Detroit Edison: Energy Optimization Plan and RPS

The Detroit Edison (DTE) energy optimization plan (case no.15806) approved by the PSC in June 2009, proposes a total 31 month EO expenditure of $127 million (NPV) which is expected to result in lifetime energy savings of 6,633 GWh, equaling roughly $0.019/kWh savings. Detroit Edison’s RPS plan proposes that by 2015, 10% of retail sales will be derived from a combination of renewable energy sources and ACE, and it will spend $3.1 billion in the next 20 years on renewable energy. By 2029, DTE will have 1,295 MW of renewable and ACE generating capacity. Edison will also own roughly 49% of this capacity with the remaining 51% owned by third parties and purchased through power purchase agreements.

As part of its compliance with the RPS requirements of PA 295, DTE has also initiated a Solar Currents Pilot Program. This is an incentive program available to DTE retail electric customers enrolled in net metering who install photovoltaic systems. The program is limited to a 5 MW capacity. Individual system sizes may be between 1kW – 20kW, they must be grid-connected and net metered, and their size must not exceed on-site energy needs. The Public Service Commission has authorized DTE to partially reimburse customers for installing solar PV systems, up to $25 million, with at least half of that amount reserved for residential customers. In order to be eligible, a system must either be newly installed in 2009, though existing PV systems installed after January 1, 2005 with a valid DTE Parallel Operating Agreement are able to participate at a reduced rebate rate.

The rebate (which DTE Energy refers to as an REC pre-payment) is calculated as $2.40 per DC watt, payable upon the successful installation of the system. The rebate rates for systems installed through January 1, 2009 are:

• 2005 Installation: 20% of calculated rebate total
• 2006 Installation: 40% of calculated rebate total
• 2007 Installation: 60% of calculated rebate total
• 2008 Installation: 80% of calculated rebate total
• 2009 Installation (and thereafter): 100% of calculated rebate total

The ongoing monthly REC payment, or production incentive, offers $0.11 per kWh for the RECs produced by the system for the duration of the 20-year contract. These payments are received monthly as credit on the customer’s electricity bill except for at the end of the calendar year, when customers will receive a check for any unused bill credits from the utility.

The production incentive portion requires all systems to be equipped with a separate generation meter -- provided at no cost to the customer by DTE Energy -- to measure total system energy production (i.e., REC production). System owners are responsible for costs associated with connecting the system to the grid and for wiring and meter socket installation costs associated with the generation meter. Additional requirements, including minimum equipment standards; equipment and installation warranties; and installer qualification requirements are described above and in further detail on the program website. All systems are subject to post-installation inspection by utility personnel.