Working in the automotive industry for over 20 years, I saw firsthand how powerful a tool benchmarking could become. Over and over I saw Ford Motor Co. improve its manufacturing processes, its quality and its products by studying the strengths and weaknesses of its competitors. Naturally, the products of Japanese and German companies received much attention.
Michigan would do well to benchmark the energy experiences of Germany and Japan. Prior to the 1986 disaster at Chernobyl, all three used a centralized, regulated utility structure. All three used energy efficiency and conservation programs to reduce energy use, although Germany and Japan were much more agressive in implementing these efforts.
Since the Chernobyl disaster Germany and Japan have taken markedly different paths. Japan gravitated to an even more centralized, nuclear future for power generation. Germany opted for a new decentralized, distributed focus on renewable energy. After the Fukushima disaster no one in either country doubts that Germany’s path is the best alternative. No one in Michigan should doubt it, either.
Germany’s plan has 5 key components:
1) Access to the grid is open to all who qualify. Over 800 co-ops and corporations have sprung up to supply electricity.
2) Feed-in tariffs were set up to provide a 5 percent to 7 percent profit margin.
3) Those tariffs were guaranteed for 20 years.
4) Costs were assigned to customers, not to government grants. (Heavy electricity users who exported products were protected.)
5) The power grid was decentralized and updated.
Results? At the start of the changeover, German utilities resisted and confidently predicted that renewable power would only supply 4 percent of the country’s need. Today, renewables supply 25 percent of Germany’s electricity and they expect to supply 80 percent by 2050. The renewable power industry has created 350,000 jobs for the German economy.
Fossil fuels have provided mankind with many benefits for 200 years. But we have used all the cheap, easy-to-find energy and we now know that carbon dioxide is warming the planet and changing our environment rapidly. Depending on fossil fuels and dabbling in renewables, Michigan’s current policy, is no longer sufficient. American ingenuity and Michigan manufacturing can solve this problem, but only if we put a system in place that develops the right incentives for the free market to unleash its power.