Transcript Green Energy Portfolio Standard Barry Moline, Executive Director Florida Municipal Electric Association (850) 224-3314, ext.

Green Energy Portfolio Standard
Barry Moline, Executive Director
Florida Municipal Electric Association
(850) 224-3314, ext. 1
[email protected]
www.publicpower.com
July 2007
Our Goal
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Put proposal on table
Focus on what is “Do-Able”
We studied state RPSs nationwide
Proposal takes the next logical step
Puts Florida in a national leadership position
Thinks “Outside The Box”
GPS: “Next Generation RPS”
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Green Energy Portfolio Standard (GPS)
All state RPSs created in era with less attention
to climate change issues
Includes renewable energy, energy efficiency,
energy conservation
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NO difference between a kWh generated from
renewable energy vs. energy efficiency or
conservation
20% Goal – Achievable?
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Difficult to achieve Governor’s 20% goal from
renewable energy alone
Adding energy efficiency and conservation will
make it achievable in a faster time frame
Affordability Rate Cap
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Utilities, Regulators, Legislators, Public concerned
with open-ended cost of RPS/GPS
Affordability Rate Cap = 1% of utility revenues
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LBNL study (2006) of rate impact of RPSs across U.S.
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Impact in the range of 1%
Let’s not argue about cost
If rate impact is around 1%, let’s agree that 1% is a reasonable
upper limit
 Minimizes debate on cost-effectiveness tests
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Why is Affordability Important?
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Utilities, Regulators, Elected Officials are guardians of cost
We are careful about every penny added to customer bills
Example – Orlando Utilities Commission
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Easy to think about the big picture
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40% of customers earn $35,000 or less
47% of customers are renters and may not be able to easily make
changes that would reduce their energy consumption
Reality – Implementation is harder, and requires trial and error
Ongoing evaluation is vital
Let’s not overburden consumers from the start
Goals
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1% ~ $200 million/year statewide
annually
$5.4 billion over 20 years
Column B, trajectory of goals,
requires analysis to define
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No timing in Executive Order
Slow ramp-up?
Faster as technologies and
implementation improve?
RFPs sufficient?
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Resource study needed
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University, or someone with
independence
If you guess at numbers, the
goals are not defensible and
will likely be wrong
A
B
C
Year
Annual
% of Retail
Sales from
Green Energy
Upper Limit of Total Utility
Annual Expense (1% of
Revenues) and Consumer
Rate Impact ($ millions)
2010
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200
2011
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206
2012
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212
2013
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219
2014
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225
2015
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232
2016
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239
2017
*
246
2018
*
253
2019
*
261
2020
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269
2021
*
278
2022
*
285
2023
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294
2024
*
303
2025
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312
2026
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321
2027
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331
2028
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341
2029
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351
20 years
Cumulative
Total
5,378
Categories of Green Energy
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Solar photovoltaics
Solar thermal
End-use energy efficiency
Energy Conservation
Measures that reduce end use energy
consumption
Biomass (with land management)
Biofuels
Wind
Landfill methane
Methane digester or wastewater
treatment
Geothermal
• Ocean energy – thermal, tides, currents or
waves
• Transmission or distribution system efficiency
improvements
• Power plant efficiency improvements
• Waste-to-energy
• Hydro power
• Fuel cells (renewable-resource-derived)
• Combined heat and power
• Thermal storage
• Other resources identified by individual
utilities and approved by the PSC.
Categories of Green Energy
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Solar photovoltaics
Solar thermal
End-use energy efficiency
Energy Conservation
Measures that reduce end use energy
consumption
• Biomass (with land management)
• Biofuels
• Wind
• Landfill methane
• Methane digester or wastewater
treatment
• Ocean energy – thermal, tides, currents or
waves
• Transmission or distribution system
efficiency improvements
• Power plant efficiency improvements
• Waste-to-energy
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Hydro power
Fuel cells (renewable-resource-derived)
Combined heat and power
Thermal storage
Other resources identified by individual
utilities and approved by the PSC.
• Geothermal
The PSC may consider assigning greater weight to technologies and programs
that yield carbon-free kWh.
Allows opportunity to achieve Governor’s preference to give higher priority to
solar and wind.
Categories of Green Energy
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Solar photovoltaics
Solar thermal
End-use energy efficiency
Energy Conservation
Measures that reduce end use energy
consumption
• Biomass (with land management)
• Biofuels
• Wind
• Landfill methane
• Methane digester or wastewater
treatment
• Geothermal
• Ocean energy – thermal, tides, currents or
waves
• Transmission or distribution system
efficiency improvements
• Power plant efficiency improvements
• Waste-to-energy
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•
Hydro power
Fuel cells (renewable-resource-derived)
Combined heat and power
Thermal storage
Other resources identified by individual
utilities and approved by the PSC.
Utility side programs: Why relegate measures to a handful of renewable
energy and DSM staff ? Give everyone in the utility the opportunity to think
creatively about implementing efficiency options across all operations. The
goal is to generate more kWh with renewables or reduce kWh consumption
through efficiency or conservation.
Funding vs. Goals
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Achieve either the goal in a particular year OR
spend the budget for the year
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Example:
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Goal is 5%, and budget is 1% ($10 million)
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Achieve 5% goal by spending $5 million
 Utility can stop spending at $5 million
Achieve 4% of goal by spending $10 million
Utility stops spending at $10 million
In both cases, report reasons to PSC in annual report
Information becomes input for 3-year evaluation and
recommendation to Legislature
Funding and Avoided Cost
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GPS budget used only for above-avoided-cost
measures and technologies
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If photovoltaics cost $130/MWh and avoided cost is
$60/MWh, the only charge to the GPS budget is
$70/MWh ($130-$60/MWh)
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Not the full $130/MWh
If a 13 SEER air conditioner costs $7,000 and a 15
SEER air conditioner costs $9,000, a utility may
provide a $500 customer incentive to motivate the
customer to purchase the efficient unit. Only $500 is
charged to the GPS budget, not the full $9,000
Considerations
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All GPS costs may be passed on to customers
Budget (1%) based on revenues, not rates, less taxes
Credits (1 MWh) may be traded with others, and may
be counted only once
Excess Green Energy may be banked for future years
Programs & projects may be counted that were initiated
on or after January 1, 1997 – but only current MWh
count (Green-E Standard)
Production & savings must be metered or verified by
statistical evaluation
Considerations
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Utilities with sales less than 500,000 MWh asked
to meet standard voluntarily (PURPA Standard)
Excludes small entities such as Havana, Bushnell,
Wauchula
 Lack administrative staff to implement program
locally
 Could “write a check” to comply, but that removes
the most attractive option – local programs
 FMEA would work with small cities to bring into
program voluntarily
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20 cities, 1.4% of state electric load
Annual Reporting
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Report annually to PSC
Progress toward achieving goals and budget
expenditures
Discussion of technologies and measures used
Lessons learned and recommendations for
improvement
3-Year Evaluation
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Evaluate program every three years
Determine if goals, budget are too low or high
Share lessons learned
Are some programs more successful than others?
 Are some projects easier to implement?
 Are there economies of scale for larger utilities vs.
smaller ones?
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Recommend changes to Legislature
Goals – Non Achievement
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Average goal achievement over 5 years
Allows for over- and under-production in a
particular year, as well as initial ramp up
 If goals not achieved in 6th year, utility must
participate in the alternative program or pay the noncompliance penalty (for the 1st year not achieved)
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Alternative Program
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Part or all of GPS budget may be spent on:
State fund to provide Green Energy grants to public
 Another utility to develop Green Energy projects or
programs
 Qualified university or research center for research,
development and/or demonstration of Green
Energy
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Non-Compliance
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Pay Green Energy budget x 1.1 to state fund for
Green Energy grants
Where To Go From Here
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Seek input on proposal
Learn from experiences of states who have
developed RPSs
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What works, what doesn’t
RPS experts at national labs, nationwide
Resource study – must be done to understand
fully where we are and we can go
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Seek outside assistance – University, consultant,
think tank, USDOE