One impediment to rooftop photo voltaic in Florida is its peculiar strategy to energy buy agreements. These long-term contracts, whereby the photo voltaic firm sells energy to the householder, are generally used to finance set up elsewhere within the nation. Florida successfully bans these, owing to a judgment by the state supreme court docket in a case over 30 years in the past that treats any supplier of electrical energy, irrespective of how small, as a public utility, deterring unbiased builders.(3)
In 2018, Florida’s Public Service Commission, which regulates utilities, bought round to clarifying that a rooftop photo voltaic firm might lease panels to clients, as long as it was particularly a cost for tools reasonably than electrical energy. It’s a workaround that lastly enabled the market to get going however comes with drawbacks for purchasers. “I can’t guarantee power production in the lease,” says John Berger, chief government of Sunnova Energy International Inc., one of many largest rooftop photo voltaic firms within the US. “I don’t have to deliver a minimum like I do in the other states.’’
Florida doesn’t offer state incentives for solar power besides net metering, whereby solar-panel owners effectively sell their excess output back to the grid, reducing their bills. Residents can also take advantage of the 30% federal tax credit. State regulators ended a limited rebate program for solar installations in 2015, saying it wasn’t needed, which is odd when you look at how slow the market was back then. This makes it tougher for solar to compete with grid power that averages about 14 cents per kilowatt-hour in Florida. Even leaving out the cost of a battery to store excess power, it takes just under 10 years for a 10-kilowatt-hour solar system to pay back, assuming you bought it outright.(4)
Yet, this April a utility-drafted piece of legislation looking to phase out net metering fell just short after Governor Ron DeSantis tossed it, surprising many. But if grid power is so competitive, why did utility lobbyists feel the need to push that bill in the first place? (Disclosure: My wife runs a company that develops software for distributed energy assets).Ari Peskoe, a specialist in electricity regulation at Harvard Law School, points to the inherent conservatism of utilities and the political support they enjoy in Florida. He cites another state supreme court decision from 2000, Tampa Electric Co. v. Garcia, as making Florida an “outlier.” This ruling makes it troublesome for any developer aside from a public utility, or one which has a long-term contract to promote to a public utility, to construct photo voltaic tasks above a sure dimension.
The ruling pertains to large-scale tasks reasonably than rooftop ones, however it speaks to a broader tradition of entrenching the pursuits of the state’s incumbent utilities. An indicator of the photo voltaic increase elsewhere is the main position performed by new entrants.Regulated utilities had been fashioned a century in the past partially to lift the big sums needed to construct the grid. But the renewables enterprise doesn’t want that; solar energy is a capital magnet anyway. In a scrumptious irony, NextEra Energy Inc. concurrently owns the most important regulated utility in its residence state, Florida Power & Light Co., but can also be the most important developer of renewable energy tasks in aggressive markets throughout the remainder of the US.
DeSantis framed his veto as an anti-inflation measure, and it stays to be seen if he would block subsequent legislative makes an attempt as soon as gubernatorial elections are out of the best way. Yet the obstacles to competitors in Florida’s energy market ought to sit down uneasily with its Republican leaders anyway.
Another doable impetus for change considerations the aftermath of Ian. The group of Babcock Ranch, simply north of Fort Myers, is by now well-known for protecting its lights on throughout and after the hurricane, because of smart flood defenses and two devoted, large-scale photo voltaic tasks. Solar methods, particularly when paired with batteries, supply some resilience towards such disasters.
Florida’s utilities, maybe as a results of observe, have a good document on reconnecting most properties and companies inside days. Yet days are inclined to really feel like years when the lights (and all the pieces else) exit. An evaluation revealed final month by Berkeley Lab concluded that a rooftop residential system paired with a 10 kilowatt-hour battery would have met 71% of the essential energy wants of a single-family residence, on the median, through the outages after Hurricane Irma, which hit Florida 5 years in the past. The worth of that insurance coverage will differ from family to family, however must determine in comparisons of electrical energy prices vis-a-vis the grid.
It additionally must determine in debates about energy market reform in Tallahassee, though that could be hoping for an excessive amount of. Regulated monopolies have a tendency to monopolize regulators. Florida seems to be no exception. Still, the shortage of assist for rooftop photo voltaic in a state peculiarly uncovered to the rising sea ranges and the extra intense storms that include local weather change seems to be ever odder because the hurricane seasons roll by.
More From Bloomberg Opinion:
• Use Market to Combat Climate Change and Hurricanes: Tyler Cowen
• Throwing Shade Is Solar Energy’s New Superpower: Adam Minter
• Energy-Rich Texas Should Love the Climate Bill: Liam Denning
Want extra from Bloomberg Opinion? {OPIN }.
(1) Data as of June 2021. Source: Bloomberg NEF.
(2) Florida was estimated to have sufficient potential rooftop solar-power capability to fulfill 46.5% of its retail electrical energy gross sales, eighth highest within the continental US, in an evaluation revealed by the National Renewable Energy Laboratory: “Rooftop Solar Photovoltaic Technical Potential in the United States: A Detailed Assessment” (January 2016).
(3) In the case PW Ventures Inc. v. Nichols (1988), the Florida supreme court docket backed the Public Service Commission’s place that any entity promoting electrical energy “to the public”, even only one member of the general public, made that supplier a public utility topic to state regulation.
(4) This assumes common annual electrical energy consumption of 13.15 megawatt-hours per family at 13.95 cents per kilowatt-hour, and a 10 kilowatt rooftop system at $2.55 per watt (sources: Energy Information Administration, Bloomberg NEF).
This column doesn’t essentially replicate the opinion of the editorial board or Bloomberg LP and its homeowners.
Liam Denning is a Bloomberg Opinion columnist overlaying power and commodities. A former funding banker, he was editor of the Wall Street Journal’s Heard on the Street column and a reporter for the Financial Times’s Lex column.
More tales like this can be found on bloomberg.com/opinion