Michigan represents 5 to 16% of the projected DOE long-term goal of 47 gigawatts of installed CHP capacity that was developed as part of the CHP Roadmap Workshop.

Energy Pricing
Energy pricing for both fuel and electricity have significant impacts on the financial viability of CHP. A detailed discussion about fuel and electricity pricing in Michigan is provided below.

CHP Partners
There are more than 35 companies in Michigan that are engaged in CHP system applications or have CHP system capabilities. This indicates a very moderate interest from the private market for the deployment of CHP technologies. Hopefully in the near future interest in CHP applications will increase through the activities of a multitude of local and regional organizations that are involved with the promotion of CHP applications. A further discussion and a list of these companies and organizations are provided below.

Financial Incentives for CHP Systems
On September 28, 2001, Governor John Engler signed the 2001-2002 Department of Consumer and Industry Services fiscal year appropriations bill which included a provision authorizing the Michigan Public Service Commission (MPSC) to begin making distributions from the Low-Income and Energy Efficiency Fund (LI/EE) of up to $60 million annually, for a period of 6 years. In response to that bill, on December 21, 2001 the MPSC issued a request for proposal for LI/EE grant funds. It is possible that CHP projects may be able to qualify for portions of this grant based on their high energy efficiencies.

Utility Contacts
Click here for a list of utility companies interested in working with businesses to install CHP systems.

Summary and Status of CHP Policy Issues
Policy issues at the State level play an important role in the deployment of CHP within a State. The following policy areas are summarized below: Access and Interconnection Rules, General Status on Progress of Deregulation, Emerging Legislation, Exit Fees, and Standby Charges.

CHP Installations
The survey of CHP Installations and potential CHP targets is primarily based on personal interviews as well as the use of published data. Published data consisted of the Energy Information Administration’s "Inventory of Nonutility Electric Power Plants in the United States" dated November 2000.

The sites identified during the survey represent the best efforts of the Midwest CHP Application Center (MAC) to identify actual and potential CHP installations in Michigan. Other existing or candidate CHP sites may exist; they can be submitted to the MAC by clicking here.

(Source: "BCHP Baseline Analysis for the Michigan Market (DRAFT)," a report prepared by the Midwest CHP for Buildings Application Center, September 2001.)

As can be seen for the systems with heat recovery, landfill applications constitute the biggest installed CHP market segment in Michigan followed by installations at schools/universities. There is a large potential market to add CHP, especially for the school/university and the municipal water/resource recovery sector where there is a large percentage of already of installed generation.

Market Potential of CHP in Michigan
The potential market capacity for CHP in Michigan is estimated to be up to 7,500 MW in the industrial and commercial sector and an additional 22,000 installations in the multi-family residential sector. This potential may only be realized if the regulatory and policy issues become more supportive of CHP installations. Also if incentives are provided, additional market potential capacity could be realized.

Commercial/Institutional Market
ONSITE Energy Corporation in January 2000 prepared a study for the Energy Information Administration titled "The Market and Technical Potential for Combined Heat and Power in the Commercial/Institutional Sector."

For Michigan ONSITE estimated that the total market potential for CHP installation in the commercial / institutional sector is about 2,560 installations, for a total commercial / industrial potential market for CHP of between 2,410 to 7,480 MW. This represents 5 - 16% of the projected DOE long-term goal of 47 gigawatts of installed CHP capacity that was developed as part of the CHP Roadmap Workshop.

Multi-Family Residential Market

Besides commercial and industrial applications CHP systems also have potential market viability for multi-unit residences (those with 2 or more units). Compared to conventional HVAC systems, the installation of CHP systems are particularly competitive when it comes to new construction or complete replacement of old HVAC systems.Since all new and replacement HVAC systems need to be permitted in Michigan, permitting data provides a good estimate of buildings where CHP systems may be a potential alternative. Applying the following assumptions the potential market for CHP applications for multi-unit residences can be estimated:

• New construction remains at or near the same level as in the year 2000 (10,113 units),
• HVAC systems need to be replaced every 20 years, therefore units installed in 1980 would need to be replaced in the year 2000, and
• the number of HVAC units replaced in 2000 is consistent with the number of units installed in 1980 (11,614 units).

Applying these assumptions the new building permit data was obtained for 1980 and 2000, those with less than 2 units were not considered. Therefore the market potential for multi-unit residential CHP installation in Michigan for 2001 is estimated to be about 21,700 units.

Energy Pricing
The EIA’s State Energy Price and Expenditure Report (1999) provides a composite table of the historical energy prices in Michigan by sector and fuel type. The EIA website also has a page that provides extensive information on energy data in Michigan.

Fuel Costs
EIA State Data: For a link to the EIA website that discusses gas prices in Michigan click here.
Most of the CHP generation technologies use natural gas as a primary fuel, such as reciprocating engines, combustion turbines and microturbines. For these systems fuel constitutes the majority of the variable/operating cost. High natural gas prices, such as those experienced in the year 2000, could have negative affects on the CHP market development, but are not anticipated to reoccur.

In an Energy Information Administration report titled "U.S. Natural Gas Markets: Recent Trends and Prospects for the Future," the EIA identifies several reasons for the gas price movement in 2000 among which are significant demand increase following a period of low growth in gas consumption (from 1996 to 1999) and a relatively cold winter in 2000. In its mid-term outlook, the EIA states, "Because natural gas resources are expected to be adequate to meet future demand through 2020 and technological progress for exploration and development is expected to be sustained, natural gas wellhead prices are projected to return to a lower price path around 2005 and gradually increase to about $3.05 per million Btu (MMBtu) in 2020."

According to the Michigan Public Service Commission, in 2000 Michigan had 229,054 commercial customers. EIA data indicate that natural gas consumption by commercial customers in the state totaled 186 billion cubic feet that year. The average prices paid for natural gas purchased from local distribution companies by commercial customers was $4.79/MMBtu. The average city gate price in Michigan was $3.23/MMBtu.

Michigan has substantial gas production and is the 11th largest producer of natural gas in the United States. Michigan produces about 25% of its gas consumption within the state. The remaining 75% is imported via five interstate pipelines. Michigan also has substantial gas storage facilities. The gas production and storage capabilities should assure adequate gas supply for the state.

Electric Pricing
In the annual Energy Information Administration report titled "Annual Energy Outlook 2002 with Projections to 2020," the EIA projects that the average electricity prices will decline from 6.9 cents/kWh (1 cent/kWh = $2.93/MBtu) in 2000 to 6.5 cents/kWh in 2020. Electricity industry restructuring contributes to declining projected prices through reductions in operating and maintenance costs, administrative costs, and other costs. Electricity prices are projected to decline to 6.3 cents/kWh by 2006 then rise in the last five years of the forecast as natural gas prices rise.

In Michigan the cost of electricity for commercial has shown a relative decrease over the last recorded 10 year period (1990-1999) based on information from the EIA's State Energy Price and Expenditure Report 1999. The cost of electricity to the commercial consumer has gone from about 8.3 cents/kWh ( 1cent/kWh= $2.93/MBtu) in 1990 to 7.9 cents/kWh in 1999. However there have been some minor fluctuations in pricing over that period.

Source: State Energy Price and Expenditure Report 1999, Table 145: Commercial Sector Energy Price and Expenditure Estimates, Selected Years 1970-1999, Michigan

 CHP Partner Details
(Source: "Draft: BCHP Baseline Analysis for the Michigan Market," a report prepared by the Midwest CHP for Buildings Application Center, September 2001.)

The following list provides information on architectural firms, engineering firms, manufacturers, and energy supply companies, which are involved in Michigan with CHP applications. In addition to that the list also provides information on firms that have the interest and capability to get involved in CHP applications either because they promote energy efficiency, green building technologies, or have other CHP supporting missions.

Architectural and Engineering Firms
Architectural and Engineering firms are important to promoting CHP technologies because the most economical time to install a CHP system is during the construction of a new building or during an extensive renovation, when the central heating and cooling plant is being initially installed or completely replaced. This is because the payback period associated with the cost to install a CHP system need only be justified on the cost differential between the CHP system and a conventional central cooling/heating system which otherwise have to be installed. Architectural and engineering firms are generally engaged in the design and installation of such facilities in commercial and light industrial buildings. Click on Architectural or Engineering firms to see a list of architectural firms and engineering firms that are potential allies in the promotion of CHP installation in Michigan.

Architectural Firms

American Institute of Architects (AIA), Michigan (AIAMI)
Capabilities: The AIA website offers a detailed search engine called "Architect Finder" which allows to locate an architect by specialization. (There are no search options, which refer to energy efficient buildings, green buildings, or other CHP related specializations.)

Engineering Firms

• Charles Equipment Co.
  Capabilities: CHP Turnkey Installations
• Cummins & Barnard, Inc. Consulting Engineers
  Capabilities: CHP Turnkey Installations
• La Salle Associates
  Capabilities: CHP Turnkey Installations
• Stanley Consultants, Inc.
  Capabilities: CHP Engineering, Environmental and Construction Services
• Montgomery Watson Harza
  Capabilities: CHP Turnkey Installations
• Ballard Engineering
  Capabilities: CHP Turnkey Systems
• CMS Energy Corporation
  Capabilities:
• DTE Biomass Energy
  Capabilities:
• DTE Energy Technologies, Inc.
  Capabilities:
• GKC-EME
  Capabilities: CHP Turnkey Installations
• Americas Power Partners, Inc.
  Capabilities: CHP Turnkey Installations
• Primera Engineering
  Capabilities: HVAC Engineering, CHP Potential
• GLHN A&Es
  Capabilities: HVAC Engineering, CHP Potential
• Cuh2a, Inc.
  Capabilities: HVAC Engineering, CHP Potential
• Epstein and Sons International, Inc.
  Capabilities: HVAC Engineering, CHP Potential
• Jacobs Facilities, Inc.
  Capabilities: HVAC Engineering, CHP Potential
• General Energy Corp
  Capabilities: HVAC Engineering, CHP Potential
• Globetrotters Engineering Corporation
  Capabilities: HVAC Engineering, CHP Potential
• Patrick Engineering, Inc.
  Capabilities: HVAC Engineering, CHP Potential
• Sebesta Blomberg & Associates, Inc.
  Capabilities: HVAC Engineering, CHP Potential

Equipment Manufacturers and Suppliers
Manufacturers of power generation equipment, absorption chillers, and desiccant dehumidification equipment, and their sales representatives are important to promoting CHP technologies for obvious reasons. In most cases these manufactures have established a market presence and have built relationships with those most likely to install CHP technologies.

It is important to to find technically and financially suitable applications where manufactures can work together with engineering and architectural firms to install CHP systems.

Equipment Manufacturers and Suppliers in Michigan
Equipment Manufacturers and Suppliers

• Caterpillar Distributor: Michigan CAT
  Capabilities: Electric Generation Equipment
• Solar Turbines Incorporated
  Capabilities: Electric Generation Equipment
• Trane
  Capabilities: HVAC systems, Air Handling Products
• Generac Power Systems
  Capabilities: Power Generators
• Detroit Diesel Corporation
  Capabilities:
• Hess Microgen
  Capabilities: Generators with Heat Recovery
• Eisenmann
  Capabilities: Air Purification
• ADA Systems
  Capabilities: Evaporative Cooling Systems, Energy Recovery
• Huntington Environmental Systems, Inc.
  Capabilities: Emissions Control Equipment
• Munters
  Capabilities: Desiccant Dehumidification Products
• GE Power Systems
  Capabilities: Combustion Turbine Products
• Ingersold Rand
  Capabilities: Microturbines
• International Fuel Cells, Inc.
  Capabilities: Fuel Cells.
• Yazaki
  Capabilities: Thermally Activated Chillers
• Wartsilla
  Capabilities: Recip. Engines
• York
  Capabilities: HVAC Systems
• Waukeshaw/Charles Equipment)
  Capabilities: Recip. Engines
• Broad
  Capabilities: Thermally Activated Chillers

Energy Suppliers
Local energy suppliers are also important to promoting CHP. Many have formed subsidiary companies to promote distributed generation, especially the gas supply companies. They can often justify the cost of distributed generation on the basis of the savings from peak shaving. However, they are not necessarily considering CHP because the heat recovered in these systems reduces their gas sale for heating. In the case of electrical supply companies, distributed generation may be viewed as a threat to the parent company which may have rate structures that pose a disincentive to the installation of distributed and therefore to CHP. In these cases, distributed generation is viewed as more acceptable if it is on the electric suppliers side of the meter, which makes CHP a difficult option to promote since the electric generation source may be at some distance form the customer making the use of waste heat impractical.

Local Energy suppliers in Michigan

DTE Energy Technologies (same parent company as Detroit Edison) is involved in one of the DOE packaged CHP awards and is actively marketing a whole line of distributed energy technologies, working with such companies as:

• Stirling Thermal Motors
• Energy Conversion Devices
• Detroit Diesel
• Michigan Caterpillar

Local Energy Suppliers
Natural Gas Providers

• Aurora Gas Company
• Citizens Gas Fuel Company
• Consumers Energy Company
• Michigan Consolidated Gas Company
• Michigan Gas Utilities (Division of UtiliCorp United, Inc.)
• Peninsular Gas Company
• Peoples' Natural Gas Company (Division of UtiliCorp United, Inc.)
• Presque Isle Electric & Gas Coop., Inc.
• SEMCO Energy Gas Company a division of SEMCO Energy, Inc.
• Superior Energy Company
• Wisconsin Public Service Corp.
• Xcel Energy

Electricity Providers:
Investor Owned Electric Utilities

• Alpena Power Company
• American Electric Power Company (Indiana Michigan Power Company)
• Consumers Energy Company
• The Detroit Edison Company
• Edison Sault Electric Company
• Michigan Electric Power Coord. Center
• Upper Peninsula Power Company
• Wisconsin Electric Power Company
• Wisconsin Public Service Corporation
• Xcel Energy (formerly Northern States Power)

Cooperative Electric Utilities

• Alger Delta Cooperative Electric Association
• Bayfield Electric Cooperative, Inc.
• Cherryland Electric Cooperative
• Cloverland Electric Cooperative
• Great Lakes Energy Cooperative
• Midwest Energy Cooperative
• Ontonagon County Rural Electrification Association
• Presque Isle Electric & Gas Co-op
• Thumb Electric Cooperative
• Tri-County Electric Cooperative
• Wabash Valley Power Association
• Wolverine Power Supply Cooperative, Inc. (not regulated by the MPSC)

Municipal Electric Utilities - Not regulated by the MPSC

• Village of Baraga
• Bay City Electric Light & Power
• City of Charlevoix
• Chelsea Electric and Water Department
• Clinton Board of Public Works
• Coldwater Board of Public Utilities
• Croswell Light & Power Dept.
• City of Crystal Falls
• Daggett Electric Department
• Detroit Public Lighting Department
• Dowagiac Department of Public Services
• City of Eaton Rapids
• Escanaba Electric Department
• City of Gladstone
• Grand Haven Board of Light & Power
• Harbor Springs Municipal Utility
• Hart Hydro Electric
• Hillsdale Board of Public Utilities
• Holland Board of Public Works
• Village of L'Anse
• Lansing Board of Water and Light
• Lowell Light and Power
• Marquette Board of Light and Power
• City of Marshall
• Michigan South Central Power Agency
• Negaunee Electric Department
• Newberry Water & Light Board
• Niles Utilities Department
• Norway Electric Department
• Paw Paw Department of Public Services
• City of Petoskey
• Portland Light and Power Board
• Sebewaing Light & Water Department
• South Haven Board of Public Works
• Stephenson Utilities Department
• Sturgis Municipal Electric Plant
• Traverse City Light & Power Department
• Union City Electric Department
• Wakefield Electric Light Department
• Wyandotte Municipal Service Commission
• Zeeland Board of Public Works

Associations and Organizations Involved with CHP Deployment
Federal, State, and regional government entities are becoming interested and concerned about distributed energy (DE) and CHP within their areas. With that interest comes significant potential opportunities for making CHP systems an important part of their distributed generation philosophy. Government entities are increasing their interest in CHP because of the energy savings and reduced emissions it provides. Many are promoting its development. While the Federal government, through the Department of Energy, Office of Power Technologies, has provided substantial support, the most effective deployment of CHP technology will come from regional and local activities. This is true because most of the barriers are due to local issues, such as site permitting interconnection requirements and studies, local utility pricing, and local building codes and standards. These barriers can be overcome with support from regional and local entities.

The Midwest area is home to many non-profit organizations and associations that have come forward to support the deployment of CHP; in fact the Midwest appears to be leading the way in promoting the deployment of CHP.

Associations and Organizations Involved with CHP Deployment in Michigan

Associations and Organizations Involved with CHP Deployment List

• Michigan/Regional Organizations
• State of Michigan, Department of Environmental Quality
• Michigan Public Service Commission
• Michigan Department of Natural Resources
• Michigan Environmental Council
• Michigan Electric and Gas Association
• Michigan Electric Cooperative Association
• University of Michigan Industrial Assessment Center
• Ecology Center of Ann Arbor
• Energy Resources Center – University of Illinois at Chicago
• Gas Technology Institute
• Midwest CHP for Buildings Application Center
• Midwest CHP Initiative
• Delta Institute
• Midwest Cogeneration Association
• Environmental Law and Policy Center
• Center for Neighborhood Technology
• Interstate Renewable Energy Council (IREC)
• Midwest Energy Efficiency Alliance (MEEA)
• Manufacturing Extension Program (MEP)
• American Institute of Architects
• BOMA Building Owners and Managers Association
• EPA Region 5
• DOE Chicago Regional Office

Property Management Firms

Property management firms are important to promoting CHP technologies because they are the operators of most commercial buildings in which CHP technologies would be suitable and therefore are interested in reducing energy costs. They often are the decision makers as to what type of central service systems are installed. In many of the buildings that they operate, they are already required by newer building codes to provide some sort of emergency electric generation equipment. Since they are already required to install generation equipment, the cost differential to install CHP over a conventional central heating/cooling system is less and easier to justify. In addition, it gives them the ability to provide higher power reliability to tenants, which is becoming an important issue to many business operators. To date the MAC has not been able to specifically identify any property management firms within Michigan that actively are pursuing CHP applications.

Status of CHP Policy Issues

Access and Interconnection Rules
In Michigan there is no State standard for the interconnection process and related fees, however, policy is in the process of being developed. On October 2, 2000 the Michigan Public Service Commission’s (MPSC) issued a report titled "Final Report on Establishing Interconnection Standards". The report recommends that, "all entities with local distribution facilities be directed to file proposed interconnection standards for interconnection to local distribution facilities." The report asks that these interconnection standards be consistent with the following principals.

• Safety, protection of equipment, and preservation of service quality.
• Timeliness in the review of applications for interconnection
• Reasonable interconnection study costs

The Michigan Staff proposal is modeled after Texas’s approach. (Case No. U-12485 details)

Detroit Edison and Consumers Energy, the two largest utilities in the state, both submitted very detailed proposed interconnection standards outlining fee structures, schedules and technology requirements. While these proposals were detailed, shortfalls were recognized by both Energy Michigan (a trade association for the cogeneration, independent power and waste to energy industries in Michigan) and the staff of the MPSC.

Energy Michigan stated in its comments of June 6, 2001 that "there must be mandatory time frames for the completion of interconnect studies and guidelines for the cost of such studies." Energy Michigan also commented on the proposed interconnection standards of Detroit Edison and Consumer’s energy. These comments are located on the MPSC website.

Energy Michigan also pointed out in its comments that "For projects above 100kW, the guidelines proposed by Edison (Detroit Edison) and Consumers (Consumer Energy) do not appear to assure rapid processing at reasonable costs, nor do they assure that interconnection study costs will be reasonable and that interconnection study costs or work will be reasonable or performed on a timely basis."

The MPSC Staff also filed comments on June 6, 2001 that stated, "… that the application fees proposed in the company filings (Detroit Edison, Consumers Energy and Michigan Electric and Gas Association) will function to discourage the submission of application, especially for smaller projects." As part of the sabout the proposed project." These comments are located on the MPSC website.

Michigan's final Interconnection Rules were filed with the Secretary of State on September 22, 2003. The utilities have 90 days to file their Interconnection Procedures, in complainace with these new rules. Assuming the procedures are filed on time, the MPSC will approve them. This will complete the process started in June 2000 with the passage of Michigan's Customer Choice and Electricity Reliabilty Act (2000 PA141).

General Status of Progress on Deregulation
Full open access for all customers of investor owned utilities (IOUs) and electric cooperatives 1 MW occurred on January 1, 2002. Remainder of co-op customers will be occur before January 1, 2005. MPSC Staff provides annual reports to the Governor and Legislature on the status of electrical restructuring. February 2002 report.

The MPSC also approved a "green rate" for Consumers Energy Company to buy zero emissions renewable energy and sell it back to consumers through their distribution system. The basis for "zero emissions" is a net reduction in existing emissions, therefore a bio-power application using a CHP system might be eligible to provide green power to Consumer’s Energy Company for resale.

Natural gas open access is proceeding without legislation. Utilities are participating voluntarily at this point. There has been slow growth in retail open access in the Detroit Edison service territory and very little activity in Consumers Energy territory.

Commercial* Customers Eligible or Participating Retail Choice Programs
(Status as of August 2001)

	Eligible		Participating
Total 2000	Total	Percent of 2000 Total	Total	Percent of Eligible	Percent of 2000 Total
229,054	N/A	--	13,341	N/A	5.8%

(Sources: Total 2000 Residential Customers: Energy Information Administration, Natural Gas Annual 2000(November 2001). Total 2001 Commercial Customers and Total Eligible and Participating: Michigan Public Service Commission (October 2001).)

The EIA website provides the current status on a monthly basis of electric restructuring on a State-by-State basis: Michigan Electric Restructuring. They also provide a status of the deregulation of the natural gas industry on a State-by-State basis: Michigan Gas Unbundling.

Links to Tables on Restructuring Issues	[Retail Access] [Stranded Costs]
Links to State Regulatory Commissions	[Michigan Public Service Commission] [PSC restructuring page]

Emerging Legislation
Public Act 141, Michigan Customer Choice and Electricity Reliability Act, MCL 460.10d(6): Established the Low-Income and Energy Efficiency Fund (LI/EE Fund). This fund is to be administered by the Michigan Public Service Commission (MPSC). In addition to providing funds for low-income families, it provides funds for energy efficient projects that support public interests.

HB 4476: Sales tax; other; cap on taxable portion of natural gas; provide for. Addresses residential natural gas, but again shows potential willingness of legislature to think about tax incentives. The same willingness is reflected in HB 4477 and HB 4479 discussed below.

HB 4477: Use tax; other; cap on taxable portion of natural gas; provide for.

HB 4479: Income tax; credit; cost of weatherization materials and energy efficient appliances; provide for under certain circumstances.

Exit Fees
In the State of Michigan there are no exit fees charged to companies or others that decide to exit from the grid and produce their own electricity for on-site use, as stated in Section 10(a)6 of the Michigan Customer Choice and Electricity Reliability Act (Public Act 141).

Standby Charges
Detroit Edison’s (Michigan’s largest utility) Standby Rider (R3) is the rate that most affects the installation and operation of 100kW and above onsite electricity generation installations. This standby charges, as many others in the Midwest are complex. The complexity of this rate underscores one of the major barriers in determining the actual economics of the installation and operation of Distributed Energy (DE) or CHP installations. Detroit Edison has a simpler Rider for installations under 100 kW: Rider DG.

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