Energy: How we might pay for renewable resources
By Asjylyn Loder, Times staff writer
Published February 10, 2008
egislators checking out Gov. Charlie Crist's budget for energy diversity must feel like a wife contemplating her husband's heedless purchase of a 60-inch flat-screen high-definition TV with deluxe surround sound.
Can we afford this?
The state has to cut $2-billion out of the budget, but Crist went ahead and asked for $200-million for solar rebates, wind energy tax credits and grants for renewable energy and biofuels.
Crist wants the money to fuel the grand scheme he unveiled in July to reduce the state's greenhouse gas emissions and spur investment in renewable energy. But the Legislature stands ready to curb what some see as a reckless campaign that ignores the fiscal reality.
"These are challenges that are not unique to Florida," said Shalini Vajjhala, fellow at Resources for the Future. "The country as a whole is grappling with these transitions."
More than 30 states have embarked on programs to measure or reduce greenhouse gases, and more than half the states have imposed renewable energy requirements. Crist wants Florida to get 20 percent of its electricity from renewable energy, although he hasn't set a deadline yet. To get a sense of the magnitude of the course Crist has set, consider this: Right now, that number stands at 3 percent.
But the electric industry has survived major shifts before. Consider that in 1990, nearly 46 percent of Florida's electricity came from coal, more than 19 percent from oil, and 14 percent from natural gas. Those numbers shifted dramatically in less than two decades. The state's dependence on coal fell to 29 percent and oil to 10 percent, while dependence on natural gas surged to 43 percent. Nuclear, now at 14 percent, is poised to grow with the planned addition of as many as four new nuclear reactors.
What will it take to force a massive industry to once again set down a new path? Across the country and within Florida, creative strategies have begun to emerge. It leaves Florida and other states facing two basic questions: Where will the money come from? And what's the best way to spend it?
In search of megawatts
Finding the money for new energy policies falls to legislators like state Sen. Mike Bennett, the Bradenton Republican who chairs the Senate committee that deals with public utilities.
Bennett said he wants to put Florida on a path toward "energy independence."
"But we've got to find $2-billion, too," he cautioned.
Other legislators have cautioned Crist not to model Florida's policies after rich states like California. In 2007, California residents reserved state rebates toward the cost of 208 megawatts of solar power, and installed 17 megawatts, according to Sue Kateley, acting executive director of the California Solar Energy Industries Association, a trade group.
By contrast, Florida has installed approximately 1 megawatt in the last two years, estimated Bob Reedy, director of the solar energy division of the Florida Solar Energy Center. That's enough to power up to 600 homes, but the comparison isn't exactly apt, as solar power isn't available at all times.
But California devoted $3.3-billion to subsidize solar installation over the next decade. Crist has asked for $10-million, a pittance by comparison but still nearly three times what the state spent subsidizing solar last year.
So where do states like California get that kind of money? Judging by the overwhelming success of Amendment 1, Floridians aren't likely to acquiesce to new taxes, no matter how noble the cause.
But what if you could spend less than a quarter of a penny extra for every kilowatt hour of electricity you used, and put that money toward renewable energy? If you use 1,200 kilowatt hours, that means a $3 addition to your monthly bill.
"A dollar here and a dollar there adds up to real money, real quick," said Frank A. Felder, director of the Center for Energy, Economic and Environmental Policy, part of the public policy school at Rutgers University in New Jersey.
That's how New Jersey subsidizes its solar energy rebate program. The state passed a law in 1999 that tacked a "societal benefits charge" on to utility bills. The money gets passed through to the state to use for low-income utility assistance, nuclear decommissioning, consumer education - and clean energy.
It works better than property taxes, because it targets everyone who uses energy, whether they own or rent, Felder said. If you want to pay less of a charge, then you have to use less power, which is the goal of the program anyway. States can also structure it to exempt low-income households or senior citizens from the charge.
In five years, starting in 2001, New Jersey collected $787-million for its clean energy programs.
Making a market
There's a lot that Florida can do to promote clean energy without spending a dime, said Reedy.
"Legislators can make a market," he said. If legislators can create demand, it will lower the price of renewable energy, spur investment and create "green collar" jobs. He outlined three things legislators can do to ensure enough demand in the state that it will draw investment.
The first, set a renewable portfolio standard that requires utilities to get a certain percentage of their power from renewable energy. Utilities can produce it themselves, or purchase "renewable energy credits" for renewable energy produced either in Florida or outside the state.
Second, the state should eliminate what Reedy calls the "third-party prohibition." Florida rules allow a property owner, like a big-box store, to put solar panels on its roof. Utilities can offer rebates for that power. But a third-party investor can't lease the roof of the Wal-Mart and put up a system, and sell power to the grid.
Third, and perhaps most important, the state can establish net-metering rules. Say you've got a solar system on your roof. On hot, sunny afternoons, it might produce more energy than you can use, and you can sell excess back to the grid. At night, you'll have to buy electricity from the grid, most of it generated from fossil fuels like coal and natural gas. The difference between what you sold to the grid and what you bought is your "net" energy use.
Bennett said he backs net-metering rules as one of the "reasonable and prudent" measures legislators can get behind without costing Floridians big bucks.
Right now, Florida's utilities offer a rebate for distributed renewables like these. But the rebates pay a lower rate to the customer than the customer pays to buy power from the grid. The Public Service Commission adopted net-metering rules late last year, but Florida's utilities have objected to some parts of the rules, so the issue remains under debate. The Legislature might consider devising rules of its own that would force utilities to pay the same rate per kilowatt hour as they charge the customer.
Then there's the German model. That country subsidized solar electricity so that producers received a higher rate for the renewable power they sold to the grid, and paid less for power from the grid. At the end of the month, the power producers owed money to some customers. The program took off. Struggling farmers augmented their agricultural income by putting solar panels in their pastures, and selling the power.
"With a solar resource that's less than half of what we have in Florida, they've become the world's largest solar market," Reedy said.
As Reedy pointed out, the rule changes might not cost state government a dime. But they could cost the utilities plenty. Just how much will get passed on to consumers through higher utility bills remains to be seen.
But for consumers, there's another advantage of solar, Reedy said. The fuel is free, and the price will never go up.
Asjylyn Loder can be reached at email@example.com or (813) 225-3117.
Florida's Energy Mix
Coal: 29.2 percent
Petroleum: 10.3 percent
Natural Gas: 42.9 percent
Nuclear: 14 percent
Hydroelectric: 0.1 percent
Other Renewables: 2.0 percent
Other: 1.5 percent
Source: Energy Information Administration, Florida 2006 electric power generation by energy source