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Lakeland Electric has a plan to increase solar power

When it comes to solar power, it isn't the sunshine holding Florida back. It's the money.

Lakeland Electric, the state's third-largest municipal utility, found a way around that hurdle: Get someone else to pony up the cash for the solar panels, and just buy the power.

Buying power from someone else's power plant is nothing new to Florida utilities. They buy power from waste-to-energy plants, fossil fuel plants and one another. Lakeland, though, is the first Florida city to do it to clear the way for solar.

The plan is for Sun Edison of Maryland to install 24 megawatts of solar power on government and customer property over the next decade. Lakeland Electric has agreed to buy all the power those panels produce.

The cost to customers? Less than a buck a month.

"They become merchant energy providers, and we become their customer," said Jeff Curry, director of Lakeland Electric's renewable energy programs. "Otherwise, we wouldn't be able to do it."

• • •

Lakeland Electric numbered among the early pioneers that found new ways to put utility-owned solar on customers' houses. Instead of using solar electric panels, which make electricity, the company deployed solar hot water heaters, which use sunlight to heat water.

In 1997, the company began buying, installing and maintaining solar water heaters on customers' rooftops. The customers got cheaper hot water and avoided the up-front cost of installing the system, which could cost $4,000 or more.

To bill the customers for the power, the utility used a special meter so that heat, measured in British thermal units, could be measured in kilowatt hours. The customers were then billed for the kilowatt hour equivalent on their utility bills. They also locked into 1997 rates at less than 9 cents per kilowatt hour, said Curry, who runs the program. Today, electricity costs more than 12 cents per kilowatt hour.

"We own it, and insure our work. We maintain the equipment, so if there's any mishap that causes damage, it's covered," Curry said. "We've never had a claim, though. We do good work."

The utility has installed about 60 of the systems throughout Lakeland and is hoping to install up to 10,000 in the next five years. The program has been such a success that utilities around the country are looking for ways to emulate it.

Hoping to build on their success, Lakeland Electric started looking for ways to create a similar program with solar photovoltaic panels, but the cost of building a solar power plant of its own was simply too high, Curry said. A kilowatt hour from a solar plant costs far more than electricity from nuclear, coal and natural gas. Solar is expensive to build, and because it's available only when it's sunny, it produces less power over its lifetime than power plants fueled by conventional fuels.

"It's a high-level, capital-intensive project, and its beyond our budgeting wherewithal to do something like this," Curry said.

The utility found a solution that will work like its solar water heating program, except this time, Lakeland Electric would be the customer.

• • •

The solution was a power-purchase agreement.

Long a fixture of the utility industry, a power-purchase agreement is a long-term contract in which an electric company buys electricity from a power plant that it doesn't own.

"If you have a mortgage on your house, if you've ever leased an automobile, then you already get about 80 percent of what goes into a power-purchase agreement," explained Mac Irvin, managing director at SunPower Corp., a California company that designs, manufactures and delivers solar power plants.

The difference between a car lease and a power-purchase agreement is that a customer pays for the power the solar panels produce instead of a fixed monthly price. Irvin likened it to paying for a car based on the number of miles you drive it.

Sun Edison, the Maryland company that is building solar for Lakeland Electric, penned the first solar power-purchase agreement five years ago.

"The idea was that people buy electricity. They don't buy power plants. So let's apply that thinking to solar," said Martha Duggan, vice president of government affairs for Sun Edison. "It was a revolutionary thought."

It caught on. Duggan estimated that 85 percent of non-residential solar installations are funded by power-purchase agreements. Competitors have flooded the market. Sun Edison has installed 60 megawatts of solar power through power-purchase agreements, building solar plants for utilities and retailers.

That 60 megawatts is just a fraction of the size of large fossil fuel plants, but it also represents more than 10 percent of all the solar connected to the U.S. grid at the end of 2007, according to the Solar Energy Industries Association.

For utilities like Lakeland Electric, the agreements solve several problems. With lawmakers pushing to boost renewable energy and slash greenhouse gas emissions, utilities have to invest in renewable energy without sharply increasing electric rates.

Curry estimated that the 24 megawatts Sun Edison will install will offset 4 percent of the utility's peak summer demand at a cost that customers can afford.

Duggan said that the Lakeland project will likely be the first of many in Florida, and that Sun Edison is keeping a close eye on the Sunshine State.

Asjylyn Loder can be reached at aloder@sptimes.com or (813) 225-3117.

Lakeland Electric has a plan to increase solar power 02/28/09 [Last modified: Saturday, February 28, 2009 3:31am]
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