The green light is on for Lansing’s Board of Water & Light to step on the gas, but a group of concerned citizens is waving a yellow flag.
Last month, the state’s Department of Environment, Great Lakes and Energy, or EGLE, approved an air permit for the BWL to build a 110-megawatt natural gas-fired plant at BWL’s Delta Energy Park.
The proposed $160 million plant, part of a $750 million, 10-year build-out that will also expand the BWL’s solar and battery power, looks like a done deal—unless local environmentalists can persuade the public utility to reconsider.
The BWL plans to have the plant up and running in 2026, along with its two existing natural gas-fired plants in REO Town and Delta Energy Park.
How does a new investment in fossil fuel-burning technology fit in with a state law requiring 50% renewable energy by 2030, not to mention the BWL’s goal of carbon neutrality by 2040?
BWL General Manager Dick Peffley said the gas plant would not operate full time but would be “cycled on and off to help support renewable generation and maintain grid reliability.”
“If we didn’t have to build these, we sure as hell wouldn’t do it,” Peffley said in a phone interview.
Members of the Capital Area Friends of the Environment — CAFÉ — and their allies aren’t taking the utility at its word. Former BWL Commissioner Dusty Horwitt said the energy plan was developed under a veil of “secrecy” and “exclusivity from the general public” and fears BWL will do so again. The utility has reserved the option of building more gas plants if necessary.
Burning gas is much cleaner than burning coal, but it’s not without consequences. Even with the latest technology, the plant will spew tons of greenhouse gases into the atmosphere and emit a wide range of pollutants, including tiny, breathable particles that could hurt human health.
As the cost of renewable energy plummets and battery technology advances dramatically, CAFÉ and its allies are urging the utility to rethink its generation strategy.
Big customers
In July 2023, BWL rolled out the largest planned growth in its history: an additional 650 megawatts of “clean energy,” including 260 megawatts of local solar power, 238 megawatts of wind energy and 160 megawatts of battery storage, as part of a $750 million expansion over 10 years. A year later, the wind part of the plan was up in the air. The 238 megawatts of wind were not part of the BWL’s budget presentation to Lansing City Council on July 8.
“It’s been problematic trying to get licensing, to get permits,” Dick Peffley explained to Councilman Ryan Kost.
But after last month’s air permit from the state, the fossil fuel-burning part of the plan is a go. BWL plans to build a 110-megawatt Reciprocating Internal Combustion Engines (RICE) natural gas-fired plant on the site of its Delta Energy Park and “a possible additional gas plant at a location to be determined later,” according to the 2023 announcement.
According to Environmental Protection Agency estimates, the RICE plant, if operated continuously, would produce about 550,000 tons of greenhouse gases each year, roughly equivalent to about 120,000 vehicles on the road.
But Peffley said the plant won’t operate continuously.
“Our intent isn’t to run the RICE engines unless they’re needed because of the gap in renewables or the batteries are run down,” Peffley said.
With their quick start-up and shutoff times, RICE plants are often used to back up intermittent renewable sources and cope with periods of see-sawing demand. In 2020, Michigan State University installed three RICE plants in its T.B. Simon power plant. MSU utilities director Sherri Jett said the units would provide a “quick response to offset the inherent volatility of renewable energy production.”
Peffley likened the BWL’s planned RICE units to household or commercial on-demand generators, with their comforting promise of power when suddenly needed.
The comparison leaves out a significant disparity in scale. BWL plans to install six RICE generators and two diesel-fired emergency units, which would generate up to 110 megawatts, or about one-fifth of the utility’s current power.
The high generating capacity is no accident. Around the world, thirsty new electricity consumers are emerging in the late 2020s, led by massive data centers, AI technology and domestic battery manufacturing. Lansing is getting a piece of that action.
This fall, the BWL expects an unprecedented demand surge from the 2.8-million-square-foot, $2.6 billion Ultium Cells battery cell plant now taking shape in Delta Township, near the GM Lansing Delta Township plant off Davis Highway.
Peffley said that the Ultium plant is expected to create a staggering 30% increase in the BWL’s electricity demand.
The plant will support the production of battery cells for GM’s Ultium Platform-based electric vehicles, including the Chevrolet Silverado EV and GMC Sierra EV.
“By far, they will be the largest customer,” Peffley said.
Peffley said the BWL has always been “long on generation” and ready to take on new customers, even high-demand ones like Ultium.
“We have the energy available right now. They’re going to be ramping up this fall, and we’re ready to go from our end.”
Then why is new generation necessary?
“They will be gobbling up a lot of our excess energy that we would typically would sell on the market,” Peffley said.
Peffley has made it clear that if Lansing is to attract more big customers and the jobs they bring, BWL needs to be ready.
He told the BWL Board of Commissioners at its July 2023 meeting that a second gas plant might be necessary.
“We will have to evaluate the need for a second combined cycle plant that will be added, based on future load” and requirements of the Midcontinent Independent System Operator. This nonprofit organization operates the electric grid in the Midwest, Peffley said.
“We’ve got some big customers who are going to locate here, and we’re not going to turn away business.”
Peffley touched upon the same theme in a phone interview last month. “When I came in eight years ago, the thought was ‘economic development,’” he said. “The stronger your local utility is, the more folks will locate here. That’s good for the city; that’s good for everything. We didn’t want to become, for lack of a better term, Flint 2.0.”
‘We are in compliance’
At the July 8 City Council meeting, Councilman Brian Jackson asked Peffley what percentage of BWL’s output comes from renewable sources.
The question led to a testy exchange. Peffley cautiously declined to produce a figure on the spot. He promised a written answer later, saying he wanted to “cross all the t’s and dot all the i’s.”
Jackson was incredulous that Peffley and BWL chief financial officer Heather Shawa, sitting next to him, didn’t have such a crucial benchmark in their spreadsheets or even in their heads.
A visit to the BWL’s website and some quick math might help explain their reluctance. A chart of the BWL’s energy portfolio on the website puts the utility’s renewable (wind and solar) energy output at 463,000-megawatt hours a year, or only 12.8% of the utility’s total production of 3.613 million megawatt hours.
New rules passed by the state Legislature and signed by Gov. Gretchen Whitmer late last year gave the question extra urgency. State law calls for 50 percent renewable energy by 2030 and 100 percent clean energy by 2050. The BWL’s strategic plan aims to produce 50 percent of its power “from clean sources” by 2030 and become “completely carbon neutral” by 2040.
That leaves the BWL fewer than six years to bridge the gap.
A new gas-fired plant strikes some observers as a move in the wrong direction.
Others phrase it less mildly.
“It’s just insane,” Heather Douglas said. “What are you thinking, BWL?”
Douglas, a member of CAFÉ, is an associate professor at MSU and former associate director of the Institute for Sustainable Energy at the University of Waterloo in Ontario.
Although BWL’s plans are in flux, Douglas doubts the utility can meet the looming state standards. Under state rules, the planned RICE units can’t be counted as “clean energy” unless they use carbon capture, which is widely considered cost-prohibitive.
Douglas estimated that, at best, BWL will achieve 33% to 35% clean energy by 2030 — possibly even less, since the utility withdrew its planned 238 megawatts of wind power from the plan.
“It’s going to change,” Peffley told the City Council. “In a couple of years, we’ll be back. There will be newer technology. Solar panels may be more efficient, and we can get bang for the buck.”
BWL spokeswoman Amy Adamy said the utility is “actively working to expand wind energy in its portfolio despite external challenges.”
“We’ll be at 50 percent by 2030,” Peffley told the Council. “The Clean Energy Program is the law. We are in compliance with the law.”
Shaving the peaks
Instead of spending $160 million on a gas-burning power plant, CAFÉ and its allies urge BWL to invest more in solar and wind projects. However, solar and wind projects, however ambitious, leave the utility with the problem of handling peak demand events with the fickle output of the wind and the sun.
“Buying tens of millions of dollars worth of natural gas when you could do it all with sun, wind, and batteries — we would obviously jump at that,” Peffley said. “It’s just not there yet. There’s no way we could have storage to make up for 29, 30 days of no sun in January, especially with the huge industrial load we have.”
Battery technology is part of the solution. According to the energy research group BloombergNEF, the cost of lithium-ion batteries more than halved from 2016 to 2022 to $151 per kilowatt-hour of storage.
While sharply critical of the decision to build a gas plant, members of CAFÉ praised the BWL’s 160-megawatt battery investment, also announced in July 2023.
“Nobody’s got anything that size in Michigan,” Peffley said. He told the City Council that Michigan’s Healthy Climate Plan calls for 1,000 megawatts of battery storage by 2025. “We will supply 16% of that while generating only 6% of the state’s energy.”
But Peffley said batteries only store energy for four hours, and that’s not enough to cover a prolonged dip in supply or spike in demand.
Tom Stanton, a longtime Lansing resident, a member of CAFÉ, and an energy policy analyst for over 40 years, has studied this problem for years.
“What happens if we start to reach a peak, and the wind isn’t blowing and the sun isn’t shining at the time when we need more energy?” Stanton said. “They want something they can turn on and off because that’s what they’re used to doing for the last 125 years.”
Stanton urges the BWL to leap-frog over fossil fuel technology and invest in expanded renewables, battery technology, energy efficiency and decentralized distributed energy sources.
While cheaper than ever, lithium-ion batteries are only the beginning, Stanton said. Interconnected “virtual power plants” are already beginning to link residential solar panels, electric vehicle charging stations, grid-integrated water heaters and appliances, making it possible to manage supply and demand “like the instruments of an orchestra.”
“Over 99 percent of all utility customers need energy in such small quantities, the best way to serve them is through distributed energy resources, integrated into micro-grids,” Stanton said. “We’ve talked with the Board of Water & Light multiple times about this over the past eight years.”
BWL’s Peak Power Program automatically raises or lowers smart thermostats in participating homes to respond to peak demand periods. Stanton said a more comprehensive range of demand management tools is already available, and more advances are forthcoming.
These include the storage of energy “in the form of chemicals, which could be hydrogen or other energy carrier chemicals,” he said.
The proposed RICE plant could reach obsolescence well before its adolescence, thanks to new technology such as iron-air batteries that harness the chemical reaction between iron and air — rusting — to capture, store and release energy over a longer term, using abundant and cheap materials (mainly, iron and oxygen).
“And we should talk about thermal energy storage,” Stanton added. Thermal energy storage takes in a dizzying range of materials and devices, from hot rocks to ice blocks, which serve as “batteries” for heat or coldness to smooth out energy demand peaks.
A 2024 report from the U.S. Energy Department called thermal energy storage “a critical enabler for the large-scale deployment of renewable energy and the transition to a decarbonized building stock and energy system by 2050.”
“We know there are ways to adjust the demand to match the supply, and that’s a complete game-changer in this industry,” Stanton said.
Given the dramatic advances in renewable energy and battery technology, the spread of distributed energy sources and increasing sophistication of demand management — not to mention the state’s impending clean energy rules —Stanton fears the planned gas-fired RICE plant will soon become a “stranded asset.”
“Why would you buy a 50-year resource and retire it after 15 years?” Stanton said. “That blows my mind.”
Peffley countered that unlike the BWL’s old coal plants, designed to last 50 years or more, gas plants “depreciate out after 25 years, 30 at the most.”
“They’ll be very close to the end of their life when 2040 rolls around,” Peffley said. “We’re not looking at a huge, stranded cost investment.”
However, if the new RICE units go online in 2026, as planned, the state’s clean energy goal of 100% by 2040 will leave them high and dry in 14 years—about half of their expected life, barring an unforeseen advance in carbon capture technology. To keep them going after that, the BWL would have to put them on a rocket and send them to an icy planet where their carbon dioxide would be more welcome.
“We feel that by 2040, there’ll be technology we can put in place that would minimize, if not retire, those facilities,” Peffley said.
CAFÉ’s Douglas isn’t so sure. “It’s going to be a huge cost the ratepayers are going to be burdened with,” she said. “It’s $160 million. If you pay for renewable energy and storage now, you have no future fuel costs, and it’s inflation-proof.”
Take a deep breath
Coal is all but dead in Lansing. BWL closed its last coal plant, the Erickson Power Station, in 2022. The utility still has a contract to buy 150 megawatts of energy from DTE’s coal-fired Belle River plant in St. Clair County, but that plant is transitioning to natural gas.
By most measures, natural gas is cleaner than coal. According to Scientific American, carbon dioxide emissions from power plants have fallen about 35 percent since 2005, largely because of the shift from coal to gas.
The federal EPA reported in 2016 that natural gas units emitted 898 pounds of carbon dioxide per megawatt hour, compared to 2,180 pounds for coal-burning units at the same rate.
But 898 pounds isn’t nothing. And carbon dioxide isn’t the only harmful consequence of burning natural gas.
BWL’s Delta Energy Park project site, including the gas-fired plant already running, “would become a major source of HAPs,” or Hazardous Air Pollutants, when the RICE plant goes online, according to the utility’s August 2023 application for an air permit for the proposed RICE plant.
The U.S. Environmental Protection Agency describes HAPs as “those known to cause cancer and other serious health impacts.”
The application also states that the project will result in a “significant emission increase” in nitrogen oxides, carbon monoxide, volatile organic compounds and particulate matter small enough to inhale.
Heather Douglas is concerned about the planned RICE plant’s impact on a part of town already dealing with emissions from several industrial operations, including BWL’s Delta Energy Park, GM’s Lansing Delta assembly plant and various construction and asphalt companies.
Neighborhoods within two to three miles of the planned RICE plant “have high asthma rates, 90th percentile of asthma rates,” Douglas said. “This is going to emit more PM 2.5,” particles smaller than 2.5 micrometers across, compared to a human hair at 70 micrometers across — small enough to travel deeply into the respiratory tract, including the lungs.
“It’s going to exacerbate these conditions.”
In response to public comment, EGLE stated that the BWL “demonstrated that they will be able to meet all (state and federal) rules and regulations.”
The air permit requires multiple levels of testing, monitoring and recordkeeping, but Douglas is concerned that it won’t be enough. The nearest air quality monitor to the planned RICE plant is at 815 Filley St. in Lansing, more than six miles from the new plant.
“The community needs better air quality monitoring, not more air pollution,” Douglas said.
Pleading a limited budget, EGLE reported in its replies to public comment that it expects to install a new monitoring site south of Interstate 496 and north of Interstate 96, “ideally located at a school or community center,” by Jan. 1, 2027.
The crucial years
As the sharpening global climate crisis intersects with rapid advancement in renewable energy and storage technology, CAFÉ members want the BWL to pivot decisively from burning fossil fuels.
They also want to know how the utility formulated its current plan.
It’s not an academic question.
Former BWL Commissioner Horwitt was surprised when Peffley sketched out the generation plan “in about 10 minutes” at the July 11, 2023, BWL commissioners’ meeting. Horwitt said the BWL did not issue detailed draft plans, with an opportunity for public comment, before the announcement.
At that meeting, Peffley said that some parts of the plan, such as the wind farms, might take years to piece together, but others would start happening “tomorrow.”
“In 20 years of working on environmental issues, I’ve never seen a public agency, on a major plan, operate at this level of secrecy and exclusivity from the general public,” Horwitt said. “He said it’s going into effect the next day. I thought, ‘Wait a minute.’ Where is the opportunity for the public, or the board, to see the plan and comment on it?”
Peffley said the plan was drawn up after the utility combed through an unexpectedly large number of projects it received in response to its All Source Request For Proposals a year earlier.
“We were ready for about 50 or 60, and we got about 110 proposals,” Peffley said. “We evaluated all of them, had consultants help us, and pulled the ones that made sense for LBWL. We had some proposals that would make better sense in Florida.”
Peffley told the City Council in July that there were 12 opportunities for public input during the RFP process.
“I don’t know when those happened,” Horwitt said. “They didn’t happen when I was on the board, and I was on the board from October 2021 through July 2023, shortly after the plan was announced.”
Horwitt’s concerns over the process might seem like closing the barn door after the horses are gone, but they take on more weight given the BWL’s intention, as laid out in the July 2023 Clean Energy Plan rollout, to build more gas plants if necessary.
“We will have to evaluate the need for a second combined cycle plant that will be added,” Peffley said at the July 2023 board meeting. “We’ve got some big customers who are going to locate here, and we’re not going to turn away business.”
With or without information on how the BWL modeled its current plan, CAFÉ is talking with other area groups about preparing an alternative energy plan for the BWL service area.
Stanton said Five Lakes Energy, a consulting group, is drawing up a similar plan for Traverse City, but these plans cost money to formulate.
“We don’t yet have the financing to pay for that work,” Stanton said. “And the BWL has thus far refused to share the details of their planning models, making it very difficult for us to do the kind of analysis needed.”
CAFÉ members are not taking this upon themselves for fun. Now and then, Douglas takes a break from the graphs and spreadsheets to take a longer view.
Whether a 110-megawatt gas plant is built in mid-Michigan in 2026 may not seem like an earth-shattering matter, but it is a small part of one.
Environmentalist and author Bill McKibben considers the next five years to be “crucial” to avoiding the worst consequences of climate change.
“We’re engaged in the most desperate race in human history—a race between a rapidly unraveling climate and a rapid build-out of renewable energy,” McKibben wrote June 11 in his blog, “The Crucial Years.”
The good news, McKibben reports, is that we are finally approaching the “sweet spot” of the curve, as plunging costs and increasing efficiency of renewables and battery technology push the world from “minimal reliance on renewable energy” to “minimal dependence on fossil fuels.”
McKibben compared the adoption curves for renewable energy and storage to those for color TV or cellphones — “from nothing to ubiquitous in a matter of years.”
McKibben says that the angle of that adoption curve “may prove to be the most significant geometry of our time on Earth.” If there’s any way, however limited, that geometry can be squeezed, nudged or stretched in the direction of survival, the members of CAFÉ and their allies believe it’s worth a try.
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