Florida Leans More on Natural Gas than Renewable Energy

Natural gas is easily Florida’s main source of energy, offering up 1,300 Trillion Btu in 2014. Gas is 62% of Florida’s power generation, compared to 47% in 2008, when the “shale revolution” really took off. Florida is unique in that power generation accounts for nearly 90% of the state’s total natural gas demand, while the national average is 33%. Second place Florida uses around 3 Bcf/day to generate 145 billion kWh of gas-fired electricity, compared to Texas leading at 205 billion kWh and California third at 120 billion kWh.

The “Sunshine State,” however, is being criticized by environmental groups for such a dramatic shift to natural gas, despite the known cost and environmental advantages. Florida today has no wind power and solar accounts for less than 1% of the state’s electricity. Natural gas provides 585 times more electricity in Florida than wind and solar combined. Florida though is just like the other Southeastern states and has no Renewable Portfolio Standard (RPS, see here). Policymakers (and the wind industry itself, see here) realize the limited opportunities for wind power in particular in the region, which is more reliable and will remain about 45% cheaper than solar. 

No wonder that wind power has accounted for about 85% of RPS-inspired capacity additions in the country over the years. Today, wind generates 10 times more electricity in the U.S. that solar does, and 80% of more land intensive solar power is produced in just three states, spacious California and sparsely populated Arizona and Nevada. Without a significant wind resource, RPSs, which are already highly technically challenging, too costly, and unrecommended by our top electricity experts (and therefore being rolled back) are simply not realistic.

In 2007, then-Governor Crist directed the Florida Public Service Commission to develop an RPS of 20% by 2020, but the Legislature didn’t approve. Beyond higher costs, one true obstacle for solar power has been Florida law allows only a few utilities – Florida Power & Light (FPL), Tampa Electric, Duke Energy – can sell power directly to consumers. Other producers must first sell to one of these utilities at a cheaper wholesale rate, lowering the economic incentives to invest in solar. Florida isn’t even in the top 10 solar power capacity states (see here).

FPL reports that it has been using more U.S.-produced natural gas as its main fuel because it’s the cleanest and most cost-effective for customers. Florida’s gas fuel prices for electricity, for instance, have been sliced in half to $5 per Thousand Cubic Feet since 2008. FPL reports that lower price natural gas have helped cut typical household bills to 25% less than the U.S. average. More than 1,200 MW of natural gas capacity were added in Florida in the first half of 2014 alone, far more than any other state. Supply prospects are only growing: U.S. gas production is expected to jump nearly 50% by 2035.

Florida’s Surge in Natural Gas Power in the “Shale-Era”…Has Lowered Rates Below the U.S. Average

Source: EIA

With no wind power and little solar, more natural gas has been the backbone of Florida’s population and economic expansion. But perhaps more importantly, and what environmental groups should be celebrating, more natural gas has also led to a huge reduction in total power sector emissions, CO2, SO2, NOx. Thanks to natural gas, Florida’s electricity sector now has a CO2 emission rate of just 1,020 lbs/MWh, compared to 1,257 lbs/MWh in 2008. Yet, the federal government wants Florida to cut its CO2 emissions from power plants by 38% by 2030. Florida’s natural gas surge has already slashed power CO2 emissions 20% since 2007, and carbon rules enhance gas’ position as the cheapest form of the most reliable sources (see EIA estimates here).

Since 2001, FPL concludes that investments in natural gas have saved customers nearly $8 billion on fuel, prevented more than 85 million tons of CO2, and helped decrease foreign oil use by more than 99%. Solar power can and will play a growing role, FPL will invest more than $400 million next year alone to triple its capacity in solar, but natural gas will remain the mainstay, especially given that gas has already significantly reduced emissions. FPL’s Martin Next Generation Solar Energy Center in Indiantown is the first hybrid facility in the world to connect a solar facility to an existing combined cycle gas turbine.

On top of the dim prospects for nuclear, Florida’s generation has fallen 7% since 2007, and coal, Florida’s generation has fallen 30% since 2007, more solar power must be accompanied by more flexible natural gas under any condition. Experts at Citi Research explain:

• “Greater use of renewables actually drives greater demand for gas-fired peaking plant…This is not just due to the intermittency of renewables…rather that as solar starts to cover more than just the midday peak…it will eat into baseload territory, requiring that to be replaced by peaking plant (gas) when the sun isn’t shining.”

Ultimately, as solar increases not decreases the need for more natural gas, gas could reach 70% of Florida’s power, but not the 90% warned by the Union of Concerned Scientists. Policymakers on both sides realize the benefits of a diversified power system are just too great.

More Natural Gas Power in Florida: Supporting More People, Making More Money…Emitting Less

Sources: EIA; St. Louis Fed; U.S. Census Bureau

Florida has no significant natural gas production, so imports come from Georgia and Alabama. FPL now wants to invest in gas production outside the state — a new venture for a Florida utility — to buffer price spikes. Unfortunately, there is a false assertion that Florida “is electricity inefficient” (see here) to argue against the essential of more gas infrastructure and capacity and as a way to lower the expectations for certain energy sources that struggle to compete with natural gas on an even playing field. Environmental groups surely agree, of course, that our goal is to reduce greenhouse gas emissions, not promote favored industries.

After all, combined cycle gas turbines are our most efficient power producers (see here), and greater efficiency is a constant paradigm of ALL energy producing entities (inefficient companies don’t last real long in the U.S. energy business: the competition is just too great). Commercial solar plants typically average 10-20% efficiency, compared to 52-60% for gas. This is a crucial point in natural gas’ favor because our national and state energy plans cite efficiency as the main resource to reduce greenhouse gas emissions by reducing fuel demand. And it’s more natural gas that’s required to give intermittent renewables a realistic chance to compete in the marketplace on their own.

Despite being criticized for not passing more efficiency laws, Florida’s statistics prove the “electricity inefficient” argument is simply false. Florida has achieved substantial improvements in electricity efficiency, yet demand continues to mount. In fact, Florida is 30th in electricity use per capita and 44th in energy use per capita. This is highly impressive given the massive need for air conditioning alone: Florida is the 2nd hottest state in the country. Over 96% of Florida’s 7.3 million homes use air conditioning, compared to just 56% of homes in California. Central Air Conditioning can devour 3,000 kWh of electricity per year, about 25% of the average American home’s total electricity consumption.

With just two major gas pipelines, Florida needs more infrastructure to enhance the supply reliability of natural gas, the state’s proven “greenhouse gas emission reducer.” The $3 billion Sabal Trail project will cost about $3 billion for the 465 miles of gas pipeline – 55 miles in Alabama, 196 miles in Georgia and 214 miles in Florida. It will have the capacity to transport more than 1 Bcf/day. The Southeast Pipeline would provide o.4 Bcf/day of natural gas capacity for FPL beginning in 2017. Since the other pipelines are at full, any new incremental needs for gas will come from these pipelines.

Finally, Florida, like California and New York, hugely populated states where imported natural gas is easily the main source of energy, must also be looking to develop its own gas resources: it’s only fair. As the EIA states: “Geologists believe there may be large oil and natural gas deposits in the federal Outer Continental Shelf off of Florida’s western coast.” 

The Notion That Florida is “Electricity Inefficient” is Simply False….And Power Demand Continues to Rise

Sources: EIA; Sun Sentinel; St Louis Fed

Forbes