The Michigan Public Service Commission (MPSC) has approved a power purchase agreement (PPA) between investor-owned utility Consumers Energy and NextEra Energy Resources (NEER) for the developer’s 200MW/800MWh Century Oaks Energy Storage project located in Huron County, Michigan.
The approval of the agreement was announced 22 August 2024 after the MSPC posted a filing approving the agreement a day beforehand, in an online docket dedicated to documents relating to Consumers Energy (docket no. U-21090).
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RFP for generation in MISO zone 7
Consumers Energy originally submitted a filing with the MPSC seeking approval of the PPA on 13 May 2024, after it executed the agreement with NEER in April 2024.
Consumers Energy selected the project after the Michigan utility issued an RFP in September 2022 seeking clean generators capable of providing capacity in Midcontinent Independent System Operator’s (MISO’s) Zone 7 region by 1 June 2025.
The lithium-ion-based energy storage project, located adjacent to the intersection of South Grassmere Road and the Huron and Eastern Railway (HESR), is expected to connect to the MISO grid via ITC Holdings’ Grassmere 345kV substation.
US$14.36/MWh fixed energy payment
When an offtake agreement is available online, it is often heavily redacted to hide certain sensitive information. However, an unedited version of the Century Oaks PPA forms part of Consumers Energy’s application with the MPSC, revealing interesting information pertaining to pricing.
Under the terms of the agreement, Consumers Energy will pay NEER a fixed energy payment of US$14.36/MWh from the Century Oaks project for a period of 20 years, providing the utility with energy, capacity, Incentive Storage Renewable Energy Credits and ancillary services.
As explained in the PPA, NEER has guaranteed Consumers Energy that the project is not connected to another renewable source but is a standalone BESS capable of charging from the grid. If NEER fails to meet these criteria, the fixed energy payment rate will be reduced by US$0.68/MWh for the entire contract term.
Consumers Energy expects the PPA to cost US$769 million over the lifetime of the deal.
The PPA can be found from page 29 onwards in Consumers Energy’s application with the Michigan Public Service Commission.
Impacts to the permitting and interconnection timeline
Although the Consumers Energy 2022 RFP sought resources with an online date in 2025, the utility and NEER negotiated a contracted online date for the Century Oaks project of 31 May 2026.
This discrepancy was explained by Contracts Manager at Consumers Energy, Beth Skowronski, as part of a testimony that formed part of the utility’s application with the MPSC.
Skowronski explained that although a 2025 online date for the Century Oaks project was initially thought possible, NEER had since experienced permitting and interconnection delays which necessitated a 2026 contracted online date.
Skowronski went on to say that despite the delay, Consumers Energy decided to move forward with the Century Oaks PPA due to the “economics being more competitive than alternatives” and in the “best interest of customers.”
According to the testimony, Consumers Energy is currently negotiating another agreement as part of the 2022 RFP.
Second energy storage offtake agreement for Consumers Energy
The recent announcement represents a second BESS for Consumers Energy’s portfolio, following an announcement in June 2024 highlighting a PPA which the utility secured with Jupiter Power, as reported by Energy-Storage.News.
The two parties executed the agreement, covering 100MW of storage capacity from Jupiter Power’s Tibbits Energy Storage project, in December 2023 which was then approved by the MPSC in April 2024.
Consumers Energy will pay Jupiter Power a US$14.54/MWh fixed energy payment for a 20-year period commencing on 31 May 2025.
2.5GW of energy storage in Michigan by 2030
As part of Consumers Energy’s goal of reaching net-zero carbon emissions it has committed to having 75MW of battery storage capacity in its portfolio by 2027, rising to 550MW of capacity by 2030.
The utility’s plans align with the state’s wider goal of having 2.5GW of storage capacity by 2030 along with a 100% clean energy standard by 2040, as mandated by legislation signed by Michigan governor Gretchen Whitmer in November last year.
