Gainsville Solar Plan Attracting Attention

February 1, 2009

By Megan Rolland, Staff writer, Gainesville Sun
As lawmakers attempt to increase Florida's renewable energy supply and decrease the use of volatile and polluting fossil fuels, Gainesville could become a microcosm test site for a different approach.Republican Gov. Charlie Crist is promoting a mandate that all private utilities use 20 percent renewable energy sources by 2020.
Meanwhile, Gainesville is drawing attention from Tallahassee by implementing a "European-style" renewable energy incentive - cash rewards for electricity produced with solar technology.
A delegation of leading German solar companies will make a stop at the state Capitol next week and then travel to Gainesville to look at investment potential in solar - causing some to look a little closer at what's occurring here.
At least one state representative is promoting a combination of the two policies.
"They're not necessarily in conflict with each other. They can be complementary," said Rep. Keith Fitzgerald, D-Sarasota.
Fitzgerald drafted a bill for this session that could introduce a statewide feed-in tariff - an incentive structure that would encourage the production of renewable energy by obligating utilities to buy electricity generated via solar, wind, biomass and other renewable sources at above-market rates. While Fitzgerald is hammering out the details, he said he's hoping for bipartisan support from a senator who could get the ball rolling.
"Usually a bill is a three- to four-year project," Fitzgerald said. "In this climate, though, lightning could strike because people are really anxious to do something about energy, and I look at it as an economic development bill."
The governor's renewable energy portfolio standards also will be considered in the state Legislature this year.
Jeremy Susac, executive director of the Governor's Energy Office, said his office is watching with interest the debate over feed-in tariffs.
"We are very aware of the pros and cons and the mechanics of both (policies)," Susac said.
In brief, Gainesville's solar feed-in tariff would allow Gainesville Regional Utilities to purchase solar energy from investors - ranging from large companies to residents with solar panels on their rooftops - for at least 20 years. The price GRU would pay for this solar energy would allow these investors to make a profit. GRU's cost of paying for this solar energy then would be passed directly on to GRU customers.
That cost to customers is capped at about $1.5 million a year. Spread out among GRU customers, that would mean a 1.5 percent increase in base electricity rates.
The governor's renewable energy portfolio standards, which mandate what percentage of a utilities' energy must come from renewable sources, is an approach being taken by more than half the states - and it's an approach that could be adopted by the federal government this year.
The recommendation in Florida is to cap the impact on utility bills at 2 percent per year.
"The fundamental difference is the renewable portfolio standards are a market mechanism to drive the price of renewable energy down, where a feed-in tariff locks you into long-term contracts for an energy price," Susac said. "We believe the price of solar will decrease. If you're locked into a long-term contract, you're locked in. It's not responsive to the market."
Ed Regan, GRU's assistant general manager for strategic planning, said that with GRU's feed-in tariff there is a degression schedule that would reduce the purchase amount on solar energy annually so the subsidy would decrease as solar technology became more affordable.
Regan laughed at the contention that Gainesville's model is too expensive for taxpayers.
"The environmental law that is requiring us to put scrubbers on our coal plant is 10 times (the feed-in tariff cost) and no one is complaining about that," Regan said.
The state of Florida is a long way from meeting the recommended renewable energy goal of 20 percent set by Crist and the Florida Public Service Commission.
In 2008, 3.6 percent of the state's energy came from renewable sources - largely from burning municipal solid waste. "Technically it is possible," said Susac of the 20 percent benchmark. "You could put (solar photovoltaics) around the state or use all of our biomass potential. We have the resources here. The mere cost equation ... that is the fundamental question."
Mayco Villafana, a spokesman for the state's largest utility company, Florida Power & Light, said FP&L is supportive of the governor's initiative and will do its best to comply.
FP&L is proposing to build three new solar facilities that will add another 110 megawatts of solar generation daily to the state's mix. However, with FP&L having a current and growing generating capacity exceeding 25,000 megawatts of power each day, the solar projects will barely make a small dent in FP&L's push for 20 percent of its energy being renewable.
Although Crist's renewable energy portfolio standards don't apply to municipally owned utilities, Gainesville Regional Utilities is confident it can meet the 20 percent mark.
"By 2013, under conservative assumptions, we will have 17.8 percent renewable energies and 82.2 percent in fossil and nuclear," said Regan.
Three years ago, GRU was considering options for a new coal-fired power plant. City commissioners at the time rejected that proposal and instead moved toward a biomass-fueled plant.
Regan said negotiations for a 100-megawatt-a-day power plant fueled by wood are well under way, and the plant could open by 2013. Regan said he expects half of that 100 megawatts to be sold rather than used by GRU customers.
The other 50 megawatts of power generated daily by that plant certainly play a huge role in GRU meeting the mark, but Regan says the potential for private investment in solar photovoltaic panels will help, too.
"We can hit the mark," Regan said. "We get close to 20 percent if we start hitting our four-megawatt high-end estimate for solar panel installation."
Phone calls from local, national and international investors asking for more details about Gainesville's feed-in tariff are what make Regan so positive about the future.
While it's much easier for a smaller company like GRU to invest in one large renewable energy project and substantially alter its portfolio, proponents of Gainesville's approach to solar energy say it promotes enough small-scale solar projects to make a dent across the state.
"More than 80 percent of (solar) installation in Germany comes from facilities under 150 kilowatts in size," said Mike Antheil with the Florida Alliance for Renewable Energy. "Those are the smaller, widespread projects, and that's the difference between one massive renewable energy farm and solar on every rooftop in Florida."
All told, Germany - not exactly a sunshine state - installed 1,100 megawatts of solar photovoltaic panels in 2007. Meantime, a daily output of 205 megawatts of solar photovoltaic panels were installed in the U.S. in the same year.
Eric Wachsman from the Florida Institute for Sustainable Energy said Florida has the potential to get much more out of its solar cells because of sun intensity and population density.
GRU has largely sold the solar feed-in tariff as an economic stimulus that will bring outside investment and create a burgeoning solar industry that creates local jobs.
The German delegation of solar companies arriving Tuesday in Tallahassee and Thursday in Gainesville is perhaps the strongest evidence so far that the solar-boom model could play out.
"As a result of the decision by the city of Gainesville and its utility GRU to introduce a solar 'feed in tariff,' (the European Photovoltaic Industry Association's) member companies are now actively considering establishing a presence in Florida, where they may participate in the rapid growth that is to come," wrote Adel El Gammal, the secretary general of the EPIA, in a letter to Gov. Crist's office.
Several major solar panel-producing companies responded to a request from Mayor Pegeen Hanrahan that they visit Gainesville.
This week, the delegation will participate in a seven-hour renewable energy conference in Tallahassee hosted by a solar-industry lobbying group that sees a statewide feed-in tariff as one solution to renewable energy problems.
As for both renewable energy portfolio standards and feed-in tariffs working together, Wachsman said they could work hand in hand nicely.
"They are mutually beneficial if you have a (renewable portfolio standard) that creates an incentive for the industry to go in and put in renewable energy. The feed-in tariff provides incentive for homeowners to do it," Wachsman said. "They augment each other."
Wachsman said he was impressed by GRU's decision to move forward with a feed-in tariff. "It's just a matter of how you create incentive to have industry invest in renewable energy," he said.