Florida Energy Facts

Quick Facts

Florida’s per capita residential electricity demand is among the highest in the country, due in part to high air-conditioning use during hot summer months and the widespread use of electricity for home heating during winter months.

Geologists believe that there may be large oil and gas deposits off Florida’s western coast in the Federal Outer Continental Shelf.

Florida is a leading producer of oranges and researchers are attempting to derive ethanol from citrus peel waste.

More petroleum-fired electricity is generated in Florida than in any other State.

Source: http://tonto.eia.doe.gov/state/state_energy_profiles.cfm?sid=FL

Renewable Portfolio Standards

The Florida Public Service Commission (FPSC) is required to adopt rules to establish a renewable portfolio standard (RPS), in consultation with the Department of Environmental Protection (DEP) and the Florida Energy and Climate Commission (FECC). The RPS rule would require each investor-owned electric utility (IOU) to supply a percentage of retail electricity sales from renewable energy resources located in Florida. The FPSC is required to submit a draft rule to the Legislature by February 1, 2009.

The FPSC recommends an aggressive RPS that requires each IOU to achieve 20 percent renewable energy by 2020. This aggressive standard is intended to protect existing renewables, and spur new renewable developers to enter the Florida market by establishing a long-term dedicated market for renewable energy in the state.

 Source: Florida Public Service Commission January 30, 2009, Draft Renewable Portfolio Standard Rule.

INVESTOR-OWNED ELECTRIC UTILITIES IN FLORIDA

  • Florida Power & Light Company (FPL)
  • Florida Public Utilities Company (FPU)
  • Gulf Power Company (GPC)
  • Progress Energy Florida, Inc. (PEF)
  • Tampa Electric Company (TEC)

 GENERATING MUNICIPAL ELECRIC UTILITIES IN FLORIDA

  • Florida Municipal Power Agency (FMP)
  • Fort Pierce Utilities Authority (FTP)
  • Gainesville Regional Utilities (GRU)
  • Homestead, City of (HST)
  • JEA (formerly Jacksonville Electric Authority)
  • Key West Utility Board, City of (KEY)
  • Kissimmee Utility Authority (KUA)
  • Lake Worth Utilities Authority (LWU)
  • Lakeland, City of (LAK)
  • New Smyrna Beach, Utilities Commission of (NSB)
  • Ocala Electric Utility (OEU)
  • Orlando Utilities Commission (OUC)
  • Reedy Creek Utilities (RCU)
  • St. Cloud, City of (STC)*
  • Tallahassee, City of (TAL)
  • Vero Beach, City of (VER)

Summary of Navigant Consulting, Inc.’s Report

Florida Renewable Energy Potential Assessment

In August 2008, the FPSC, in cooperation with the Governor’s Energy Office and the Lawrence Berkeley National Laboratory, engaged Navigant Consulting to perform an assessment of renewable energy resources that are currently operating in Florida and could potentially be developed in Florida through the year 2020. Funding for this study was provided through a grant from the U.S. Department of Energy. The final report was filed on December 30, 2008.

Navigant Consulting: (1) quantified existing renewable resources in Florida; (2) projected through 2020 future renewable development under varying economic and policy scenarios; and (3) conducted a screening analysis of renewables compared to utility resources with similar operating characteristics. 

In order to project future renewable energy development, Navigant Consulting identified ten key drivers that could impact the renewable energy market.  Scenarios of potential renewable development were analyzed around the five key drivers with the highest potential impacts and the most uncertainty. These drivers are: (1) fossil fuel prices, (2) cost of carbon under greenhouse gas emissions policies, (3) federal and state renewable energy tax credits and other incentives, (4) the availability and cost of debt and equity, and (5) the rate cap established for the purchase of Renewable Energy Credits (REC). According to Navigant Consulting, the purpose of the additional revenue stream to the renewable energy resource is to make up any difference between the cost of the renewable facility and the comparable utility generation facility in order to insure an adequate return on investment for the renewable developer.

Navigant Consulting created three scenarios for potential renewable energy development in which the five key drivers were used. These key drivers were varied under three scenarios to determine the impact on the development of renewable energy by 2020. These scenarios are summarized as:

  • Unfavorable – low fossil fuel prices, 1 percent rate cap, no extension of current government renewable incentives, tight financial markets, and carbon pricing of $10/ton by 2020;
  • Mid-favorable – mid range fossil fuel prices, 2 percent rate cap, partial extension of government renewable incentives, moderate financial markets, and carbon pricing of $30/ton by 2020; and
  • Favorable – high fossil fuel prices, 5 percent rate cap, government renewable incentives extended through 2020, widely available debt and equity, carbon pricing of $50/ton by 2020.

Navigant Consulting concluded that:

  • Under the unfavorable scenario for renewable development, renewable energy in Florida could be 5 percent of IOU retail sales by 2020;
  • Under the mid-favorable scenario for renewable development, renewable energy in Florida could be 11 percent of IOU retail sales by 2020; and
  • Under the most favorable scenario for renewable development, renewable energy in Florida could be 24 percent of IOU retail sales by 2020.

 Navigant Consulting found that renewable energy development would be expected to develop more extensively under a scenario with high fossil fuel prices, a 5 percent rate cap on RECs, government incentives extended through 2020, and widely available debt and equity at lower cost. Also, the Florida renewable energy resources with the most achievable potential under the economic and policy scenarios are: (1) ground mounted solar photovoltaic; (2) biomass – direct combustion; (3) biomass – waste to energy; and (4) waste heat from sulfuric acid conversion processes.

Current economic and policy conditions generally coincide with Navigant Consulting’s unfavorable scenario for future renewable development. Specifically, the unfavorable scenario for carbon pricing assumes $0/ton initially, then scaling to $10/ton by 2020. Currently, there is no federal or state policy establishing carbon pricing. Navigant Consulting assumes in its unfavorable scenario the cost of debt to be approximately 8.5 percent, the cost of equity approximately 14 percent, and ready access to debt, which would make-up 50 percent of renewable project financing. Currently, credit markets are extremely tight and it is uncertain when conditions will improve.

 Navigant Consulting assumes natural gas costs to be $5-$6/MMBtu in the unfavorable scenario. Currently, natural gas is trading at $5.70/MMBtu. Most forecasts project natural gas prices to increase over the long-term. Navigant Consulting projects various federal and state renewable energy financial incentives under each scenario. For example, in the unfavorable scenario, Florida’s solar rebate program is projected to expire in 2010, with a $5 million annual funding level. The Governor’s Energy Office has budget authority to spend $5 million in the 2008/09 fiscal year. It is unknown if and to what level the Legislature will appropriate funds for the solar rebate program in future fiscal years. It should be noted that Navigant Consulting performed their primary analysis with a solar and wind carve-out of 75 percent of RPS expenditures, identical to the FPSC’s draft RPS rule.

 Source: Florida Public Service Commission January 30, 2009, Draft Renewable Portfolio Standard Rule.

 

image0014Source: Navigant Report, Nov 13, 2008