Dave Denslow: Solar Farms a Sign of Energy Changes
Solar and heavyweight Florida Power & Light is discussed today, July 9, 2017, in the Gainesville Sun
by columnist Dave Denslow. Lower cost for the photovoltaic panels is the driver behind the huge upsurge in solar power. Change is on the way but it can’t be soon enough.
Comments by OSFR historian Jim Tatum.
-A river is like a life: once taken, it cannot be brought back-
Dave Denslow: Solar farms a sign of energy changes
Posted Jul 7, 2017 at 2:00 AM Updated Jul 7, 2017 at 9:08 AM
Why is Florida Power and Light planning to install over 2,000 megawatts of additional solar capacity by the year 2023, including 75 megawatts now under construction near Hawthorne? Is FPL risking $3 billion on seven million photovoltaic panels expecting fossil fuel prices to rise or have PV costs fallen so much that solar farms are in the money even if fuel prices hold steady or fall yet more?
We’d like to know in case the biomass buyout goes through and Gainesville Regional Utilities decides whether to retrofit, mothball or scrap the plant. Will wood compete with natural gas and PV? FPL’s views are worth knowing. With 5 million customers, FPL ranks as the nation’s third largest utility, 50 times the size of GRU.
Guided over the years by a board of directors packed with business people, leavened with one politician and one retired finance professor, FPL — besides charging low rates — was named the top green utility in the nation in 2016 for its low carbon emissions. Though that’s partly luck, there’s irony in comparing FPL’s achievement with politically governed GRU.
In its 10-year plan, FPL tells us that it is expanding solar capacity chiefly because the cost of utility-scale PV farms has plunged. The company, seeing no competition from costly rooftop solar panels, expects the PV farms to help meet summer peak demand for years to come. It is also worth bearing in mind that FPL is betting the farms, not the firm. When completely installed, solar will account for only 8 percent of the utility’s capacity and, since even in the Sunshine State PV panels produce power just a fourth of the time, only 4 percent of its megawatt hours.
FPL purchases fossil fuel price projections from the standard providers and estimates returns on investment using sophisticated standard procedures, normally a good way to proceed. But today’s energy markets are in flux, with fossil fuel prices remarkably low. Is that the new normal or a passing fluke that could dupe us into foolish decisions? Will we scrap the biomass plant and then regret our mistake? Times like these call for a broader and more historical perspective.
At least that’s the view of Dieter Helm, whose book “Burn Out: The Endgame for Fossil Fuels,” garnered reviews in both Nature and Science. Looking out 10 years, Helm sees prices of fossil fuels trending down. Though volatility will obscure the trend, demand for fossil fuels will fall as economic growth slows and, most importantly, with breakthroughs in solar power, energy storage and energy efficiency.
Big data technology will both reduce the overall demand for energy and reduce the burden of the intermittency of solar and wind power. Adding to that, as the damage from climate change accumulates, nations will push harder for decarbonization, favoring solar and funding government R&D to boost energy efficiency.
On the supply side, the shale revolution with its horizontal drilling, seismic-information technologies and the know-how to split rock strata will keep output ready to expand with any hint of rising prices. Falling fossil fuels will restructure the world economy, weakening Russia, Venezuela, Saudi Arabia, Nigeria and other oil producers. The oil majors such as Shell and Exxon will slowly go the way of coal mining companies.
Helm’s projections of very low fossil fuel prices may leave you uncomfortable because of their reliance on still-to-come breakthrough technologies in solar power and energy storage. So turn to what’s already happened. According to congressional testimony, more than half of U.S. households use smart meters. The cost of lithium-ion batteries has fallen 70 percent in the last two years, with engineers aiming at a further 50 percent reduction applying existing technology. LED lights now have paybacks shorter than two years.
Siemens invests over $1 billion a year in energy efficiency R&D. The cost of wind energy has fallen by more than 50 percent since 2012. In Florida, FPL plans to add 2,200 megawatts of new nuclear generating capacity at Turkey Point.
Retrofitting the biomass plant to fit it to GRU’s dispatch needs may be the right thing to do, but there’s a chance low fossil fuel prices will make it uncompetitive. Proceed with caution.
— Dave Denslow is a retired University of Florida economics professor.
Photo by the Gainesville Sun.