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In 2023, the Michigan legislature passed Act 235, requiring energy companies to meet continuously increasing clean energy standards. By 2040, energy providers will be required to have an energy portfolio derived exclusively from “clean energy.” MCL 460.1051(1). This legislation, among other goals and incentives from utilities and the State of Michigan, has caused an increase in demand for renewable energy land uses in townships.

As further outlined in our January 2024 E-Letter, the Michigan Legislature passed “Siting Legislation” that will take effect in November 2024 and allows in many circumstances for developers to bypass local zoning regulations on utility-scale solar, wind, and battery energy storage system land uses and instead provides developers an option to site such land uses using a process involving the Michigan Public Service Commission (“MPSC”) . MCL 460.1222.Despite the above, many developers appear to still be interested in siting renewable energy projects using traditional local zoning ordinances regardless of the new MPSC option in Michigan. This E-Letter discusses one of the more recent renewable energy land uses, battery energy storage systems, and what a township may want to consider when drafting zoning regulations for the land use specifically in Section 3.

1.   What are Battery Energy Storage Systems and Why Are They Increasing in Demand as a Land Use?

Battery energy storage systems (sometimes called battery storage power stations, energy systems, or “BESSs”) are systems that collect and store energy to be discharged to the grid at a later time (i.e., the battery will be “charged” by surplus energy during low energy demand times and “discharge” energy to the grid during high demand times). See NFPA 833, § 3.3.9. BESSs are a relatively new land use in Michigan and have only recently begun to be sited by developers in Michigan. To the State and utilities, BESSs are a key tool to meet goals to provide reliable electricity from intermittent energy sources. To Townships, BESSs are a land use that it may seek to regulate through its zoning power to ensure that safety and security needs are met.

To ensure a reliable utility grid, electricity supply must meet electricity demand. Energy generation must be high enough to meet peak demand. See James McBride and Anshu Siripurapu, How Does the U.S. Power Grid Work? (Center on Foreign Relations 2022). Energy demand often fluctuates such as on warm summer days when many individuals are running their air conditioning systems. While traditional energy power plants such as coal, natural gas, and nuclear can generally have stable energy production levels that can be systematically increased to meet demand, energy from renewable energy sources can be more intermittent (i.e., dependent on wind and the amount of sunshine that are out of the control of humans and subject to mother nature). As more of Michigan’s electrical generation comes from renewable energy sources (wind and solar), there becomes a need to utilize BESSs for grid stability and to use stored electricity during periods of high demand.

As for BESSs, they are systems of batteries which store energy. See NFPA 855, § 3.3.9. Although different chemistries may be used to store energy, such as lead-acid or sodium, lithium-ion batteries are now most commonly used. Thomas Bowen, et al., Grid-Scale Battery Storage (USAID and NREL). Currently, a BESS land use will include, among other things: (1) a perimeter fenced area; (2) various buildings that appear similar in design to storage containers; (3) within the storage container buildings, “cabinets” containing batteries and fire suppression system; and (4) ventilation/air conditioning systems to cool the individual buildings. In our experience with this relatively new land use, these land uses are typically being sited in areas near existing renewable energy projects, substations, and/or transmission lines.

Practically, BESSs implicate some of the same concerns as other industrial land uses, but also may pose unique concerns. Like solar and wind energy systems, land-use concerns regarding sound and aesthetics exist when permitting BESSs. Further when BESSs are not properly sited or designed, they may pose unique hazards such as fire, explosion, and toxic gas release. See NFPA 855, Annex B.  A BESS may be sited in areas currently used for agricultural use. Therefore, there are also considerations for townships to ensure zoning ordinances contain proper decommissioning requirements to allow lands to be returned to a state to provide for agricultural use.

2.   How Will Battery Energy Storage systems be Regulated Under the State Siting Legislation?

As noted above, Act 233 of 2023 (the “Siting Legislation”) allows energy companies seeking to construct utility-scale battery storage systems the option to circumvent local zoning regulations by applying for permitting through the Michigan Public Service Commission (the “MPSC”). See MCL 460.1222(2). The Siting Legislation applies only to BESSs “with a nameplate capacity of 50 megawatts or more and an energy discharge capability of 200 megawatt hours or more.” MCL 460.1222(1)(c). All smaller BESSs do not have the option of siting through the MPSC.

Under the Siting Legislation, a developer seeking to site a utility-scale BESS may be required to do so in one of three ways:

1. Circumvent local zoning requirements and apply for permitting through the MPSC. MCL 460.1222(2).
2. Apply through a township’s “compatible renewable energy ordinance” if the township timely asserts that it has one. MCL 460.1223(3).
3. Apply for permitting under a local zoning ordinance. See MCL 460.1222(2).

The MPSC Process

A developer may – but is not required to – apply for permitting to construct a utility-scale BESS through the MPSC process. MCL 460.1222(2). The Siting Legislation establishes a state-permitting process and operation requirements for BESSs. MCL 460.1225; MCL 460.1226(8)(c). Under the MPSC process, developers will be required to comply with setback requirements, sound requirements, lighting requirements, and the guidelines implemented by the National Fire Protection Association (“NFPA”) for BESSs. MCL 460.1226(8)(c).  The NFPA generally includes standards for BESSs regulating hazard prevention, among other standards.

Compatible Renewable Energy Ordinance

If a developer opts to apply through the MPSC process, a township may assert that it has a compatible renewable energy ordinance. MCL 460.1223(3). If a township asserts a compatible renewable energy ordinance, a developer will be required to apply for permitting through the local ordinance rather than through the state. Id. Compatible renewable energy ordinance is defined as “an ordinance that provides for the development of energy facilities within the local unit of government, the requirements of which are no more restrictive than the provisions included in section 226(8).” MCL 460.1221(f) (emphasis added). Therefore, a compatible renewable energy ordinance will generally mirror the requirements that the state will apply. A developer may return to the MPSC process if a township denies a compliant application or wrongfully asserts having a compatible renewable energy ordinance. MCL 460.1223(3)(c).

Local Zoning

If a developer chooses, it may apply for permitting under a local zoning ordinance. In this instance, the traditional zoning process would occur and a township could adopt standards that are more stringent than what the state siting process or a compatible renewable energy ordinance would provide. Recently, our office has experienced a desire from many developers to continue to site renewable energy land uses, like BESSs, under local zoning regulations—even if the local regulations are more stringent than the Siting Legislation standards (but not too stringent to prevent a project). Accordingly, the next section will discuss items that a township may want to consider when updating its zoning ordinance to address BESSs.

3.   Updating a Township Zoning Ordinance to Address Battery Energy Storage Systems

As noted above, we have observed a demand from developers to site renewable energy projects like BESSs under local zoning ordinances rather than the state siting process, which will take effect in November 2024. For townships, this means they should review their zoning ordinances to make sure that BESSs are adequately addressed in a manner that reflects protections consistent with community goals and desires. Because BESSs are a new land use, many zoning ordinances will not explicitly address them. If a township zoning ordinance does not address the BESS land use, that can cause a court to interpret a zoning ordinance as not allowing BESSs, which will require a BESS to be sited under the Siting Legislation when it takes effect. This result can be troublesome for a township as explained below.

The challenge with forcing BESSs to be sited under the Siting Legislation is the state standards may not include provisions that can be feasible to a developer for a project. In other words, the Siting Legislation may allow a project with less “protections” than what is possible under local zoning. The same result would occur (a project sited with potentially less stringent standards) should a township simply adopt a “compatible renewable energy ordinance” under the Siting Legislation.

Townships should consider their unique needs and consider addressing issues not specifically contemplated in the Siting Legislation. In order to avoid a potentially lengthy state siting process, some developers may prefer to work through reasonable local zoning regulations, even if such regulations could be non-compatible if challenged.

When townships are considering addressing BESSs in their zoning ordinance, there are several areas they may want to address. Below is a list of some items that a BESS zoning ordinance amendment may want to contemplate. The below is not intended to be an all-exhaustive list and a township should strongly consider having legal counsel and/or a planner assist it with preparing any zoning ordinance amendment to address BESSs.

1. Decommissioning: Townships should make sure there is a financial security available to the township to, if necessary, decommission a BESS to allow its lands to be returned to productive use once the BESS is not operational.
2. Sound Standards and Testing: BESSs may generate noise from air conditioning units, inverters, or other components. To avoid nuisance impacts on adjacent properties, a township may want to consider imposing a sound standard and requirements for sound testing to ensure a BESS meets such a standard.
3. Emergency Response and Service: Due to the components of a BESS (a system made of many batteries), it is extremely important for ordinances to consider plans to deal with any emergencies to a BESS. An ordinance may require an emergency response plan to be prepared and for any developer to provide training or resources to local first-responders to adequately respond to emergencies at a BESS. Likewise, it may be appropriate in certain circumstances to require a BESS to provide an “emergency alert” system that residents can sign up for to have text alerts sent to residents in the event of an emergency. Thorough requirements for emergency planning can result in benefits by ensuring projects are not only prepared for emergencies, but also ensuring that emergencies/incidents at a BESS can be avoided.
4. Screening: Layouts of a BESS may not be aesthetically pleasing or may contrast with adjacent land uses such as rural residential. Townships may want to require reasonable landscaping and/or screening around the perimeter of a BESS project to help it be compatible with neighboring land uses.
5. Stormwater and Drainage: A BESS project may be located on land previously used for agriculture. In many areas of Michigan, private drainage is essential for agricultural activities. Therefore, a township may want to consider a BESS ordinance to require a thoughtful stormwater management and drainage plan to avoid disruptions to adjacent properties.
6. Agricultural Preservation: Many townships hosting renewable energy projects in Michigan are agricultural communities and their master plans and zoning ordinances may contain goals to preserve agriculture. Unlike a solar or wind project, BESS projects will generally require less land. A Township may want to consider requiring a developer to indicate how they will preserve agricultural activities or lands when siting a project (e.g., by farming around the perimeter of the project, having lands within a BESS fence include pollinators to benefit surrounding agricultural lands, etc.).
7. Setbacks: The smaller land areas necessary for a BESS project than a solar farm may provide more practical leeway with respect to setbacks being further from roadways and residential properties. A township should carefully consider setback requirements to avoid impacts to ensure compatibility with neighboring land uses.
8. Repowering: Many renewable energy land uses are represented to be temporary uses (i.e., they will be decommissioned after their useful life such as after a period of 20 years). However, owners may contemplate the concept of repowering, which is replacing project components to extend the life of a project. A township should consider what types of approval (if any) it wants to require if it wants to permit applicants to repower BESS projects.
9. Special Use Permits and Conditions: In many cases it makes sense to provide for BESS projects by special use permit in a zoning ordinance. This allows a township and its residents to learn about a project during a public hearing as well as to impose reasonable conditions on a project to ensure compatibility with zoning ordinance standards and to protect residents. Nonetheless, townships could also permit BESSs as permitted uses subject to site plan review.

We hope that this E-letter helped educate your township about BESS land uses and how a township may want to update its zoning ordinance to address BESSs. Should you have any questions about zoning ordinance updates for BESSs or the land use in general, do not hesitate to contact our office using the information below.

By Lindsey Gergel and Kyle O’Meara

This publication is intended for educational purposes only. This communication highlights specific areas of law and is not legal advice. The reader should consult an attorney to determine how the information applies to any specific situation.