1 Analysis of the use of Multipliers as a substitute for Set-Asides December 6, 2007 Presentation at...

1

Analysis of the use of Multipliers as a substitute for Set-Asides

December 6, 2007Presentation at FPSC Staff Workshop on RPS

Bob McGee, Marketing Services Manager

Gulf Power Company

2

Overview

Caveats Terminology Assumptions Analysis Conclusions

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Caveats

Proposing only the use of multipliers as a substitute for set-asides, carve-outs and tiers

Analysis requires the use of certain assumptions to make calculations

Those assumptions are for illustrative purposes only

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Terminology

Set-asides Carve-outs Tiers

Market-driven Multipliers

Mandates within a mandate

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Assumptions

RPS exists in Florida RPS compliers are required to purchase

renewables at costs above avoided cost Some form of renewable, such as PV, is

favored or is to be encouraged more than other renewables

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Assumptions

RPS structure 20% of Retail Sales

Retail Sales projections from FRCC Exponential phase-in of 20% RPS mandate in 13yrs

The Multiplier in effect at the “commercial operation date” of a PV generator is applicable for the life of that generator

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Assumptions

Cost curve for Photovoltaics (PV) from FSEC presentation to FPSC 1/19/07

Cost of non-PV alternatives 5¢/kWh growing to 8¢/kWh

Average PV generating capacity in Florida 4kWh/day/installed kW of PV from FSEC and verified

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Analysis

On Spreadsheet

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Effective FloridaProjected Simulated cost of PV Simulated Florida Simulated

cost of PV Multiplier after applying RPS Retail Sales RPSYear cents/kWh for PV Multiplier percent GWH GWH

1 25.6 5.12 5.0 1.8% 241,986 4,390

2 23.2 4.42 5.3 2.2% 249,138 5,521

3 20.0 3.64 5.5 2.7% 255,710 6,922

4 17.6 3.06 5.8 3.3% 263,158 8,700

5 15.2 2.53 6.0 4.0% 270,581 10,926

6 13.6 2.18 6.3 4.9% 277,174 13,670

7 12.0 1.85 6.5 6.0% 284,503 17,138

8 10.4 1.54 6.8 7.4% 292,015 21,486

9 9.6 1.37 7.0 9.0% 299,960 26,957

10 9.6 1.32 7.3 11.0% 308,119 33,819

11 8.8 1.17 7.5 13.4% 316,500 42,430

12 8.0 1.03 7.8 16.4% 325,109 53,237

13 8.0 1.00 8.0 20.0% 333,951 66,790

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1 25.6 5.12 5.0 1.8% 241,986 4,390

2 23.2 4.42 5.3 2.2% 249,138 5,521

3 20.0 3.64 5.5 2.7% 255,710 6,922

4 17.6 3.06 5.8 3.3% 263,158 8,700

5 15.2 2.53 6.0 4.0% 270,581 10,926

6 13.6 2.18 6.3 4.9% 277,174 13,670

7 12.0 1.85 6.5 6.0% 284,503 17,138

8 10.4 1.54 6.8 7.4% 292,015 21,486

9 9.6 1.37 7.0 9.0% 299,960 26,957

10 9.6 1.32 7.3 11.0% 308,119 33,819

11 8.8 1.17 7.5 13.4% 316,500 42,430

12 8.0 1.03 7.8 16.4% 325,109 53,237

13 8.0 1.00 8.0 20.0% 333,951 66,790

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1 25.6 5.12 5.0 1.8% 241,986 4,390

2 23.2 4.42 5.3 2.2% 249,138 5,521

3 20.0 3.64 5.5 2.7% 255,710 6,922

4 17.6 3.06 5.8 3.3% 263,158 8,700

5 15.2 2.53 6.0 4.0% 270,581 10,926

6 13.6 2.18 6.3 4.9% 277,174 13,670

7 12.0 1.85 6.5 6.0% 284,503 17,138

8 10.4 1.54 6.8 7.4% 292,015 21,486

9 9.6 1.37 7.0 9.0% 299,960 26,957

10 9.6 1.32 7.3 11.0% 308,119 33,819

11 8.8 1.17 7.5 13.4% 316,500 42,430

12 8.0 1.03 7.8 16.4% 325,109 53,237

13 8.0 1.00 8.0 20.0% 333,951 66,790

A B CA/C

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1 25.6 5.12 5.0 1.8% 241,986 4,390

2 23.2 4.42 5.3 2.2% 249,138 5,521

3 20.0 3.64 5.5 2.7% 255,710 6,922

4 17.6 3.06 5.8 3.3% 263,158 8,700

5 15.2 2.53 6.0 4.0% 270,581 10,926

6 13.6 2.18 6.3 4.9% 277,174 13,670

7 12.0 1.85 6.5 6.0% 284,503 17,138

8 10.4 1.54 6.8 7.4% 292,015 21,486

9 9.6 1.37 7.0 9.0% 299,960 26,957

10 9.6 1.32 7.3 11.0% 308,119 33,819

11 8.8 1.17 7.5 13.4% 316,500 42,430

12 8.0 1.03 7.8 16.4% 325,109 53,237

13 8.0 1.00 8.0 20.0% 333,951 66,790

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1 25.6 5.12 5.0 1.8% 241,986 4,390

2 23.2 4.42 5.3 2.2% 249,138 5,521

3 20.0 3.64 5.5 2.7% 255,710 6,922

4 17.6 3.06 5.8 3.3% 263,158 8,700

5 15.2 2.53 6.0 4.0% 270,581 10,926

6 13.6 2.18 6.3 4.9% 277,174 13,670

7 12.0 1.85 6.5 6.0% 284,503 17,138

8 10.4 1.54 6.8 7.4% 292,015 21,486

9 9.6 1.37 7.0 9.0% 299,960 26,957

10 9.6 1.32 7.3 11.0% 308,119 33,819

11 8.8 1.17 7.5 13.4% 316,500 42,430

12 8.0 1.03 7.8 16.4% 325,109 53,237

13 8.0 1.00 8.0 20.0% 333,951 66,790

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1 25.6 5.12 5.0 1.8% 241,986 4,390

2 23.2 4.42 5.3 2.2% 249,138 5,521

3 20.0 3.64 5.5 2.7% 255,710 6,922

4 17.6 3.06 5.8 3.3% 263,158 8,700

5 15.2 2.53 6.0 4.0% 270,581 10,926

6 13.6 2.18 6.3 4.9% 277,174 13,670

7 12.0 1.85 6.5 6.0% 284,503 17,138

8 10.4 1.54 6.8 7.4% 292,015 21,486

9 9.6 1.37 7.0 9.0% 299,960 26,957

10 9.6 1.32 7.3 11.0% 308,119 33,819

11 8.8 1.17 7.5 13.4% 316,500 42,430

12 8.0 1.03 7.8 16.4% 325,109 53,237

13 8.0 1.00 8.0 20.0% 333,951 66,790

ED FD x E

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1 25.6 5.12 5.0 1.8% 241,986 4,390

2 23.2 4.42 5.3 2.2% 249,138 5,521

3 20.0 3.64 5.5 2.7% 255,710 6,922

4 17.6 3.06 5.8 3.3% 263,158 8,700

5 15.2 2.53 6.0 4.0% 270,581 10,926

6 13.6 2.18 6.3 4.9% 277,174 13,670

7 12.0 1.85 6.5 6.0% 284,503 17,138

8 10.4 1.54 6.8 7.4% 292,015 21,486

9 9.6 1.37 7.0 9.0% 299,960 26,957

10 9.6 1.32 7.3 11.0% 308,119 33,819

11 8.8 1.17 7.5 13.4% 316,500 42,430

12 8.0 1.03 7.8 16.4% 325,109 53,237

13 8.0 1.00 8.0 20.0% 333,951 66,790

ED FD x E

A B CA/C

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FloridaSimulated Florida SimulatedMultiplier Retail Sales RPS actual actual PV capacity

Year for PV GWH GWH RPS GWh percentage required (MW)

1 5.12 241,986 4,390 857 0.4% 587

2 4.42 249,138 5,521 1,113 0.4% 763

3 3.64 255,710 6,922 1,499 0.6% 1,026

4 3.06 263,158 8,700 2,080 0.8% 1,424

5 2.53 270,581 10,926 2,958 1.1% 2,026

6 2.18 277,174 13,670 4,219 1.5% 2,890

7 1.85 284,503 17,138 6,098 2.1% 4,177

8 1.54 292,015 21,486 8,920 3.1% 6,110

9 1.37 299,960 26,957 12,909 4.3% 8,842

10 1.32 308,119 33,819 18,091 5.9% 12,391

11 1.17 316,500 42,430 25,430 8.0% 17,418

12 1.03 325,109 53,237 35,899 11.0% 24,588

13 1.00 333,951 66,790 49,453 14.8% 33,872

Scenario 1all RPS requirements met

with PV only

B E F

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1 5.12 241,986 4,390 857 0.4% 587

2 4.42 249,138 5,521 1,113 0.4% 763

3 3.64 255,710 6,922 1,499 0.6% 1,026

4 3.06 263,158 8,700 2,080 0.8% 1,424

5 2.53 270,581 10,926 2,958 1.1% 2,026

6 2.18 277,174 13,670 4,219 1.5% 2,890

7 1.85 284,503 17,138 6,098 2.1% 4,177

8 1.54 292,015 21,486 8,920 3.1% 6,110

9 1.37 299,960 26,957 12,909 4.3% 8,842

10 1.32 308,119 33,819 18,091 5.9% 12,391

11 1.17 316,500 42,430 25,430 8.0% 17,418

12 1.03 325,109 53,237 35,899 11.0% 24,588

13 1.00 333,951 66,790 49,453 14.8% 33,872


with PV only

B E F

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1 5.12 241,986 4,390 857 0.4% 587

2 4.42 249,138 5,521 1,113 0.4% 763

3 3.64 255,710 6,922 1,499 0.6% 1,026

4 3.06 263,158 8,700 2,080 0.8% 1,424

5 2.53 270,581 10,926 2,958 1.1% 2,026

6 2.18 277,174 13,670 4,219 1.5% 2,890

7 1.85 284,503 17,138 6,098 2.1% 4,177

8 1.54 292,015 21,486 8,920 3.1% 6,110

9 1.37 299,960 26,957 12,909 4.3% 8,842

10 1.32 308,119 33,819 18,091 5.9% 12,391

11 1.17 316,500 42,430 25,430 8.0% 17,418

12 1.03 325,109 53,237 35,899 11.0% 24,588

13 1.00 333,951 66,790 49,453 14.8% 33,872


with PV only

B E F▲ F/B+G -1

G

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1 5.12 241,986 4,390 857 0.4% 587

2 4.42 249,138 5,521 1,113 0.4% 763

3 3.64 255,710 6,922 1,499 0.6% 1,026

4 3.06 263,158 8,700 2,080 0.8% 1,424

5 2.53 270,581 10,926 2,958 1.1% 2,026

6 2.18 277,174 13,670 4,219 1.5% 2,890

7 1.85 284,503 17,138 6,098 2.1% 4,177

8 1.54 292,015 21,486 8,920 3.1% 6,110

9 1.37 299,960 26,957 12,909 4.3% 8,842

10 1.32 308,119 33,819 18,091 5.9% 12,391

11 1.17 316,500 42,430 25,430 8.0% 17,418

12 1.03 325,109 53,237 35,899 11.0% 24,588

13 1.00 333,951 66,790 49,453 14.8% 33,872


with PV only

B E F G G/E▲ F/B+G -1

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1 5.12 241,986 4,390 857 0.4% 587

2 4.42 249,138 5,521 1,113 0.4% 763

3 3.64 255,710 6,922 1,499 0.6% 1,026

4 3.06 263,158 8,700 2,080 0.8% 1,424

5 2.53 270,581 10,926 2,958 1.1% 2,026

6 2.18 277,174 13,670 4,219 1.5% 2,890

7 1.85 284,503 17,138 6,098 2.1% 4,177

8 1.54 292,015 21,486 8,920 3.1% 6,110

9 1.37 299,960 26,957 12,909 4.3% 8,842

10 1.32 308,119 33,819 18,091 5.9% 12,391

11 1.17 316,500 42,430 25,430 8.0% 17,418

12 1.03 325,109 53,237 35,899 11.0% 24,588

13 1.00 333,951 66,790 49,453 14.8% 33,872


with PV only

B E F G G/E G/1.46

▲ F/B+G -1

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B EJ/BK

K+nonPVK/1.46H J

E x HL L/E

FloridaSimulated Simulated

Simulated Florida RPS PV RPS PVMultiplier Retail Sales with PV cap of with PV cap actual actual actual PV capacity

Year for PV GWH 10% GWH PV GWh RPS GWh percentage required (MW)

1 5.12 241,986 0.18% 439 86 4,036 1.7% 59

2 4.42 249,138 0.22% 552 111 5,080 2.0% 76

3 3.64 255,710 0.27% 692 150 6,380 2.5% 103

4 3.06 263,158 0.33% 870 208 8,038 3.1% 142

5 2.53 270,581 0.40% 1,093 296 10,129 3.7% 203

6 2.18 277,174 0.49% 1,367 422 12,725 4.6% 289

7 1.85 284,503 0.60% 1,714 610 16,034 5.6% 418

8 1.54 292,015 0.74% 2,149 892 20,230 6.9% 611

9 1.37 299,960 0.90% 2,696 1,291 25,553 8.5% 884

10 1.32 308,119 1.10% 3,382 1,809 32,246 10.5% 1,239

11 1.17 316,500 1.34% 4,243 2,543 40,730 12.9% 1,742

12 1.03 325,109 1.64% 5,324 3,590 51,503 15.8% 2,459

13 1.00 333,951 2.00% 6,679 4,945 65,057 19.5% 3,387


but PV is limited by PV cap

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B EJ/BK

K+nonPVK/1.46H J

E x HL L/E

D x 0.1Florida

Simulated SimulatedSimulated Florida RPS PV RPS PVMultiplier Retail Sales with PV cap of with PV cap actual actual actual PV capacity


1 5.12 241,986 0.18% 439 86 4,036 1.7% 59

2 4.42 249,138 0.22% 552 111 5,080 2.0% 76

3 3.64 255,710 0.27% 692 150 6,380 2.5% 103

4 3.06 263,158 0.33% 870 208 8,038 3.1% 142

5 2.53 270,581 0.40% 1,093 296 10,129 3.7% 203

6 2.18 277,174 0.49% 1,367 422 12,725 4.6% 289

7 1.85 284,503 0.60% 1,714 610 16,034 5.6% 418

8 1.54 292,015 0.74% 2,149 892 20,230 6.9% 611

9 1.37 299,960 0.90% 2,696 1,291 25,553 8.5% 884

10 1.32 308,119 1.10% 3,382 1,809 32,246 10.5% 1,239

11 1.17 316,500 1.34% 4,243 2,543 40,730 12.9% 1,742

12 1.03 325,109 1.64% 5,324 3,590 51,503 15.8% 2,459

13 1.00 333,951 2.00% 6,679 4,945 65,057 19.5% 3,387



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B EJ/BK

K+nonPVK/1.46H J

D x 0.1L L/E

E x HFlorida



1 5.12 241,986 0.18% 439 86 4,036 1.7% 59

2 4.42 249,138 0.22% 552 111 5,080 2.0% 76

3 3.64 255,710 0.27% 692 150 6,380 2.5% 103

4 3.06 263,158 0.33% 870 208 8,038 3.1% 142

5 2.53 270,581 0.40% 1,093 296 10,129 3.7% 203

6 2.18 277,174 0.49% 1,367 422 12,725 4.6% 289

7 1.85 284,503 0.60% 1,714 610 16,034 5.6% 418

8 1.54 292,015 0.74% 2,149 892 20,230 6.9% 611

9 1.37 299,960 0.90% 2,696 1,291 25,553 8.5% 884

10 1.32 308,119 1.10% 3,382 1,809 32,246 10.5% 1,239

11 1.17 316,500 1.34% 4,243 2,543 40,730 12.9% 1,742

12 1.03 325,109 1.64% 5,324 3,590 51,503 15.8% 2,459

13 1.00 333,951 2.00% 6,679 4,945 65,057 19.5% 3,387



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B E H JE x HD x 0.1Florida



1 5.12 241,986 0.18% 439 86 4,036 1.7% 59

2 4.42 249,138 0.22% 552 111 5,080 2.0% 76

3 3.64 255,710 0.27% 692 150 6,380 2.5% 103

4 3.06 263,158 0.33% 870 208 8,038 3.1% 142

5 2.53 270,581 0.40% 1,093 296 10,129 3.7% 203

6 2.18 277,174 0.49% 1,367 422 12,725 4.6% 289

7 1.85 284,503 0.60% 1,714 610 16,034 5.6% 418

8 1.54 292,015 0.74% 2,149 892 20,230 6.9% 611

9 1.37 299,960 0.90% 2,696 1,291 25,553 8.5% 884

10 1.32 308,119 1.10% 3,382 1,809 32,246 10.5% 1,239

11 1.17 316,500 1.34% 4,243 2,543 40,730 12.9% 1,742

12 1.03 325,109 1.64% 5,324 3,590 51,503 15.8% 2,459

13 1.00 333,951 2.00% 6,679 4,945 65,057 19.5% 3,387



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B E KH JE x HD x 0.1 ▲ J/B+K -1




1 5.12 241,986 0.18% 439 86 4,036 1.7% 59

2 4.42 249,138 0.22% 552 111 5,080 2.0% 76

3 3.64 255,710 0.27% 692 150 6,380 2.5% 103

4 3.06 263,158 0.33% 870 208 8,038 3.1% 142

5 2.53 270,581 0.40% 1,093 296 10,129 3.7% 203

6 2.18 277,174 0.49% 1,367 422 12,725 4.6% 289

7 1.85 284,503 0.60% 1,714 610 16,034 5.6% 418

8 1.54 292,015 0.74% 2,149 892 20,230 6.9% 611

9 1.37 299,960 0.90% 2,696 1,291 25,553 8.5% 884

10 1.32 308,119 1.10% 3,382 1,809 32,246 10.5% 1,239

11 1.17 316,500 1.34% 4,243 2,543 40,730 12.9% 1,742

12 1.03 325,109 1.64% 5,324 3,590 51,503 15.8% 2,459

13 1.00 333,951 2.00% 6,679 4,945 65,057 19.5% 3,387



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B E KK+ non-PV

H JE x H

LD x 0.1 ▲ J/B+K -1




1 5.12 241,986 0.18% 439 86 4,036 1.7% 59

2 4.42 249,138 0.22% 552 111 5,080 2.0% 76

3 3.64 255,710 0.27% 692 150 6,380 2.5% 103

4 3.06 263,158 0.33% 870 208 8,038 3.1% 142

5 2.53 270,581 0.40% 1,093 296 10,129 3.7% 203

6 2.18 277,174 0.49% 1,367 422 12,725 4.6% 289

7 1.85 284,503 0.60% 1,714 610 16,034 5.6% 418

8 1.54 292,015 0.74% 2,149 892 20,230 6.9% 611

9 1.37 299,960 0.90% 2,696 1,291 25,553 8.5% 884

10 1.32 308,119 1.10% 3,382 1,809 32,246 10.5% 1,239

11 1.17 316,500 1.34% 4,243 2,543 40,730 12.9% 1,742

12 1.03 325,109 1.64% 5,324 3,590 51,503 15.8% 2,459

13 1.00 333,951 2.00% 6,679 4,945 65,057 19.5% 3,387



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B E KH JE x H

L L/ED x 0.1 K+ non-PV▲ J/B+K -1




1 5.12 241,986 0.18% 439 86 4,036 1.7% 59

2 4.42 249,138 0.22% 552 111 5,080 2.0% 76

3 3.64 255,710 0.27% 692 150 6,380 2.5% 103

4 3.06 263,158 0.33% 870 208 8,038 3.1% 142

5 2.53 270,581 0.40% 1,093 296 10,129 3.7% 203

6 2.18 277,174 0.49% 1,367 422 12,725 4.6% 289

7 1.85 284,503 0.60% 1,714 610 16,034 5.6% 418

8 1.54 292,015 0.74% 2,149 892 20,230 6.9% 611

9 1.37 299,960 0.90% 2,696 1,291 25,553 8.5% 884

10 1.32 308,119 1.10% 3,382 1,809 32,246 10.5% 1,239

11 1.17 316,500 1.34% 4,243 2,543 40,730 12.9% 1,742

12 1.03 325,109 1.64% 5,324 3,590 51,503 15.8% 2,459

13 1.00 333,951 2.00% 6,679 4,945 65,057 19.5% 3,387



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B E K K/1.46H JE x H

L L/ED x 0.1 K+ non-PV▲ J/B+K -1




1 5.12 241,986 0.18% 439 86 4,036 1.7% 59

2 4.42 249,138 0.22% 552 111 5,080 2.0% 76

3 3.64 255,710 0.27% 692 150 6,380 2.5% 103

4 3.06 263,158 0.33% 870 208 8,038 3.1% 142

5 2.53 270,581 0.40% 1,093 296 10,129 3.7% 203

6 2.18 277,174 0.49% 1,367 422 12,725 4.6% 289

7 1.85 284,503 0.60% 1,714 610 16,034 5.6% 418

8 1.54 292,015 0.74% 2,149 892 20,230 6.9% 611

9 1.37 299,960 0.90% 2,696 1,291 25,553 8.5% 884

10 1.32 308,119 1.10% 3,382 1,809 32,246 10.5% 1,239

11 1.17 316,500 1.34% 4,243 2,543 40,730 12.9% 1,742

12 1.03 325,109 1.64% 5,324 3,590 51,503 15.8% 2,459

13 1.00 333,951 2.00% 6,679 4,945 65,057 19.5% 3,387



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Year 1 Year 1

Multiplier Effective cost Scenario 1 Scenario 23.20 8.0 16.2% 19.6%3.66 7.0 15.7% 19.6%4.27 6.0 15.3% 19.5%5.12 5.0 14.8% 19.5%6.40 4.0 14.4% 19.4%

Year 13 Actual percentSummary Table

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Conclusions

Multipliers and Set-asides both place emphasis on a particular type of renewable generation

Multipliers make no guarantee that kWh of a particular type will be generated

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Conclusions Multiplier method offers highest incentive in

early years. Set-aside method sets highest mandate in last years.

Multiplier offers an incentive to choose PV without removing market pressure to keep PV costs low

Multiplier phases out logically and automatically in accordance with cost projections

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Conclusions

Multipliers can make RPS complier indifferent to higher actual cost of PV

Multipliers can bring cost of RPS compliance using PV down to the cost of RPS compliance using other renewable sources

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Conclusions

But Multipliers must be set high enough to be effective

Experience in other states indicates that multipliers of 2x or 3x are inadequate Failure of Multipliers in other states is not due to the

mechanism itself, but due to the inadequate level at which the mechanism is set

34

Conclusions

Even if all RPS requirements are met with PV using multipliers, a substantial portion of the original RPS target will be met

Within the context of the overall mandate of an RPS, Multipliers allow market forces to work for the benefit of customers

35

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