Green Energy Portfolio Green Energy Portfolio StandardStandard

Barry Moline, Executive DirectorBarry Moline, Executive DirectorFlorida Municipal Electric AssociationFlorida Municipal Electric Association

(850) 224-3314, ext. 1 (850) 224-3314, ext. 1 bmoline@publicpower.combmoline@publicpower.com

www.publicpower.comwww.publicpower.com

December 2007December 2007

Our GoalOur Goal

Put proposal on tablePut proposal on table Focus on what is “Do-Able”Focus on what is “Do-Able” We studied state RPSs nationwideWe studied state RPSs nationwide Proposal takes the next logical stepProposal takes the next logical step Puts Florida in a national leadership Puts Florida in a national leadership

positionposition Thinks “Outside The Box”Thinks “Outside The Box”

GPS: “Next Generation GPS: “Next Generation RPS”RPS”

Green Energy Portfolio Standard (GPS)Green Energy Portfolio Standard (GPS) All state RPSs created in era with less All state RPSs created in era with less

attention to climate change issuesattention to climate change issues Includes renewable energy, energy Includes renewable energy, energy

efficiency, energy conservationefficiency, energy conservation NO difference between a kWh generated NO difference between a kWh generated

from renewable energy vs. energy from renewable energy vs. energy efficiency or conservationefficiency or conservation

20% Goal – What Time 20% Goal – What Time Frame?Frame?

20% goal is achievable, but probably 20% goal is achievable, but probably not in near term. not in near term.

Adding energy efficiency and Adding energy efficiency and conservation will make it achievable conservation will make it achievable in a faster time framein a faster time frame

Affordability Rate CapAffordability Rate Cap Utilities, Regulators, Legislators, Public Utilities, Regulators, Legislators, Public

concerned with open-ended cost of concerned with open-ended cost of RPS/GPSRPS/GPS

Affordability Rate Cap = 1% of utility Affordability Rate Cap = 1% of utility revenuesrevenues LBNL study (2006) of rate impact of RPSs LBNL study (2006) of rate impact of RPSs

across U.S.across U.S. Impact in the range of 1%Impact in the range of 1%

Let’s not argue about costLet’s not argue about cost If rate impact is around 1%, let’s agree that 1% is If rate impact is around 1%, let’s agree that 1% is

a reasonable upper limita reasonable upper limit Minimizes debate on cost-effectiveness testsMinimizes debate on cost-effectiveness tests

Why is Affordability Why is Affordability Important?Important?

Utilities, Regulators, Elected Officials are guardians Utilities, Regulators, Elected Officials are guardians of costof cost

We are careful about every penny added to We are careful about every penny added to customer billscustomer bills

Example – Orlando Utilities CommissionExample – Orlando Utilities Commission 40% of customers earn $35,000 or less40% of customers earn $35,000 or less 47% of customers are renters and may not be able to 47% of customers are renters and may not be able to

easily make changes that would reduce their energy easily make changes that would reduce their energy consumption consumption

Easy to think about the big pictureEasy to think about the big picture Reality – Implementation is harder, and requires trial and Reality – Implementation is harder, and requires trial and

errorerror Ongoing evaluation is vitalOngoing evaluation is vital

Let’s not overburden consumers from the startLet’s not overburden consumers from the start

GoalsGoals 1% ~ $200 million/year statewide 1% ~ $200 million/year statewide

annually (includes fuel)annually (includes fuel) $5.4 billion over 20 years$5.4 billion over 20 years Column B, trajectory of goals, Column B, trajectory of goals,

requires analysis to definerequires analysis to define No timing in Executive OrderNo timing in Executive Order Slow ramp-up?Slow ramp-up? Faster as technologies and Faster as technologies and

implementation improve?implementation improve? RFPs sufficient?RFPs sufficient? Resource study neededResource study needed

University, or someone with University, or someone with independenceindependence

If you guess at numbers, the If you guess at numbers, the goals are not defensible and goals are not defensible and will likely be wrongwill 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 * 200

2011 * 206

2012 * 212

2013 * 219

2014 * 225

2015 * 232

2016 * 239

2017 * 246

2018 * 253

2019 * 261

2020 * 269

2021 * 278

2022 * 285

2023 * 294

2024 * 303

2025 * 312

2026 * 321

2027 * 331

2028 * 341

2029 * 351

20 yearsCumulative

Total5,378

Categories of Green Categories of Green EnergyEnergy

• 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 Categories of Green EnergyEnergy• 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.

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 Categories of Green EnergyEnergy

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.

• 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.

Funding vs. GoalsFunding vs. Goals

Achieve either the goal in a particular Achieve either the goal in a particular year OR spend the budget for the yearyear OR spend the budget for the year Example:Example:

Goal is 5%, and budget is 1% ($10 million)Goal is 5%, and budget is 1% ($10 million) Achieve 5% goal by spending $5 millionAchieve 5% goal by spending $5 million

Utility can stop spending at $5 million Utility can stop spending at $5 million Achieve 4% of goal by spending $10 millionAchieve 4% of goal by spending $10 million Utility stops spending at $10 million Utility stops spending at $10 million In both cases, report reasons to PSC in annual In both cases, report reasons to PSC in annual

reportreport Information becomes input for 3-year Information becomes input for 3-year

evaluation and recommendation to Legislatureevaluation and recommendation to Legislature

Funding and Avoided Funding and Avoided CostCost

GPS budget used only for above-GPS budget used only for above-avoided-cost measures and technologiesavoided-cost measures and technologies If photovoltaics cost $130/MWh and avoided If photovoltaics cost $130/MWh and avoided

cost is $60/MWh, the only charge to the GPS cost is $60/MWh, the only charge to the GPS budget is $70/MWh ($130-$60/MWh)budget is $70/MWh ($130-$60/MWh)

Not the full $130/MWhNot the full $130/MWh If a 13 SEER air conditioner costs $7,000 If a 13 SEER air conditioner costs $7,000

and a 15 SEER air conditioner costs $9,000, and a 15 SEER air conditioner costs $9,000, a utility may provide a $500 customer a utility may provide a $500 customer incentive to motivate the customer to incentive to motivate the customer to purchase the efficient unit. Only $500 is purchase the efficient unit. Only $500 is charged to the GPS budget, not the full charged to the GPS budget, not the full $9,000$9,000

ConsiderationsConsiderations All GPS costs may be passed on to customersAll GPS costs may be passed on to customers Budget (1%) based on revenues, not rates, less Budget (1%) based on revenues, not rates, less

taxestaxes Includes fuel cost in base calculationIncludes fuel cost in base calculation

Credits (1 MWh) may be traded with others, Credits (1 MWh) may be traded with others, and may be counted only onceand may be counted only once

Excess Green Energy may be banked for Excess Green Energy may be banked for future yearsfuture years

Programs & projects may be counted that Programs & projects may be counted that were initiated on or after January 1, 1997 – were initiated on or after January 1, 1997 – but only current MWh count (Green-E but only current MWh count (Green-E Standard)Standard)

Production & savings must be metered or Production & savings must be metered or verified by statistical evaluationverified by statistical evaluation

Annual ReportingAnnual Reporting

Report annually to PSCReport annually to PSC Progress toward achieving goals and Progress toward achieving goals and

budget expendituresbudget expenditures Discussion of technologies and Discussion of technologies and

measures usedmeasures used Lessons learned and Lessons learned and

recommendations for improvementrecommendations for improvement

3-Year Evaluation3-Year Evaluation

Evaluate program every three yearsEvaluate program every three years Determine if goals, budget are too low or Determine if goals, budget are too low or

highhigh Share lessons learnedShare lessons learned

Are some programs more successful than Are some programs more successful than others?others?

Are some projects easier to implement?Are some projects easier to implement? Are there economies of scale for larger Are there economies of scale for larger

utilities vs. smaller ones?utilities vs. smaller ones? Recommend changes to LegislatureRecommend changes to Legislature

Alternative ProgramAlternative Program

Part or all of GPS budget may be Part or all of GPS budget may be spent on:spent on: State fund to provide Green Energy State fund to provide Green Energy

grants to publicgrants to public Another utility to develop Green Energy Another utility to develop Green Energy

projects or programsprojects or programs Qualified university or research center Qualified university or research center

for research, development and/or for research, development and/or demonstration of Green Energydemonstration of Green Energy

Where To Go From HereWhere To Go From Here

Learn from experiences of states who Learn from experiences of states who have developed RPSshave developed RPSs What works, what doesn’tWhat works, what doesn’t

RPS experts at national labs, RPS experts at national labs, nationwidenationwide

Resource study – must be done to Resource study – must be done to understand fully where we are and we understand fully where we are and we can gocan go Seek outside assistance – University, Seek outside assistance – University,

consultant, think tank, USDOEconsultant, think tank, USDOE