Agriculture and Rural Communities Energy …...Energy Characteristics for Agriculture and Rural Customers •Statewide, 75 percent of customers are served by natural gas utilities

PUBLIC SECTOR CONSULTANTS @PSCMICHIGAN PUBLICSECTORCONSULTANTS.COMPUBLIC SECTOR CONSULTANTS @PSCMICHIGAN PUBLICSECTORCONSULTANTS.COM

Wednesday, July 31, 2019

Michigan Public Service Commission

Lansing Conference Room

7109 W. Saginaw Hwy.

Lansing, MI 48917

Agriculture and Rural Communities Energy Roadmap—Stakeholder Meeting

PUBLIC SECTOR CONSULTANTS @PSCMICHIGAN PUBLICSECTORCONSULTANTS.COM

Welcome and Introductions

2


Overview of Agenda and Meeting Process

3


Agenda

4

Time Agenda Item Presenter

8:45–9:00 AM Meet and Greet

9:00–9:10 AM Welcome and IntroductionsRobert Jackson; Department of Environment, Great

Lakes, and Energy (EGLE)

9:10–9:15 AM Overview of Agenda and Meeting ProcessJulie Metty Bennett

Public Sector Consultants (PSC)

9:15–10:00 AM

Presentation of Findings from the Agriculture and Rural Communities Energy Roadmap—Baseline and Evaluation

AssessmentJill Steiner and Eric Pardini; PSC

10:00–10:15 AM Discussion of Research Findings Julie Metty Bennett; PSC

10:15–10:30 AM Break

10:30–11:30 AM Identify New or Changed Policies and Programs Julie Metty Bennett; PSC

11:30–11:45 AM Review Recommendations Julie Metty Bennett; PSC

11:45 AM–12:00 PM Thank You/Next Steps Terri Novak; EGLE


Presentation of Findings from the Agriculture and Rural Communities

Energy Roadmap—Baseline and Evaluation Assessment

5


Overview of Rural Population—Definition

• Federal agencies have over two dozen definitions for rural communities based on land use, population density, and economic characteristics

• Definition, including list of rural counties and zip codes, comes from Federal Office of Rural Health Policy

6


Rural Demographics—Population

7

79% 93%

14%

2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Michigan Rural

Race

Two or more races

Some other race

Native Hawaiian and Other Pacific Islander

Asian

American Indian and Alaska Native

Black or African American

White


Rural Demographics—Population

9

6%

22%

10%

16%

5%

19%

8%

23%

0%

5%

10%

15%

20%

25%

Under 5 years Under 18 years 18 to 24 years 65 years and over

Age

Michigan Rural


Rural Demographics—Income and Employment

10

7%

5%

11% 10%

14%

19%

12% 13%

5% 4%

7%6%

12%13%

17%

20%

12%

9%

2% 2%

0%

5%

10%

15%

20%

25%

Less than$10,000

$10,000 to$14,999

$15,000 to$24,999

$25,000 to$34,999

$35,000 to$49,999

$50,000 to$74,999

$75,000 to$99,999

$100,000 to$149,999

$150,000 to$199,999

$200,000 ormore

Income Distribution

Michigan Rural



11

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Michigan Rural

Household Income

0%

5%

10%

15%

20%

Michigan Rural

Poverty Rate



12

61%57%

7%

53%49%

8%

0%

10%

20%

30%

40%

50%

60%

70%

Labor Force Participation Rate Employment/Population Ratio Unemployment rate

Employment

Michigan Rural


Rural Demographics—Housing

14

71%

29%

83%

17%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Owner-occupied housing units Renter-occupied housing units

Housing

Michigan Rural


Rural Demographics—Educational Attainment

15

3%7%

29%

24%

9%

17%

11%

3%

7%

37%

24%

10%13%

7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Less than 9thgrade

9th to 12th grade,no diploma

High-schoolgraduate (includes

equivalency)

Some college, nodegree

Associate'sdegree

Bachelor's degree Graduate orprofessional

degree

Educational Attainment

Michigan Rural


Overview of Agriculture Sector

• Michigan has over 50,000 farm operations producing 300 different commodities

• Michigan is the second-most agriculturally diverse state in the U.S.

• Total value of production from Michigan’s agriculture sector is $8.1 billion

• The combined food and agriculture sectors contribute $104.7 billion annually to the state’s economy, representing 20 percent of the state’s gross domestic product and 22 percent of total employment

16


Agriculture Sector—Farming

17

24,500

15,100

4,500

2,7004,100

Number of Farms by Economic Sales Class,

$1,000–$9,999

$10,000–$99,999

$100,000–$249,999

$250,000–$499,999

$500,000+

1,100,000

1,700,000

900,000

1,100,000

5,150,000

Amount of Farmland by Economic Sales Class

$1,000–$9,999

$10,000–$99,999

$100,000–$249,999

$250,000–$499,999

$500,000+


Agriculture Sector—Farming

18

0 500,000 1,000,000 1,500,000 2,000,000

Sweet corn, fresh

Cucumbers, fresh

Squash

Cucumbers,…

Blueberries

Sugarbeets

Wheat

Hogs

Cattle and calves

Corn

Thousand Dollars

Top 20 Commodities in Cash Receipts

33%

34%

17%

13%

2% 1%

Acres of Michigan Farmland Harvested by Crop, 2017

Corn

Soybeans

Dry hay, haylage,and greenchop

Oher field crops

Fruit bearing acres

Vegetables


Agriculture Sector—Agribusiness

• Agribusiness is an essential part of Michigan’s agriculture sector

• Michigan’s food processing sector alone generated $25 billion in economic output

• Industry includes grain handlers, feed suppliers, seed companies, fertilizer companies, food processors, and agritourism

19


Energy Characteristics for Agriculture and Rural Customers• Statewide, 75 percent of customers are served by natural gas utilities and 8

percent rely on propane providers

• In rural communities, just over 50 percent of customers have natural gas service and 23 percent are served by propane providers

• The use of wood and fuel oil are also more prevalent in rural communities

• Energy consumption can be a significant business expense for some commodity types and certain agricultural processes, ranging from 10 to 15 percent for livestock operations to 40 to 50 percent for wheat and other commodities

• Projections show that if fuel costs were to double for farmers, it could result in a 13 percent increase in commodity prices

20


Potential for Energy Efficiency

• Studies of the cost-effective energy-efficiency potential for the Upper and Lower Peninsulas have found that there is significant potential for savings

• Based on forecasted sales for the Upper Peninsula, the potential for energy efficiency is an additional 14.4 percent by 2026 and 20.4 percent by 2036

• Based on forecasted sales for the Lower Peninsula, the potential for energy efficiency is an additional 16.9 percent by 2026 and 24.4 percent by 2036

21


Potential for Renewable Energy

• Michigan’s technical potential for renewable energy generation was estimated at 51,000 gigawatt hours (GWh) by 2030

• This translates to roughly 45.9 percent renewable energy production based on 2017 production levels

22

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

10,000

20,000

30,000

40,000

50,000

60,000

2015 2020 2025 2030

An

nu

al G

Wh

Year

Technical Potential for Renewable Energy Production (GWh)

Onshore windRooftop solar—residentialRooftop solar—commercialUtility PVCentral biomass powerPercent renewable energy production


Evaluation of Energy-efficiency Program Offerings for Agriculture and Rural

Communities

23


Evaluation Components

• Review of existing evaluations of programs targeted to agriculture or rural communities

• Interviews with 39 different stakeholders, including government agencies, nonprofits, commodity groups, state associations, energy providers, and other entities

• Analysis of utility data for program delivery

• Benchmarking and best practices review of programs nationally

• Survey of farms/agribusinesses, residents of rural communities, and local government and community leaders

24


Analysis of Utility Data

• The project team gathered participation, incentive, and savings information for rural areas to compare proportion of program activity to the proportion of customers living in designated areas

• Reporting utilities and program administrators represent more than 90 percent of electric use in Michigan

• Cherryland Electric Cooperative, Thumb Electric Cooperative, Efficiency United, and the MECA Collaborative service areas are predominately rural

25

46%

36%

4%

4%

1%

0.10%

9.00%

DTE Energy Consumers Energy MECA Collaborative

Efficiency United Cherryland Thumb Electric

Not Reported


Residential Program Delivery

26

15.6%

8.6%

10.6%

26.2%

31.1%

3.1%3.9%

21.9%

0%

5%

10%

15%

20%

25%

30%

35%

Low income Heating andcooling

equipment

Insulation andwindows

ENERGYSTAR

products

Appliancerecycling

ENERGYSTAR new-

homeconstruction

Homeperformancewith ENERGY

STAR

Consumers Energy Residential Rural Customers and Program Participants

Customers

2.7%

7.8% 7.9%

5.5%

19.5%

9.4%

0%

5%

10%

15%

20%

25%

Low income Heating andcooling equipment

Insulation andwindows

ENERGY STARproducts

Multifamily directinstalls

DTE Energy Residential Rural Customers and Program Participants

Customers


Commercial and Industrial Program Delivery

27

24.0%

31.2%

19.1%

14.5%

27.5%

17.5%

9.6%

24.0% 23.5%

29.7%

0%

5%

10%

15%

20%

25%

30%

35%

C&I Custom C&I Prescriptive Small and Medium Business

Consumers Energy

Participants Savings Incentives Commecial and industrial customers

3.20%

8.30% 8.10%

2.2% 3.5%1.8%

6.5%5.6%

9.5%

12.20%

12.20%

0%

5%

10%

15%

20%

25%

30%

35%

C&I Custom C&I Prescriptive Small and Medium Business

DTE Energy

Participants Savings Incentives Commercial and industrial customers


Utility Energy-efficiency Program Deliveryin Rural Areas

• Stakeholder interviews indicate increased focus on agriculture and rural communities in program design and outreach

• Several programs show strong penetration in rural areas, but others show participation less than proportional to the number of rural customers

• Rural residents and businesses represent 55 percent of the customers impacted by elimination of energy-efficiency standards for cooperatives and municipalities

• Approximately 30 percent of rural customers overall will be impacted

28


Benchmarking and Best Practices

• Notable programs and policies:

- Southern Minnesota Municipal Power Authority

- Entergy Arkansas Agricultural Energy Solutions

- Florida Office of Energy’s Farm Energy and Water Efficiency Realization Program and Farm Renewable and Efficiency Demonstration

- Winneshiek Energy District

- Wisconsin Focus on Energy Rural Engagement and Statute §196.374(5m)(b)

- Minnesota Conservation Improvement Program

- California Rural and Hard to Reach Working Group

29


Opportunities for Enhancement

• A comprehensive suite of programs serving all rural customer segments (residential, C&I, and agricultural) is essential to provide wide participation options

• Leveraging federal financing (e.g., from the USDA) with state, ratepayer, and/or member dollars provides expanded resources for serving agriculture and rural customers

• State energy-efficiency requirements for municipal and cooperative utilities are important for reaching rural and agricultural customers

• Coordinated program administration supports improved energy-efficiency performance

30


Survey Respondents

Respondent TypeNumber of

Responses Resident of a rural community 175Owner/operator of a farm 43Owner/operator of an agribusiness 15Owner/operator of a business in a rural community 15Local government or community leader 38Provider of services, equipment, or supplies to farms or rural facilities 10Provider of energy-efficiency or renewable technologies or services 6

31


Overall Awareness of Technologies and Programs

32

18%10% 8% 10% 14%

6%

59%

45% 45% 35%

57%

43%

14%

39% 41%

39%

22%

37%

8% 6% 6%16%

6%14%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Energy-efficienttechnologies

Utility energy-efficiencyprograms

Utility programs forfarm and

agriculture

Governmentenergy-efficiency

programs

Renewable energytechnologies

Renewable energyprograms

Very knowledgeable Somewhat knowledgeable Not very knowledgeable Not at all knowledgeable


Residential Characteristics

33

Very efficient

26%

Somewhat efficient59%

Somewhat inefficient

14%

Very inefficient1%

Home Efficiency

Natural gas45%

Propane46%

Other9%

Heating Fuel Type


Residential Program Participation

34

33%

9%

40%

16%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Energy-efficiencyprograms

Renewable programs

Program Participation

All residents Residents with very efficient homes

24%9%

28%

46%

37%

43%

16%

33%

25%

15% 21%

4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Application process Level of incentive Performance ofenergy-efficient or

rewable technologies

Satisfaction with Program Elements

Excellent Good Fair Poor


Farm and Agribusiness Energy Use

35

44%

4%

16%

44%

38%

16%

38%

30%

4%2%

12%

8%

16%

6%

2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Electric Natural gas Propane Gasoline/diesel Biomass Solar

High use Moderate use Limited use


Farm and Agribusiness Program Participation

36

43%

22%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Energy-efficiencyprograms

Renewable programs

Program Participation

10% 10%16%

52%

29%

55%

26%

45%

26%

13% 16%

3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Application process Level of incentive Performance ofenergy-efficient

technologies

Satisfaction with Program Elements

Excellent Good Fair Poor


Farm and Agribusiness Barriers to Program Participation

37

10%

8%

28%

32%

36%

36%

40%

42%

42%

48%

0% 10% 20% 30% 40% 50% 60%

Other

Energy-efficient technologies are not available from local retailers or contractors

Existing equipment still works

Energy-efficient technologies cost more than alternatives

Lack of time to evaluate energy-efficiency or renewable energy technologies

Lack of knowledge of which technologies are most applicable

Lack of data needed to evaluate energy-efficiency or renewable energytechnologies

Energy-efficiency investments have long payback periods

Renewable energy technologies have long payback periods

Not aware of programs that provide technical assistance and/or financialincentives


Local Government Leaders

38

55%

11%

29%

37%

24%

0%

10%

20%

30%

40%

50%

60%

Localgovernment

offices

Schools Recreationalfacilities

Public works Other

Types of Facilities Managed

76%

50% 50%47%

24% 24%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Small grants Energy-relatedworkshops

How-to guidesfor projects

Funding forprojects

Meetings withother

communities

Number to callfor assistance

Interest in Types of Assistance


Perceptions of Current Policies and Programs

39

7% 7% 9% 10% 7%

30% 27% 25% 19%19%

28% 35%39%

28% 30%

20%23% 16%

12%22%

14% 9% 10%

31%22%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Current policies topromote energy efficiency

Current policies topromote renewable

energy

Promotion of utilityenergy-efficiency program

offerings andopportunities

Energy-related technicalassistance for farms andagricultural operations

Energy-related assistancefrom the U.S. government

Excellent Good Fair Poor No opinion


Availability of Programs

40

More available

11%

Available at the same level

30%Less available

33%

Don’t know26%


Barriers Identified

• Other priorities often take precedence over energy

• Program awareness remains low

• Deliverable fuels customers are left behind

• Costs and benefits must be clearly articulated

• Administrative burdens are deterrents

• Identifying and targeting agriculture customers is difficult

• Building and electric codes do not apply to agriculture customers

41


Further Barriers

• Farm energy audits represent an additional cost

• Farm energy audits do not reflect true costs

• Implementation from farm energy audits has been limited

• The Michigan Farm Energy Program faces critical challenges

• Energy efficiency in the agriculture sector requires a unique approach

• The future of energy-efficiency programming is uncertain

• Rural population demographics are unique

• Renewable energy and agriculture integration is challenged by existing programs

• Onsite renewable energy development has limits

42


Key Takeaways

• There is a significant amount of untapped, cost-effective energy-efficiency potential remaining

• Energy-efficiency programs should be available that have a specific emphasis on serving the needs of agriculture and rural customers

• Cost-effective energy-efficiency programming should continue to be a statewide policy priority and be made available to all Michigan residents

• Better communication of the potential benefits of energy efficiency to help customers feel confident in their decision to invest is key

43


Key Takeaways Continued

• As Michigan’s renewable energy sector is primed for continued expansion, rural landowners need to have support to understand the impact of renewable energy siting on their business and how they can benefit

• Deliverable fuel customers should have the same opportunities to access energy-efficiency services as customers served by natural gas utilities

• Increasing customer awareness requires education and outreach about the viability of onsite renewable energy generation to control and/or reduce energy costs

44


Key Takeaways Continued

• Michigan’s rural communities and agriculture sector need better collaboration and coordination to advance policies that reflect their needs and disseminate information about existing opportunities

• Farm energy audits need to be focused on demonstrating tangible benefits for customers in a way that drives implementation and supports customer action

• More needs to be done to directly link farm energy audits to utility energy-efficiency programs that can provide financial incentives and other assistance to help enable energy-efficiency improvements

45


Workshop Question:What policies and programs are needed

to increase energy improvements in agriculture and rural communities?

46


Break

47


Workshop Question:What policies and programs are needed

to increase energy improvements in agriculture and rural communities?

48


Thank you

50


Documents

Agriculture and Rural Communities Energy …...Energy Characteristics for Agriculture and Rural Customers •Statewide, 75 percent of customers are served by natural gas utilities