Wind energy in Michigan: Bet on the status quo 

On Monday, the American Wind Energy Association (AWEA) will be holding a major event in East Lansing. Inside the building, the well-financed wind advocates will no doubt have a love fest. They will sing the praises of wind energy and promote, promote, promote the idea that Michigan should expand its current wind energy (they’ll call it renewable energy) quota above the current 10 percent level to 30 percent or higher.

Outside of the building the meagerly-financed wind energy opponents will be picketing the event. They’ve planned their protest in the hope of getting the news media to cover more than one side of the issue.

A key backdrop to what will occur in East Lansing is that Michigan’s law that created the 10 percent quota is scheduled to be revisited by the legislature in 2015. To many, the storyline will be: the “insiders,” who want a lot more wind energy, versus the “outsiders” who want much less or none at all. However, the real story is that neither of these sides is likely to win

A third side, Michigan’s two quasi monopolistic energy utilities, Consumer’s Energy and Detroit Edison, will almost surely be pushing for the status quo. That means neither eliminating nor increasing the quota.

It would be unwise to bet against the utilities. Their advantage is that their agenda combines the political realities that the “insiders” at the East Lansing event represent with the practical realities represented by the “outsiders.”

When it comes to legislative revision, those working for the status quo hold a strong hand. It’s doubtful a consensus will be mustered in Lansing within the next two years to make the changes over which wind energy advocates and wind energy foes are arguing.

To understand what’s really going on, one has to see the bigger picture.

Consider where both sides of the wind energy debate will (literally) be standing in East Lansing. For decades those labeled as the “environmental movement” have tried to cast themselves as the “outsiders,” fighting the good fight against a money-grubbing, polluting establishment. Yet, in reality, they long ago sold out to that establishment. In other words the “green” aspect of wind energy today isn’t concern for the environment – it is all about money.

Over the past decade wind energy has been a fixed game. Even when the wind fails 70 percent of the time – as is the case in Michigan – those who bet on it get paid off. That’s what happens when government sets quotas for how much energy must come from a certain source. The inefficiency or actual environmental impact of the source becomes irrelevant.

Here’s the sales pitch for investing in wind energy:

“It doesn’t have to work worth a darn.” “Persistent propaganda in the ‘friendly’ news media guarantees that many politicians will keep supporting it.” “Government mandates assure that it will have a share of the market.” “Government subsidies prop up the illusion that it is working.”

All of these “can’t lose” factors attract billions of investment dollars to “wind energy.” Many corporations, billionaires, and millionaires are involved to one degree or another. And remember, these aren’t really investments in “wind,” they’re investments in politics. When government is handing out taxpayer dollars it will always attract a crowd.

However, with wind energy there’s a huge long term downside for the environmental movement. Investors aren’t true believers in a “cause.” They will pull their money out the minute it looks like the profits are going to dry up. Inefficiency is destined to fail in the long run. At some point wind energy will lose its allure.

When that happens the billions of dollars that have been feeding the active national public relations network that promotes wind energy will go elsewhere. The only question is – when?

Best guess – the wind energy fad will be over within two decades, but few would bet on it ending within two years.

So here we are in 2013 with a law that in practical terms says 10 percent of Michigan’s energy must come from in-state wind. Never mind that natural gas would be cheaper and cleaner. Never mind that Michigan ratepayers could be purchasing wind-produced energy from better wind states for less than half the price.

To Michigan’s two huge electric utilities the current 10 percent quota is a major headache. In 2008, they agreed to it as part of a deal to get back their quasi monopoly status. Considering the higher quotas other states were passing, 10 percent probably seemed like a relatively small pill to swallow.

It was a bargain the utilities aren’t likely to back away from any time soon. For the time being they’ll adopt a ‘wait and see” position. That means defending the 10 percent quota while doing all they can to hold onto their monopolies.

With Michigan experiencing the highest electricity rates in the region, many lawmakers will be under pressure to get rid of both the monopolies and the quota. Against this the wind advocates will be campaigning to increase the quota. The arm’s length support for wind energy is something to which most politicians will continue to pay lip service.

For the reasons stated above, the utilities are likely to prevail. A sort of status quo holding pattern will be established. Then everyone will wait and see which way both the political and practical winds blow nationally in 2016.

Jack Spencer is Capitol Affairs Specialist for Capitol Confidential, an online newsletter by the Mackinac Center for Public Policy.