Posted by Joseph Y. Calhoun, III

Florida Power & Light, my home state power company, just broker ground on a large solar plant north of Palm Beach (via the Green, Inc. Blog at the NYT):

The Sunshine state is starting to live up to its name on the energy front. Today Florida Power & Light, the state’s biggest utility, broke ground on what it says will be the first utility-scale solar investment in the state — and the second-largest of its kind in the country when it is fully turned on in 2010.

Projects like this will “not only do good things for the environment, but drive costs of renewable power down,” said Lew Hay, the chairman and chief executive of F.P.L. Group, in a telephone interview.

This solar thermal plant, which is located on the Atlantic coast just north of Palm Beach County, will consist of 180,000 mirrors, spread over 500 acres. It also matches solar power with an existing combined-cycle natural gas plant, so that when the sun is not shining, the natural gas can take over the work of powering the turbines.

I’ve been following the developments in solar power for many years and while I am impressed with the advances being made, solar power has not yet reached the price point to be truly competitive with carbon sources. There are still significant hurdles to making solar viable as a major source of power. As the article states, the size of this project is huge, taking up 500 acres of land. According to this press release from FPL, it is large enough to power 11,000 homes. At 500 acres per 11,000 homes we just don’t have enough room to generate enough solar for it to be a major source of electricity in the state. And remember that this plant is a hybrid plant with natural gas as a backup.

I also found this comment from Mr. Hay interesting:

In building the Florida solar plant, Mr. Hay said that he was looking toward a future of higher renewables requirements and perhaps even carbon regulation. He also predicted that Florida will soon join more than half the states in implementing a renewable portfolio standard — a requirement that a certain percentage of a state’s electricity come from renewables by a fixed date — in addition to a national renewable standard from the incoming Obama administration.

FPL is looking forward to the future of higher renewable requirements and carbon regulations because they will likely be a winner under whatever plans emerge. A cap and trade system will benefit FPL and make this solar investment pay off because they will be able to sell carbon permits to companies that don’t have a renewable portfolio. While that is good for FPL, I’m not sure it’s good for the economy as a whole. In a sense the government will be allocating capital to inefficient energy sources.

The economic argument for a carbon tax is that the tax will correct the externality of emitting carbon. In order to make that system work though you have to determine the true cost of emitting carbon. That is not possible without politics entering the equation. That’s what worries me; if the politicians put the price of carbon emiision too high, we’ll handicap our economy by taxing carbon emissions too much. Price it too low and you won’t have much of an effect on carbon emissions. I don’t know the answer to how it should be priced but I certainly don’t trust politicians to make that decision.