After the Florida Public Service commission excoriated Florida Power and Light for “mismanagement” of its nationally recognized green power program, Sunshine Energy, the utility was forced to shutter its program last week.
The PSC’s drastic decision caught many in the utility green power business off guard. FPL’s program has consistently ranked among NREL’s Top 10 Utility Green Power Programs for both total renewable energy sales (No. 4, as of December 2007) and total customers enrolled (No. 6). The program also just narrowly missed being in the Top 10 of programs with the lowest premiums, with a relatively low 0.9 cents per kilowatt-hour charge. The program’s 37,184 participants paid premium pricing to support a total of 42.6 average megawatts of renewable generating capacity, or more than 10,000 kilowatt-hours a piece.
The Florida PSC news release cited the program’s high marketing and administrative costs — as much as 80 percent of proceeds from the premium pricing — as a major factor in its decision. But Cindy Muir, director of the office of public information at the PSC, told us that the decision was also based on the commission’s belief that “a voluntary program has kind of had its day in the sun.”
Florida recently signed a new energy bill into law that has tasked the PSC with drafting a Renewable Portfolio Standard (RPS). Historically, states with green power programs are more likely to also have a Renewable Portfolio Standard (RPS), according to NREL. But that once-happy correlation could soon prove challenging for voluntary programs, which will face increasing competition for both project development and renewable energy credits from utilities scrambling to meet RPS mandates. And that’s an issue that could soon have bearing for green power programs throughout the country.
Renewable energy credits can only be purchased from “new” renewables (those developed since 1997) and many of the credits available from both operating and under-construction projects are already spoken for, a situation that seems likely to worsen. A December 2007 NREL report (PDF) on green power marketing in the United States suggests that the growing number of Renewable Portfolio Standards across the United States could begin affecting the availability and pricing of “new” renewable energy projects as soon as 2010, when state RPS requirements ramp up. NREL projects that demand could outstrip supply by as much as 28 million MWh.
Thor Hinckley, green power program manager for Portland General Electric (a Top 10 program that also works with Green Mountain Energy, the green power marketer under scrutiny from the Florida PSC), says regional resources costs have jumped 20 percent annually over the last few years. Hinckley attributes that price increase in part to competition with RPSs in Oregon, Washington, and California.
While utility green power programs can help boost public opinion and financial support for renewable energy, NREL has long warned that the voluntary green power market is a slow way to generate cash flow for increasing capacity. And when it comes to using those funds for local development, not all states are created equal when it comes to wind, solar thermal and geothermal resources, and even in areas where such resources are abundant, such projects can take years to complete, with issues from siting to financing to materials shortages causing delays.