This Big Energy Company Is Helping Small Business Kick The Coal Habit

Many major American companies grabbed the green branding spotlight by installing solar panels and wind turbines at their headquarters or operating in areas where there is ample access to renewables. Those opportunities are beyond the reach of most smaller companies and neighborhood businesses, but a good chance at green branding can still arise when local utilities transition out of coal.

The Michigan company DTE Energy is a good example of the benefits -- and shortcomings -- of that trend. DTE recently announced a new plan to wean its electricity customers off coal, but that doesn't necessarily mean an instant plunge into wind and solar for your neighborhood shop.

The renewable energy good news

With 2.2 million customers in Detroit and southeastern Michigan, DTE Energy is one of the largest electric utilities in the U.S. That makes it a good indicator of the direction for energy companies nationwide.

DTE has already established a low emissions profile that predates the current renewable energy trend, primarily through its hydropower contracts and the Fermi 2 nuclear power plant.

The company kept the option of expanding its nuclear capacity open, but its new plan for reducing carbon emissions makes it less likely that a Fermi 3 will be needed. (DTE's Fermi 1 nuclear plant suffered a permanent breakdown just a few years after it went online in the 1960s.)

The new targets, announced earlier this month, are designed to reduce DTE's carbon emissions by more than 80 percent by 2050.

DTE Chairman and CEO Gerry Anderson made it clear that the old jobs-versus-environment debate is no longer operational:

"We have concluded that not only is the 80 percent reduction goal achievable – it is achievable in a way that keeps Michigan's power affordable and reliable. There doesn't have to be a choice between the health of our environment or the health of our economy; we can achieve both."

The 80 percent goal will be reached in a series of steps. DTE expects to hit the 30 percent mark by the middle of the next decade. It hopes to hit 45 percent by 2030 and 75 percent 10 years later.

Renewable energy will not entirely drive the transition, but it does plays a key role.

DTE plans to add more than 6,000 megawatts of renewables under the new initiative. Going by the 2050 timeline, that's consistent with the company's past rate of adoption. DTE added 1,000 megawatts of wind and solar between 2009 and 2016.

As for coal, DTE previously shut down three coal-fired power facilities in the Michigan cities of Marysville, Harbor Beach and Conners Creek. And three more coal-fired units were retired at DTE power plants last year.

Within the next five years or so, the company expects to shut down its plants in River Rouge, Trenton Channel and St. Clair.

Grid modernization and 100 percent renewables

The new DTE initiative appears to be based on a relatively conservative outlook for the ability of wind and solar to compete on price with natural gas, at least in the near term. Wind and solar costs are dropping rapidly, but the shale gas boom is still alive. That means low-cost natural gas will continue to flood the market for the foreseeable future.

With that in mind, the new DTE initiative calls for the addition of 3,500 megawatts of natural gas capacity to replace coal power plants.

Aside from cost competitiveness, DTE's continued reliance on natural gas and nuclear also derives from the need to ensure 24/7 reliability. Intermittent sources -- namely, solar and wind -- were once assumed to fall short on the reliability score.

However, with the emerging combination of energy storage and smart grid technology, wind and solar are beginning to prove they can stand in for conventional power generation without a loss of reliability.

The reliability factor makes grid modernization a vital driver of renewable energy adoption. Accordingly, the new DTE initiative calls for a five-year, $5 billion upgrade that includes its natural gas infrastructure as well as its electric grid. (In addition to its electricity business, DTE has 1.1 million gas customers in Michigan.) In sum, the grid upgrades could put DTE in a good position to outperform its goals on renewables for electricity generation while easing back on its commitment to natural gas.