Energy Assurance Study: Interim Report - Southwest Florida ...

Economic AnalysisSeveral different scenarios were modeled for the State of Florida to investigate the impact that potential energy price changes,potential supply disruptions, or resiliency or assurance strategies might have on the economy. All the scenarios presented inthis section of the report were modeled utilizing Regional Economic Models, Inc. (REMI) PI+ Software (ver. 1.3.13). The resultswill be presented depicting estimates on a statewide level comparing Energy Planning Areas (EPAs).Natural Gas Price Increase or Supply DisruptionIntroductionRecent developments in technology (hydraulic fracturing and horizontal drilling) have unlockedan enormous supply of natural gas. This new technology allows previously inaccessible reservesto be tapped and extracted (see figure). This has led to vast increases in supply of natural gas.Subsequently, the price per unit has dropped substantially.Figure 9: Diagram of NaturalGas Fracking TechnologySome analysts predict 100-150 years of supply at current rates, with potentially 10-15 years ator near current pricing. All natural gas supply comes to Florida from out of state, primarily bytwo major pipelines entering the state from the panhandle and the west coast (see figure). Thesource of this natural gas is primarily the northern United States and Canada. Another pipeline iscurrently under development and will primarily be accessible to northern Florida. New capacityhas been developed to mitigate supply disruptions following natural disasters that cut off theflow of natural gas, but the potential still exists for a bottle neck in supply.Current benefits of high supply and low prices of natural gas include a greater share fromdomestic or near-domestic (Canada and Mexico) supply. When used in power plants to produceelectricity, natural gas creates less air pollution than coal per unit electricity produced.Combined with the low price of natural gas, these and other factors have led to natural gas fired power plants replacing coalplants in some areas as the baseload generationFigure 10: Natural Gas Utilities and Pipelinesmethod of choice. Currently, natural gas is cheap,abundant, and available. Natural gas is responsible forproducing approximately 54% of electricity in Floridain 2008 (see chart), and most estimates say that it willbe responsible for closer to 60% within a decade ifthese trends continue.Figure 11: Florida Net Electricity Generation by FuelSource (U.S. EIA, Nov. 2012) (GWh)22 | ENERGY ASSURANCE STUDY