Green Energy Portfolio Standard

1
Green Energy Portfolio Standard

• Barry Moline, Executive Director
• Florida Municipal Electric Association
• [phone], ext. 1
• bmoline_at_publicpower.com
• www.publicpower.com
• July 2007

2
Our Goal

• 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

3
GPS Next Generation RPS

• 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
• NO difference between a kWh generated from
  renewable energy vs. energy efficiency or
  conservation

4
20 Goal Achievable?

• Difficult to achieve Governors 20 goal from
  renewable energy alone
• Adding energy efficiency and conservation will
  make it achievable in a faster time frame

5
Affordability Rate Cap

• Utilities, Regulators, Legislators, Public
  concerned with open-ended cost of RPS/GPS
• Affordability Rate Cap 1 of utility revenues
• LBNL study (2006) of rate impact of RPSs across
  U.S.
• Impact in the range of 1
• Lets not argue about cost
• If rate impact is around 1, lets agree that 1
  is a reasonable upper limit
• Minimizes debate on cost-effectiveness tests

6
Why is Affordability Important?

• Utilities, Regulators, Elected Officials are
  guardians of cost
• We are careful about every penny added to
  customer bills
• Example Orlando Utilities Commission
• 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
• Easy to think about the big picture
• Reality Implementation is harder, and requires
  trial and error
• Ongoing evaluation is vital
• Lets not overburden consumers from the start

7
Goals

• 1 200 million/year statewide annually
• 5.4 billion over 20 years
• Column B, trajectory of goals, requires analysis
  to define
• No timing in Executive Order
• Slow ramp-up?
• Faster as technologies and implementation
  improve?
• RFPs sufficient?
• Resource study needed
• University, or someone with independence
• If you guess at numbers, the goals are not
  defensible and will likely be wrong

8
Categories of Green Energy

• 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.

9
Categories of Green Energy

• 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.

The PSC may consider assigning greater weight to
technologies and programs that yield carbon-free
kWh. Allows opportunity to achieve Governors
preference to give higher priority to solar and
wind.
10
Categories of Green Energy

• 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.

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.
11
Funding vs. Goals

• Achieve either the goal in a particular year OR
  spend the budget for the year
• Example
• Goal is 5, and budget is 1 (10 million)
• 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

12
Funding and Avoided Cost

• GPS budget used only for above-avoided-cost
  measures and technologies
• If photovoltaics cost 130/MWh and avoided cost
  is 60/MWh, the only charge to the GPS budget is
  70/MWh (130-60/MWh)
• 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

13
Considerations

• 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

14
Considerations

• 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
• 20 cities, 1.4 of state electric load

15
Annual Reporting

• Report annually to PSC
• Progress toward achieving goals and budget
  expenditures
• Discussion of technologies and measures used
• Lessons learned and recommendations for
  improvement

16
3-Year Evaluation

• 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?
• Recommend changes to Legislature

17
Goals Non Achievement

• 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
  non-compliance penalty (for the 1st year not
  achieved)

18
Alternative Program

• 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

19
Non-Compliance

• Pay Green Energy budget x 1.1 to state fund for
  Green Energy grants

20
Where To Go From Here

• Seek input on proposal
• Learn from experiences of states who have
  developed RPSs
• What works, what doesnt
• RPS experts at national labs, nationwide
• Resource study must be done to understand fully
  where we are and we can go
• Seek outside assistance University, consultant,
  think tank, USDOE