Electric Jolt

 

Having sleep problems?

I recommend a dull read, the most recent 10-year plan FPL submitted to the Florida Public Service Commission in April. Skeptics, however, should be aware of a possible side effect: The reading could jar you awake.

When I finished the 212-page report (www.fpl.com/about/ten_year/pdf/plan.pdf) at 3 a.m., I got not only a glimpse of our state’s mid-term energy future, but I was wide awake with a feeling that we’re happily letting ourselves be hoodwinked.

The document has two story lines: One in words, in plain view; and another in the numbers, which is a little more difficult to discern. Most of the prose is about diversification. This story line talks about an increasingly diverse mix of new power plants, moving us away from dependency on oil and coal, which, as everyone knows by now, are finite fossil fuels and the main sources of greenhouse gas emissions.

But the numbers tell a different story: I call this tale, "The Dash for Gas." Behind a rhetorical smokescreen of using renewables and nuclear energy, FPL is quietly ramping up electricity production with natural gas—another finite fossil fuel—at breakneck speed. If FPL’s proposal goes through, natural gas will account for 66.8 percent of the energy portfolio of Florida’s largest utility by 2017, up from an already whopping 48.2 percent this year.

Wow! I couldn’t believe my eyes. Two-thirds of our eggs in one basket? Switching from one dependency to the next one? Even bigger profits for the good old oil boys? Billions of dollars of infrastructure investments that won’t go into new energies?

If you don’t think such questions matter, let me try to shake you awake with this: The dash for gas matters here in Southwest Florida not only because it is a major factor in the future cost of electricity, but because we are—literally—at the receiving end.

Recently, a subsidiary of Norwegian shipping and energy concern Höegh cleared the last major regulatory hurdle to build Port Dolphin. This liquid natural gas (LNG) tanker terminal in the Gulf of Mexico, 28 miles off Longboat Key, will pump gas into Florida’s existing gas grid via an undersea pipeline to Port Manatee. Port Dolphin could be up and running as soon as 2013.

Another local connection to electricity generation with gas is the Manatee 3 unit at the Parrish power plant, which is already one of FPL’s 12 combined-cycle gas plants, and the aging Manatee 2 oil generator in Parrish, which is on the utility’s long-shot list of potential sites for a new gas power plant.

So what’s bad about relatively clean and very efficient combined-cycle gas power plants? After all, this looks benevolent compared to the Orimulsion heavy-oil plans FPL had for the power plant in Parrish in the 1990s.

Meanwhile, the Höegh subsidiary promises $150 million worth of economic benefit for the region over 20 years from Port Dolphin. Gas spoils neither water nor beaches. Besides, the two-tanker docking station is in federal waters, way out of sight from beachgoers.

And the energy powers-that-be in Washington are reassuring us as well, reporting that natural gas is a time-limited tool that will help us smoothly transition to a really green and sustainable future. We just can’t get there now because renewable energies aren’t cost-effective yet. Gas is a default solution.

The U.S. Energy Information Administration even sets a sort of deadline in a recent study: Natural gas use in the United States will peak in 2025, it predicts, as natural gas prices rise and renewable energies will begin to replace gas.

OK, it seems possible for busy people to ignore the local impact of the dash for gas. But I think, no matter how far away or beneficial, these gas projects deserve more scrutiny. We shouldn’t just be looking at local safety concerns and environmental impact, but also at the big picture.

Few people are questioning FPL’s gas focus because most of us fear losing our electricity-intensive lifestyles and ways of doing business. It’s so soothing to our climate-change frayed nerves to continue doing what we’re doing while trusting that the FPLs and Exxon Mobils will run a smooth transition towards a green future and then peacefully ride into the sunset.

Well, there might be a few glitches along the way.

For one, rising dependency on foreign fuel, with all its nasty political implications: North America has been largely self-sufficient when it comes to gas, but gas production in the United States seems to have peaked. In a speech four years ago, Samuel Bodman, energy secretary of the second Bush administration, called the promise of natural gas "something of a poison pill, in that our nation is threatening to grow overly dependent on this source of fuel." Bodman expressed his concern about shrinking domestic gas supplies and suggested linking up the global islands of gas production and consumption via a LNG network. This will allow the United States—and Florida (that’s where Port Dolphin comes in)—to get steady supplies of gas from far away producers. Just one comment about these plans: The world’s No. 1 and 2 countries in terms of gas reserves are Russia and Iran.

Even so, the U.S. Energy Information Administration believes LNG imports will rise from 2 percent of U.S. gas consumption today to 6 percent by 2020.

This, in turn, raises the greenhouse effect of gas use. The LNG supply chain emits more greenhouse gases than the supply chain for pipeline gas, primarily because of the extra processing steps needed for LNG shipment.

Finally, there’s the issue of price. While gas has decoupled itself somewhat from the oil price over the past three years, the gas price still mirrors the wild swings of oil prices. And oil prices are predicted to return to previous record levels by 2012, with no hope of going down much after that. There will be upward price pressure on gas, as demand is bound to shoot up in the United States and around the globe.

But ultimately the biggest concern should be the idea of letting oil and gas companies become the biggest beneficiaries of what is supposed to be a transition process that should end up with their self-elimination. I would be very cautious about handing them the keys to that car, and I hope the Florida Public Service Commission is, too, when they get FPL’s next 10-year plan in April.

OK, after all this nagging, some constructive ideas. First, affordable, reliable electricity is central to the region’s economic health and quality of life. And, yes, gas will play an important role. My objection is not about gas as such. It’s just about the way we’re diving into this.

Second, one of the biggest sources of energy has been barely tapped here: savings. Old-fashioned thrift, coupled with high-tech advances in measuring, using and conserving electricity.

Conservation, as it’s officially called, is part of the mantra of utilities today. FPL’s Captain Conservation, for that matter, shows up in schools around the state, and the U.S. Department of Energy in 2007 ranked FPL’s conservation programs best in the country. But again, the numbers in the report tell a different story. FPL bases its 10-year plan on a slight drop of power use per residential customer (from 13,333 kw/h today to 11,185 kw/h in 2018), but these savings are more than erased by a rise per commercial customer from 44,878 kw/h today to 58,189 kw/h in 2018. That’s not good enough.

Maybe Captain Conservation should show up in business colleges instead of elementary schools. If the utility is so sanguine about conservation, either the government or we customers must act.

Which brings me to proposal No. 3. Let’s move big-time into distributed generation—producing more electricity on-site, in small units that can feed the grid when they generate excess power. As of 2008, FPL received a puny 167 kw/h from customer-owned renewable energy generators, according to its report. That’s what the net-metering bill the Florida legislature passed in 2008 is supposed to change. The politically iffy part about implementing this is it challenges the concept of big, remote power plants, and with that the role electric utilities have traditionally played.

At this point, FPL is in a house-to-house battle with lawmakers and regulators, defending its generation monopoly in as many areas and ways as possible. As of early 2009, there were only seven exceptions to FPL’s rule over power generation. Among them is Sarasota County’s Rothenbach Park solar facility, which sold 269 kw/h to FPL in 2008. Tropicana, the orange juice maker in Bradenton, sold 24,266 kw/h from its natural gas power plant, the second-largest amount of power FPL bought from any non-utility. Way to go, Tropicana.

We should view renewables as a business opportunity. "FPL is seeking cost-effective power purchase agreements with any and all potential renewable energy providers," the power company says in its report. Let’s hold them to their word.


Johannes Werner is a Sarasota-based, award-winning business journalist who covers Latin America and global issues for a variety of publications. He writes the column "Outside In" for Biz941 and is also the editor of Cuba Trade & Investment News and the Venezuela Trade & Investment News.

Brazil—Building Bridges

From a country where everything seems to be going right: Brazil is, literally, building bridges to neighboring markets at dizzying speed. In the latest example, the leaders of Brazil and Guyana inaugurated the Takatu Bridge. While a comparatively small project, it connects the two countries and fills a strategic gap of the highway linking Manaus in central Brazil with the Atlantic port of Georgetown. Most of the stretch from the Brazilian border to the capital of Guyana still is a dirt road, but if a Brazilian-financed plan comes through, it should become a full-fledged highway in a matter of a few years.

In combination with a deepwater port in Georgetown, this highway will have implications for Caribbean agriculture and U.S. exports to the Caribbean, a British observer suggests. David Jessop, director of the London-based Caribbean Council, believes that within a decade or two, the agriculture and industrial powerhouse in South America will displace a good number of traditional Caribbean trade partners.

Cuba—Going Global

Way under the radar screen, Cuba is slowly turning into a global business player. In early November, CubaPetróleo became a shareholder in an exploratory oil field in Angola. Parlaying Cuba’s long-standing political, military and medical assistance to the African country into dollars and oil, the Cuban state company acquired a 5-percent stake in the Cabinda Onshore South block. Although the Angolan engagement is small and a long shot, it points to Cuban efforts of leveraging longtime political partnerships with developing countries to diversify its energy supply. Cuba is also increasing economic ties with Algeria, another longtime political ally and major oil producer in Africa. Algeria has become the biggest supplier of jet fuel to Cuba over the past few years. The island currently depends on Venezuela for more than half its energy needs.

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