March 20, 2018

Editor's Page

Electrons: Recasting the solar battle

Mark R. Howard | 12/28/2016

In the grand scheme of electrical power generation in Florida, solar power is still a pipsqueak, accounting for less than a percent of the power generated. Among renewable sources of energy in Florida, biomass remains the largest.

Solar power is, however, the most dynamic at the moment, as evidenced by the solar-related proposed constitutional amendments that became political footballs in the last election. The media narrative in the coverage of those measures was a David vs. Goliath tale that pitted virtuous green-lovers yearning for energy independence against big, evil utilities hell-bent on holding back solar technology.

That narrative is convenient, facile — and intellectually dishonest. For one, rooftop solar owners aren’t exactly huddled masses. A $30,000 rooftop solar installation, supported by a 30% federal income tax credit (buttressed in some states by additional state and local tax incentives), is basically a moral vanity for people with enough income to take advantage of all the tax breaks.

Government subsidies to spur development of a desirable new technology are nothing new. But giving back $10,000-plus in tax revenue on the purchase of a $30,000 rooftop solar array — to someone likely making more than $100,000 a year? It’s awfully hard to imagine environmentalists and progressives looking the other way at a huge tax break on some other $30,000-plus (discretionary) purchase by the well-off. Meanwhile, those tax breaks are unavailable to anyone who doesn’t control a rooftop — home renters or apartment dwellers, for instance.

Another hole in the David vs. Goliath narrative is the fact that utilities, large and small, have been adding solar-generating capacity rapidly. FPL, which built the then-biggest solar farm in the U.S. in Florida six years ago, is bringing another three solar farms online with more than 1 million panels in Florida as I write this; FPL’s parent firm is already the largest producer of solar and wind energy in the world. Even little Seminole Electric has announced plans for a 2.2-megawatt solar farm.

Some view those developments as attempts by the utilities to cement their “monopoly” status. A different view is that the prices of solar panels have finally fallen to levels where the economics of solar power are beginning to work — assuming you have the kind of purchasing clout that utilities have, and assuming the government sustains the massive level of subsidies that have propped up the solar industry.

What’s really happening in Florida is not a David-Goliath fight but rather the early rounds in a wrestling match over how to evolve utility regulation and how to regulate the rooftop solar industry, which isn’t a bunch of mom-and-pop shops. Solar City — a multi-state company whose business model is built entirely on capitalizing on the governmental tax breaks — just opened in Orlando with plans for other locations around the state.

Going forward, there are plenty of issues to be resolved, including consumer protections for those who choose to lease rooftop solar systems. Leasing a solar system from companies like Solar City lowers the cost for consumers, but they typically sign a 20-year deal that puts a lien-like encumbrance on their home that can make it difficult to refinance or sell. One solar leasing company in Arizona even sold a 20-year lease to a couple in their 80s, who found they couldn’t sell the home until they found a buyer willing to accept the lease deal. Solar City and other solar leasing companies aggressively fought a consumer protection bill that Arizona passed in 2015.

The biggest issues involve net metering and subsidies. In Florida, if you have a rooftop solar installation, you can sell excess power back to the utility at the utility’s retail price — even if the utility could have purchased power elsewhere cheaper. That means that if I don’t have a solar installation on my roof, I’m paying more than I should have to for the power your solar system contributed to the grid.

Meanwhile, when your power line or transformer breaks, the utility is obligated to fix it. And so you’ve reduced the utility’s revenue stream and gotten full retail price for your excess solar-generated power — without having to account for any of the costs of getting your power into the grid or maintaining the power lines. Those costs, with no revenue to support them, end up falling on those of us without rooftop solar.

Rooftop solar owners who argue that they’re saving the utility from having to build more generating capacity are mistaken. Regulatory rules require the utility to have enough power, 24 hours a day, for everybody on the grid, including your solar-powered home at night or when it’s cloudy. Since you can’t guarantee your rooftop-generated solar power will be available at a given time, the utility can’t count on it in meeting its regulatory requirements.

There are plenty of ways to address this unfair subsidy — either by having utilities pay rooftop solar owners something closer to the wholesale rate for the excess power or with some kind of fee that accounts for the cost of supporting the grid. Massachusetts, an aggressively pro-solar state, doesn’t make utilities pay full retail for excess solar power.

These issues shouldn’t be that difficult to resolve. Solar — whether rooftop or ground-mounted — is a great addition to Florida’s collective power-generation portfolio and supplies power when it’s needed most — on hot days when the sun shines.

Dealing with the issues, however, requires an honest discussion of the facts. It’s electrons, not a morality play.

Tags: Editor's column, Energy & Utilities, Environment

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