When the goals of a utility and its host community aren’t in sync, breakups happen.
Perception trumps reality at Florida ‘solar city.’
Solar Shell Game
Calling Babcock Ranch the world’s first solar-powered city stretches the truth to its breaking point, and perhaps beyond it.
Kitson says FPL’s on-site 75-MW PV array will generate more power than the city consumes, which makes it a solar-powered city. But irrespective of whether the numbers add up, FPL isn’t building the plant specifically to serve the Babcock Ranch community. Indeed, FPL says it will build the PV project whether the city materializes or not—assuming it gets favorable rate treatment. Speaking during the press conference, FPL Chief Development Officer Eric Silagy said, “We are extremely excited to build one of the world’s largest solar PV projects once the state legislative and regulatory authorities have taken the actions that would be required for us to move forward.”
Those “actions” could include a bill (SB 1154) that was advancing in the Florida legislature at press time, which would create a “20 percent by 2020” clean-energy portfolio standard, and would provide “full cost recovery under the environmental cost-recovery clause” for clean energy plants in Florida, totaling 110 MW for each utility. Reportedly FPL wants to apply for such rate treatment for the Babcock Ranch project.
By putting the plant into its rate base, FPL proposes to spread the $350 million in costs among all FPL ratepayers—increasing the typical customer’s bill by about 30 cents a month. From a public-policy perspective, this price seems reasonable enough, and the approach makes perfect sense if the goal is to encourage utility investments in renewable energy. However, this rate-making approach also belies the fact that Babcock Ranch really won’t be a solar-powered city.
If this were just a case of misleading advertising, it wouldn’t matter much. After all, real estate developers frequently exaggerate the “feel good” features of their properties. The problem, however, is that now FPL and the whole renewable power industry are part of the charade.
By locating 75 MW of PV modules all in one place—at least partly so Babcock Ranch can pretend it’s a solar-powered city—FPL might not optimize the potential of its investment. The same modules, installed on rooftops all over Florida, might produce greater value to ratepayers by virtue of geographic dispersion. Distributed modules might provide more reliable power than the same amount of centrally located modules would. On the other hand, even a solar power plant can benefit from scale economy. By using fewer, larger inverters and less wiring and other gear to integrate variable DC power into FPL’s grid, one central station might be more cost-effective than hundreds of distributed panels.
All things being equal, engineering and resource analysis would answer those questions. But all things aren’t equal, given the political factors driving support for the world’s first solar-powered city. If SB 1154 becomes law, and if FPL takes advantage of its pre-approval provision and puts the project into its rate base, the utility won’t need to ask whether 75 MW of PV at Babcock Ranch actually makes sense. The legislation says the PSC should approve FPL’s rate-recovery request, as long as it doesn’t exceed the