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Consumers Energy Reaches Interconnection Cap: What now?


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If you have been considering solar for your home or business served by Consumers Energy or follow the Michigan solar market, you may be aware that in late November Consumers Energy hit their program “cap” for interconnections to the grid. According to the 2008 law that required publicly held utilities in the state of Michigan to offer a metering program, utilities only had to interconnect distributed assets up to 1% of their average 5-year base energy load. This 1% is further divided into 0.5% for residential installs (net metering) up to 20kw, 0.25% for commercial installs (modified net metering) up to 150kw and the remaining 0.25% for methane digesters up to 150kw. Now that they have hit this cap, they do not have to allow for any further interconnections to the grid. So where do we go from here? 

If history can tell us anything on this subject of public utilities hitting a program cap for distributed generation assets it is, “don’t worry, it will work out.” Which, I recognize, is not very comforting for either the person wanting to do a solar project or the person seeking to sell one. Nonetheless, there is merit here. In the summer of 2016, the Upper Peninsula Power Company (UPPCO) hit its 1% cap first which makes sense because they have the highest utility rates in the country. Within about 2 months they raised this cap to 2% under an active rate case with the Michigan Public Service Commission (MPSC). What this tells us is that the MPSC is serious about continuing to foster the advanced energy industry that is rapidly building in Michigan and they are not afraid to use unorthodox channels to drive the continued implementation of renewables in the state. UPPCO is now nearing the capacity of its 2% interconnection program size, a topic that will likely heat up in early to mid-2021. 

Since the cap was hit in November the MPSC immediately started negotiating within the active rate case Consumers submitted for their annual rate increase (Case Number U-20697). In this rate case, Consumers requested a rate increase of almost 14%, an egregious amount compared to the national average rate increase of 4-6%. Within the negotiation, the MPSC was able to get Consumers to voluntarily raise the cap for interconnections to 2%, a huge win for solar advocates, installers, and customers across Michigan. Consumers Energy has also agreed to work with the MPSC and stakeholders to identify a more robust methodology to define the value of solar to the grid (i.e. What is my outflow worth?) These two initiatives will support the growth of solar in Michigan’s western region but they are certainly not enough. I always find myself asking, “Why a cap in the first place?”

As a part of the rate case, Consumers was granted permission to raise residential rates by 12% – which truly means there has never been a better time to go solar!

With Consumers raising the cap to 2%, they will now institute a new inflow/outflow metering mechanism that closely follows what DTE did in their transition from net metering to distributed generation in November 2019. No longer will Consumers offer a full retail credit for excess energy (outflow) sent to the grid, they will now credit outflow at the power generation rate which for most residential homes will be about 9.5 cents per kWh. There has not been a clear declaration if this program will act like DTE’s where outflow credits can only be used against inflow power generation charges, but it is promising that the outflow rate is higher than in most places in the state. This decreased outflow rate and increase in electricity pricing warrant working with a proven solar company to ensure your system is sized for optimal financial results. The decreased outflow rate will also cause many more homeowners to consider battery storage to limit the amount of energy sent to the grid. The new distributed generation program will go live on 1/2/2021. 

To recap the events that have unfolded, Consumers Energy hit their program cap for distributed resource grid interconnection in November 2020. In mid-December 2020, within the active rate case U-20697, Consumers agreed to increase the cap to 2% of the average system baseload and they were approved to move to the inflow/outflow metering methodology for their new distributed generation program. While this certainly caused waves of uncertainty for all parties planning solar projects, we can rejoice that the MPSC has once again kept a keen eye on one of the most exciting and growing industries in the state; solar!

If you or another business is interested in having an undeniable impact on your triple bottom line give us a call for a free consultation to see if solar is right for you! Call (248) 923-3456 or request a Free Online Solar Analysis for Your Business.

Michigan Solar Solutions is a commercial and residential solar installer and electrical contractor that has served the lower peninsula of Michigan since 2007. We have installed thousands of panels and have a happy customer near you, check out what our customers think of us on Guild Quality.

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