Published on January 7th, 2018 | by Danny Parker0
What About Florida? Energy Efficiency, Solar Energy, & Regulatory Backwardness In The Sunshine State (Part 6: Who Will Own The Sun?)
January 7th, 2018 by Danny Parker
Florida Utility Solar Plans: We’ll Own It, You’ll Buy It
Against complaints of their dismantling efficiency programs, a laudable accomplishment for Florida Power and Light Company (FPL) is their recent plans to greatly increase renewable energy generation. It is true that utility scale solar remains lower cost than rooftop solar for generation when both investments are unsubsidized. Also, it can be seen in the latest third party evaluation of the cost effectiveness of various generation resources that utility scale solar is now cost competitive with natural gas combined cycle generation even though solar will have to be part of a diversified collection of resources to meet 24 hour needs, according to this Lazard analysis1.
Still, as late as 2015, FPL claimed that utility solar plants in Florida were not cost effective. However, soon afterwards, utility solar projects sprouted in Georgia with astonishingly good results. In 2016, FPL suddenly changed course to embrace big solar in its 10 year site plan.
FPL officially connected three new 74.5-megawatt universal solar power plants to the energy grid that serves its customers on Dec. 31, 2016.
In 2017, FPL plans to build four more universal solar power plants. And this is just the start. The utility anticipates adding 298 MW each year over the 10 year forecasting period. This will consist of four 74.5 MW solar fields (450 acres with roughly 330,000 modules) installed each year. A large advantage anticipated is that the passage of Amendment 4 will include elimination of ad valorem taxes, substantially altering the resulting generation economics as the corporate tax rate on generation assets is 39 or 40%.
As Florida utilities are planning on ever more combined cycle natural gas generation, there is some concern about the exposure of the consumers in the state to the volatility of future natural gas prices.
While the installation of utility solar is no panacea against this exposure, it is certainly a hopeful sign that points at Florida IOU orientation towards a low-carbon electric generation future.
Plants sited and under construction are:
- Loggerhead (Putnam Co.)
- Blue Cypress Solar Energy Center (Indian River Co.)
- Barefoot Bay Solar Energy Center (Brevard Co.)
- Hammock Solar Energy Center (Hendry Co.)
Then from one year to the next, four of such universal solar fields will be sited around Florida, adding 298 MW in generation capacity annually. This will result in FPL’s total solar capacity increasing to approximately 2,420 MW by 2023. With this rapid gain in solar electric generation capacity, FPL will likely reach a historic milestone by 2020 when — for the first time in history — it begins to produce more energy from solar than from coal and oil combined (FPL Ten Year Site Plan, p. 6).
Buried in the report, FPL estimates that federal and state efficiency standards have had a huge influence in cutting load growth in Florida. (See page 30–35 of FPL’s Ten Year Site Plan.)
Note that consumption per customer peaked in 2010 and has been declining or nearly flat since. Indeed, total sales have been nearly flat in spite of adding 20–50K customers each year. FPL has revised downward its forecast for new capacity, which it will meet with a few combined cycle plants and lots of solar fields. Added demand from plug-in electric vehicles is estimated at 308 MW over the period.
Meanwhile, FPL only forecasts 167 MW of “private solar” over the same period. (p. 36) If we assume typical future “private PV” systems will be about 6 kW on average, this estimates about 28,000 PV installations over the period or about 2,800 per year — perhaps larger than what is taking place now, but not an explosion in installations by any stretch.
The levelized cost of rooftop electrical generation was approximately double that of utility generation. Although, the cost of distributed generation fell by 26% in 2016 — more than double that of utility reductions (11%). Of course, distributed generation has other advantages — a prominent one being the lack of needing expensive grid connection for utility generation, and also the reduced amount of grid losses from central solar electrical generation to site — which is often 7% to 10% or more of the energy use to get electricity from the point of generation to where it is used. Further, with higher saturations, there might be reduction of the need to site transmission lines as well.
It turns out that distributed solar is actually of small risk to ratepayers relative to raising rates. However, as shown by the 2014 LBNL study, net metering of distributed solar is a much more significant threat to utility shareholders. While there is only small risk to rising rates, it can significantly cut investor profits.
Are the people of Florida — the ratepayers — responsible for maintaining the profits of often wealthier utility shareholders?
Rooftop Solar’s Achilles Heel: Net Metering
One way to end the threat of homeowner-installed solar is to reduce the likelihood of its rapid spread by attacking net metering.
Amendment 1 was a deceptively worded amendment intended to mislead Florida voters that it was the right thing to select if a voter was in favor of solar energy. Not surprisingly, an overwhelming 70% of Florida voters were in favor of measures to increase the utilization of solar energy in the sunshine state.
However, in fact, Amendment 1 consisted of difficult to understand, but cleverly misleading, legal language guaranteeing the right of citizens to produce solar energy — a legal right they already had. It all sounded good to the unwary.
However, other language in the ballot initiative, “guaranteeing the right of homeowners not to have solar energy not increase the costs of electricity for any consumers,” while sounding protective, was more nefarious. This language would make it legally possible to utilities to then levy increased fees on customers producing solar electricity so that utilities could both maintain investor profits on distributed generation while at the same time discouraging installation of rooftop solar across the state.
This move comes at a time when the cost of rooftop solar in the U.S. has reached such lows – down to installed costs for residential generation approaching $2.50 per watt, such that generating one’s own electricity looks increasingly favorable compared with paying $0.11/kWh (note that the residential rate in Florida varies by the IOUs, but with state and local utility taxes added, the cost for consumers is fully $0.11 to $0.12/kWh).
The expectation in forecasts from the National Renewable Energy Laboratory (NREL) is that the cost of rooftop solar could reach as low as $1.50/W in the next few years. Utility scale costs are already low2. With the economics resulting from that low cost, solar electricity will become the very cheapest way to generate electricity when the sun is up, when compared to oil, coal, new nuclear, and even natural gas.
And another easy prediction: the cost for electrical storage is also falling rapidly, such that only a few years after solar becomes the lowest cost electric generation resource, either local or home storage will become as easy and seamless as the battery powering the laptop upon which many of you are reading this post.
The combination of electrical storage like the enhanced Tesla Powerwall (13.5 kWh of storage) coupled with the coming ubiquitousness of electrical vehicles — some of which will be parked at home — will make it possible for homes to approach the Holy Grail upon which I have spent my career: Zero Energy Homes that largely produce as much as they need.
And electrical storage coupled with self-generation leads to other possibilities: storm resiliency and powering plug-in electric automobiles.
Risking Grid Defection to Preserve the Business Model
Utilities are very aware of the potential of solar electricity power production, but the push from their side is to own the solar resource and charge their customers to use it. This is, after all, the business model upon which electric utilities have paved their way to financial success. And it is also true that the cost of generating solar electric power in large central generation farms is the way to the lowest cost generation given economies of scale. However, there are several countervailing trends that may eventually place distributed generation on near parity with central generation. I’ll briefly list them:
- Rooftop or neighborhood generation does not experience the distribution losses indigenous to central generation. The grid-connected electrons are used much closer to the place where they are needed. (Distribution losses are typically about 7–10% such that only about 90% of the generated electric power ends up doing useful work on the site premise.)
- No need to include expensive non-solar generation resources in the source mix such as coal and oil generation resources which will become more expensive than solar generation. For instance, a future utility based around neighborhood solar that used storage and low-cost solar generation would not need to pay for antiquated coal or oil generators that are no longer cost effective.
- There is no data about the shading effects of solar electric photovoltaic (PV) systems on heat gains to roofs/attic and homes. PV arrays are known to lower roofing temperature, but how might such shading reduce space cooling through the roof/attic section of the building envelope? If we better understood the advantages from shading from rooftop PV systems, how might this affect the attractiveness of PV systems in southern regions? We posit that installed PV systems will shade roofs and influence attic air temperatures and slightly reduce cooling loads after their installation. PV shaded roofs can be a part of high performance home solutions, particularly in hot climates like Florida.
How Rooftop Solar PV may Help Keep Homes Cooler in Summer
Experiments done in homes in Florida with reflective roofs installed over standard darker ones showed savings of about 20%. The saving of covering about 25–33% of the roof with PV could be expected to produce cooling savings of 5–7%. Although, this has never been measured. What do we know?
There has been one empirical study in Japan (Tsurusaki, Tanaka, and Nakagami, 2000) which saw a drop in measured space cooling of 26% in 33 measured homes in the Kanagawa Prefecture after rooftop PV was installed where most of the 2nd story roof was shaded by the comparatively large PV systems.
In San Diego Gas & Electric service territory, the estimated weather-related space cooling in this mild climate dropped by 45% after the installation of home rooftop PV arrays, indicating the impact of shading the arrays (Itron, 2010). However, these estimates were made in a very mild climate and one where air conditioning was not directly measured. There has also been one detailed study of a commercial facility by Dominguez et al. (2010) which showed pronounced cooling impacts in commercial buildings. Reductions to heat flux to the attic were 52–63% and the ceiling temperature under the insulated assembly was 2.5°C cooler under the sections with the PV system overhead.
The specific savings from roof shading from stand-off arrays will depend on convection radiation, spacing, roofing composition, tilt and wind. There are many unknown influences, including the convection coefficient at the array (both sides) and at the roof plane. These values are also influenced by the temperatures of these surfaces and the turbulent airflow between the roof and array.
With many unknowns and uncertainties, measured data is desirable. While industry has long recognized roof shading must influence cooling, this has never been measured. FSEC has proposed this research in the past as a natural follow-on to the PDR project, where we had 2–3 years of air conditioning data before installing any PV. However, we had no takers. I’ll suggest that such an influence — even if small — is an oversight and should be investigated in cooling-dominated Florida. Not only can covering a significant part of one’s roof generate a lot of electricity, it can also lower the amount of electricity that has to be used for cooling of the home below.
The Future of Rooftop Solar
The ongoing drop in the cost of generating your own solar electricity will likely forever change the long-term state of affairs. For one, not only are solar prices dropping, but the conversion efficiency of modules are increasing as well, meaning that a Florida roof with good solar exposure can produce about 10% more solar energy than a similar array installed 5 years ago. Along with storage and greater home energy efficiency, that means that the potential of homes that largely take care of them relative to annual energy are becoming ever more feasible – particularly after some new technologies such as heat pump water heaters, variable speed pool pumps, and heat pump clothes dryers become available. And with more energy produced on the roof, it can be stored for later use on a rainy day.
With net metering, it is possible to install fairly large PV systems and to obtain immediate and dramatic reductions to utility bills. See the illustration below of the installation of a 14.7 kW PV system on the Miami home of NBC 6 meteorologist John Morales last November. Since the installation of the solar electric system, Morales has seen his monthly bill drop by over $200 as seen in the monthly graph from the utility comparing consumption in the year before and after the PV installation. He estimates a 6 year payback for the system. Morales has also been an advocate for the Solar United Neighbors of Florida cooperative (formerly FLSUN), which helps homeowners throughout the state with bulk purchases for solar panels to reduce installed system costs.
My report on FL SUN's new solar power cooperatives launching in Miami. It's a great way to save 20% on the cost and installation of solar panels on your home. I'm participating, and you can too! Info session coming up Wednesday 31 May 7 PM at Miami City Hall in Coconut Grove.Mi repore sobre las cooperativas de energía solar que comienzan en Miami. Es una gran manera de ahorrar 20% en el costo de instalar paneles solares en su casa. Yo estoy participando, ¡y usted puede hacerlo también! Hay una reunión de información el 31 de mayo a las 7 PM en la alcaldía de Miami en Coconut Grove.
Posted by John Morales on Wednesday, May 24, 2017
Of course, net metering in its current incarnation may not be viable when the saturation of solar PV installations become greater than about 20% of Florida households. We need the grid to balance out loads and voltages. But Florida is very, very far away from that point (less than one tenth of 1% of homes have solar PV). So, if one wishes to see more solar in the Sunshine State, leave net metering rules as they are for some years. The uptake is slow because of the capital costs as well as state statutes that still forbid no-cost installation third-party solar electric sales as popularized by SolarCity and Sunrun.
Moreover, the greatest impediment to installation of rooftop solar — particularly for lower income households — has always been the hurdle to come up with $10,000 to $20,000 in capital costs needed to complete an installation. The IOUs in Florida have been determined to forbid these kinds of sales – and really any expansion of the rooftop solar market. Otherwise, how can they justify siting and constructing new generation facilities that are the fastest way to greater profits? I’ll suggest that the Florida PSC consider changing the rules such that IOUs can profit from rooftop solar as well as central utility generation.
The net metering terrain is also rapidly changing in the last months. Indeed, in late October 2017, Jacksonville Electric Authority (JEA—the 8th largest community owned electric utility) in the northeast part of the state announced that it would immediately alter its net metering policy as of March 31, 2018. Rather than compensate at the retail rate of approximately $0.11/kWh for solar generation sent to the grid, the new compensation would only be $0.0325/kWh — less than a third of what was previously provided. Generation that offsets consumption will still be compensated at the net metered rate, but excess power sent back to the grid would be compensated at the lower rate. And in a display of the future, in an effort to encourage site-level electrical storage, JEA announced they would pay homeowners up to $2000 to help install battery systems to help use solar produced power to offset evening and non-solar periods. Meanwhile, the Florida gold rush for utility scale solar is fully on display at JEA, as the municipal utility announced plans at the same time to add 250 MW of solar generation.
And even when net metering rules are altered, it will be important not to make them punitive such as advocated in states such as Nevada and Arizona where a political utility zero-sum-game battle is taking place over solar energy. Alabama may have the most punitive rates for solar customers in the country, creating fixed charge and wholesale compensation rates for power production that make any rooftop solar non-cost effective – an indication that the energy policy of that state is even more backward than that in Florida3.
However, utilities attempting to punish consumers and anticipating net metering without compensation are playing a dangerous game. That’s because the dropping cost of rooftop solar electric systems and the coming potential of economically adding 10–20 kWh of daily site storage means that, with efficiency, technology improvements like the ones described here that houses can simply dump the utility, opt off the grid with small backup generator systems for winter using natural gas or propane4. These systems are already readily marketed in Florida for power assurance after hurricanes. They would seldom be used with such homes, but with solar power costs so low, such systems would almost certainly be more cost effective than electricity with rates and charges designed to punish those producing home solar electricity.
Of course grid-defection is not a desirable state of affairs. We need the utility grid to balance out resources and loads and to be able to choose the lowest cost generation resources over time. Keep in mind that rooftop solar is not feasible for more than half of Florida homes due to shade and other obstructions. However, if we’re serious about reducing greenhouse gas emissions, we need an “all the above” strategy: efficiency, rooftop solar, and utility solar. The best solution is the middle ground. There is plenty of evidence to show that solar electric power in hot climates reduces the cost of providing electric power to the system because it largely cuts electrical demand in the daytime when cooling needs are high.
Also, changing net metering rules to punishment levels (as epitomized by Alabama Power) will encourage a flood of future major appliances (such as air conditioners and water heaters) that directly use PV to cut energy needs, but within a self-contained system when the electrons are all used in the equipment with onboard storage, do not interact with the grid and therefore do not need net metering. Such appliances would essentially be end-runs around net metering.
At FSEC, we have been testing such an appliance that uses solar PV to assist a heat pump water heater, but does not interact with the grid. The technology has shown dramatic reductions to water heating energy. With this system, smart controls allow more thermal energy to be stored in the tank when solar availability is high – the equivalent of 2 kWh in the tank itself and at no real cost. Testing over the last year has shown an 80% reduction in comparative tests at our labs of water heating energy. Moreover, it seems feasible that PV-assisted heat pump water heaters can be produced for less than the half of the costs of solar thermal systems – and with no plumbing, freeze protection. Installation would be exceedingly simple.
The key takeaway is that solar electricity is here to stay and a very good thing for Florida. In fact, I’d like to make the case that Florida utilities should help homeowners to purchase and install solar electric systems with battery backup. This could dramatically help improve the resiliency of the average household to power outages after a hurricane as well as sculpt future residential electric demand. We’ll cover that next time.
1 Although alternative energy is increasingly cost-competitive and storage technology with great promise, alternative energy systems alone will not be capable of meeting the baseload generation needs in the near future. Therefore, the optimal solution for many regions of the world will be to use complementary traditional and alternative energy resources in a diversified set of mixed generation resources.
2 In an earlier report NREL forecasts residential PV costs reaching $0.65/Watt in 2020. “DOE Maps Path to Huge Cost Savings for Solar,“ Dave Levitan, 2 Oct. 2013.
3 After a contentious conflict, net metering has been re-instated in Nevada.
4 These are readily available from the natural gas utilities in Florida and are sold based on emergency power in the event of hurricane power interruption. https://assurancepower.com