Energy Incentive Programs

Monday March 28, 2016

Total energy efficiency funding budgeted across Michigan's utilities was almost $230 million in 2014.



In 2008 the Michigan legislature passed Act 295 requiring all Michigan gas and electric utilities to offer energy-saving programs to their customers and to set increasing energy saving goals via energy efficiency resource standards (EERS).

Efficiency United administers energy efficiency programs for almost twenty of Michigan's gas and electric utilities. There are both prescriptive and custom incentive programs available to commercial/industrial customers of the participating utilities, though the programs differ based on the specific serving company. The Comprehensive C&I Program allows customers to work with Efficiency United to develop a tailored plan to implement multiple energy conservation measures (all with incentives). Indiana Michigan Power, SEMCO Energy Gas, Upper Peninsula Power Company, We Energies, and Michigan Gas Utilities customers are eligible for this program.


DTE Energy offers incentives to both its Detroit Edison electric and MichCon gas customers. The prescriptive program covers rebates for a broad range of equipment types including lighting, HVAC, food service, and more. See the current program application for a full list of covered equipment and rebate amounts. Additional incentives are available for the implementation of multiple measures and for Michigan-made equipment. Custom incentives are also available and are based on $0.07/kWh and $4.00/Mcf of first-year savings (maximum 50% of project cost). The new construction and major renovation program offers incentives for projects that exceed the requirements outlined in ASHRAE 90.1-2007, LEED, or local building codes, whichever is more stringent. All incentives are available on a first-come, first-served basis, with reservations required and limits per project and per customer. Additional resources include an energy-use analysis either online or through an in-person consultation.

Similar to DTE, Consumers Energy offers both prescriptive rebates for energy-efficient equipment and a custom option for anything outside of the bounds of the prescriptive program. Custom incentives are based on $0.08/kWh and $8.00/Mcf of first-year savings. Multi-measure, Michigan-made, and new construction incentives are also available. An online tool and customized reports can provide customers with insight into energy-use and potential opportunities.

The dozen or so rural electric cooperatives and municipal utilities that participate in the Energy Optimization program can take advantage of its prescriptive commercial and industrial facility rebates for lighting, HVAC, variable speed drives, food service, and compressed air measures. The custom program also offers an incentive, of $0.06/kWh for first-year savings or 75% of the project cost, whichever is less; pre-approval is required.

The Energy Start program offers rebates for facilities in select cities with pre-approval. Measures include lighting, HVAC controls, variable frequency drives (VFDs), food service equipment, and more. Custom measures may qualify for an incentive of $0.08/kWh for first-year savings.


DTE Energy offers interruptible rates to all its commercial and industrial customers. Electricity is discounted in exchange for interruptibility in times of system need or very high wholesale prices. Interruptible rate discounts vary from approximately 10% to 25% depending on the tariff. To participate, customers must agree to shed a minimum of 50 kW and interrupt within one hour of notification. Failure to interrupt incurs a penalty at the rate for the highest 30-minute kW demand created during the interruption period for all usage above firm demand (i.e., on top of the prescribed monthly rate). In addition, the interruptible contract capacity will be immediately reduced by the amount of failed interruption, unless it is demonstrated that failure to interrupt was beyond the customer's control.

Xcel Energy (Northern States Power) offers various interruptible options including its Peak Controlled Service rates, which offers reduced electric costs for customers with at least 50 kW that can be curtailed upon the company's request.

The On-Line Power Exchange program is a variant on the typical interruptible program. WPSC periodically sends participants (who must have a minimum of 500 kW to shed) an e-mail requesting curtailments for a given time and a given price. Participants respond on-line to accept the terms (including the designated baseline period and penalties for non-compliance) if they are interested in participating in the event. 

The PJM Interconnection (PJM), a regional transmission organization (RTO), offers several demand response programs. Two specific programs may be attractive to federal facilities in PJM's southwestern Michigan footprint:

PJM's emergency "capacity" program allows demand resources to participate in PJM's Reliability Pricing Model (RPM) forward capacity market via a curtailment service provider (any existing PJM member, such as their utility, a third-party electricity supplier, or a specialty CSP). Participants pledge to either reduce their load by a specified amount (guaranteed load drop, GLD), or to a specific kW level (known as firm service level, FSL), within one or two hours of an event notification. Load reductions are mandatory and may occur up to ten times per year, lasting up to six hours per event. Penalties for non-compliance are substantial. Remuneration is based on the results of the annual RPM capacity auctions in various PJM regions. Remuneration levels for the 2016-17 PJM year (which begins June 1, 2016) are in the $22,000 per MW range for Michigan customers. Participants are also eligible to receive energy payments for actual reductions, if and when the program is called.

The Economic Load Response program allows electricity users to provide load reductions in exchange for a payment based on hourly wholesale electricity prices. Participation is fully voluntary. Customers start by submitting load reduction bids (through their CSP) of at least 100 kW into the day-ahead energy market. Participants whose bids are accepted are paid for their load reductions based upon the day-ahead, hourly electricity market prices (the day-ahead "locational marginal price," or LMP). Reductions are figured based on a customer baseline load (CBL), which is essentially the average loads for the same hours in four of the facility's previous non-responding days. Regardless of which type of firm it is, the CSP will generally offer to split the revenues with the customer at a pre-determined percentage.

In both programs, participants can provide load reductions either through curtailing electricity use or by operating on-site generation consistent with local environmental regulations and permits.


The Database of State Incentives for Renewables and Efficiency (DSIRE) provides information on programs that offer incentives for renewable distributed generation. The following programs may be of interest to federal customers:

Through its Solar Currents program, DTE Energy offers commercial customers rebates of $0.13 per watt (DC) and production incentives of $0.02/kWh (for 20 years) for systems up to 20 kW in exchange for relinquishing their system's renewable energy credits (RECs) to the company. Systems must be grid-tied, net-metered, and sized only for their facility's peak.

Consumers Energy offers the Experimental Advanced Renewable program feed-in tariff program that currently remunerates non-residential customers at $0.199/kWh for the output of their PV systems, up to 150 kW. Check site to confirm current rate.


The Michigan Economic Development Corporation's (MEDC) Michigan Energy Office provides funding for energy efficiency activities on a recurring basis, subject to availability of funds. Activities include technical assistance, energy-use evaluations, and audits. Check site or contact MEDC for more information on resources currently available to federal facilities.


Federal customers whose utilities have area-wide supply contracts through GSA (e.g., Atmos, American Electric Power Service Corp.), may be able to take advantage of 3rd-party financed energy efficiency projects called utility energy services contracts (UESCs). Information is available in GSA's Energy Division Library. Federal facilities should contact their account executive to determine the level of each utility's participation.

PJM now allows energy efficiency projects to participate in its forward capacity markets, based on its Reliability Pricing Model (RPM). To be eligible, EE projects must reduce load continuously by at least 100 kW during peak summer hours. This load reduction can be bid into PJM's annual (for three years in advance) and "residual" (nearer-term) capacity auctions, and if selected will receive the auction clearing prices. EE reductions are eligible for four years' worth of participation. Interested customers can participate through energy service companies conducting ESPCs or utilities executing utility energy services contracts (UESCs) at their sites.



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