The Florida Public Service Commission (FPSC) staff is gathering information regarding enhancing development of solar technologies in Florida. Florida Solar Design Group responded to the April 23rd Memorandum as follows, answering the FPSC’s questions in an email:
Dear Lee Eng Tan (FPSC Senior Attorney, Office of the General Counsel),
In response to the subject Memorandum, I offer the following response and comments as a licensed State Certified Solar Contractor on behalf of myself and my company.
1. What policies or programs would be most effective at promoting demand-side solar energy systems (i.e., programs effective on the customer side of the meter)?
Exempting solar energy systems from property tax assessments on commercial properties is a major requirement for solar energy adoption in the commercial sector, where the opportunity for large-scale installations is greatest. This exemption exists for residential property owners, and is a common sense cost-neutral policy that the state can implement. The Florida Legislature blocked voting on this important policy in the last session, bowing to pressure from utility industry lobbyists.
a) Can the policies or programs be implemented under current Florida statutes?
No. This policy would need to be entered into Florida Statutes by way of the Florida Legislature.
b) Can the policies or programs be implemented under current FPSC rules? If not, what changes or additions to the rules would be needed?
Yes. This policy can be implemented independent of FPSC involvement.
c) What are the impacts of the policies or programs on system reliability?
Increased use of solar energy in distributed commercial applications reduces both energy use and power demand in locations where the largest burden on the utility grid is often experienced. Commercial users of solar electricity can significantly reduce utility electric delivery to the point of use, and typically have an excellent solar resource availability with large facilities and suitable roof space.
d) What are the impacts of the policies or programs on system fuel diversity?
If solar energy is considered a “fuel,” increased adoption by default increases diversity, reducing reliance on fuels that are finite in availability and volatile in price. The “fuel” required by solar energy is effectively inexhaustible and free. This can be equated to building a fossil fuel power plant and pre-paying for all of the required fuel (at today’s rates) for the next 25+ years.
e) Identify the cost-effectiveness of the policies or programs compared to traditional forms of generation.
Since there is no cost to implement the policy, the return on investment is infinite. The costs of installing new distributed power plants are borne entirely by ratepayers who choose on their free will to invest in solar energy equipment. Since no property tax is currently being collected on solar energy equipment, and the equipment does not decrease the property’s tax basis, there will be no impact on the tax receipts for each jurisdiction or the state. This is common sense and has been proven successfully with the residential property tax exemption on solar energy equipment.
f) Identify specific costs associated with the policies or programs and who will bear these costs.
See (e) above.
g) Identify how the policies or programs will be fair, just, and reasonable across the general body of ratepayers.
This policy does not cost the taxpayer or the ratepayer anything. It benefits the general body of ratepayers by reducing the need for future new power plants, reducing the capital investment that are ultimately borne be the ratepayer. It makes existing power plants more effective, enabling them to serve more customers.
2. What policies or programs would be most effective at promoting supply-side solar energy systems (i.e., utility or third-party owned)?
The effective prohibition on third-party owned residential and commercial solar energy systems has placed the State of Florida in an embarrassing position, trailing the nation badly in distributed solar energy adoption. The undeniable truth is that solar energy systems’ initial costs are out of reach for most ratepayers in Florida. The vast majority of solar energy systems installed nationwide are financed by a third-party in the form of a loan, lease, or Power Purchase Agreement (PPA). Loans require collateral that most ratepayers cannot supply.
Leases and PPAs allow those who cannot afford a large up-front sum to have solar panels installed on their home or business at little or no out of pocket costs. The property owner purchases energy produced by the solar panels from the panel owners rather than their utility company. The price of the solar electricity purchased and sold is negotiated directly between the owner of the solar panels and the buyer of the energy without utility company involvement. Ratepayers are allowed to choose where they purchase their energy rather than being forced to purchase energy from their incumbent utility company, creating competition and forcing utility companies to manage costs and provide energy at attractive rates.
a) Can the policies or programs be implemented under current Florida statutes?
No. Current Florida law prohibits the sale of electricity except by monopoly utility companies and cooperatives.
b) Can the policies or programs be implemented under current FPSC rules? If not, what changes or additions to the rules would be needed?
The current Net Metering Rule would be the appropriate vehicle for allowing third party ownership, including PPAs. The Net Metering Rule should be strengthened to lengthen the required term of Net Metering Agreements to better match the investment horizon of a solar energy plant.
In addition, the Conjunctive Billing Rule should be suspended for property owners who wish to aggregate meters for billing purposes when a Net Metering Agreement is established. Because commercial and some residential properties have multiple meters, it is often impractical and unnecessarily costly to implement multiple solar energy systems at a site, or even on the same building. The current Rule considers a single meter to be a “customer.” In terms of Net Metering, it makes more sense to consider a customer a single person or business entity. Allowing a customer (person/entity) to offset electricity usage across multiple meters is a far more efficient use of resources, and would further increase the cost-effectiveness and adoption of distributed solar energy generation.
c) What are the impacts of the policies or programs on system reliability?
Widespread implementation of distributed solar reduces the transmission losses incurred by sending power over long distances. By spreading out energy generation, a smart grid can react to deficiencies and excesses throughout the network, creating redundancy and reducing power demand in pockets where solar energy production is in place.
d) What are the impacts of the policies or programs on system fuel diversity?
If solar energy is considered a “fuel,” increased adoption by default increases diversity, reducing reliance on fuels that are finite in availability and volatile in price. The “fuel” required by solar energy is effectively inexhaustible and free. This can be equated to building a fossil fuel power plant and pre-paying for all of the required fuel (at today’s rates) for the next 25+ years.
e) Identify the cost-effectiveness of the policies or programs compared to traditional forms of generation.
Since there is no cost to implement the policy, the return on investment is infinite. The costs of installing new distributed power plants are borne entirely by ratepayers who choose on their free will to invest in solar energy equipment. Since no property tax is currently being collected on solar energy equipment, and the equipment does not decrease the property’s tax basis, there will be no impact on the tax receipts for each jurisdiction or the state. This is common sense and has been proven successfully with the residential property tax exemption on solar energy equipment.
f) Identify specific costs associated with the policies or programs and who will bear these costs.
See 2(e) above.
g) Identify how the policies or programs will be fair, just, and reasonable across the general body of ratepayers.
The State’s utility company lobbyists have spread the myth that solar energy negatively impacts poorer ratepayers. A policy allowing PPAs allows people in all economic circumstances to choose the company from whom they buy energy, and manage their costs through long-term contracts that lock in the price of electricity, hedging against the effects of fluctuating fuel prices and general inflation.
The assertion made by utility company executives that distributed solar energy adoption shifts the grid maintenance cost burden onto other ratepayers has not been proven in other states where PPAs are legal and thriving. The argument is also disingenuous. The same argument would have to be made against individuals who choose to install energy efficient appliances and improve efficiency of their homes with better windows and insulation. Because those customers will use less electricity, they effectively pay less to use the same utility grid infrastructure, yet utility companies (and the FPSC) actively encourage energy efficiency through demand-side programs.
To lobby against distributed solar energy while encouraging general energy efficiency implies that utility companies’ efforts against customer owned solar generation are purely profit motivated. Customer and third-party owned solar energy systems present a threat to utility company profits, and have no proven negative impact on the general body of ratepayers in the short-, medium-, or long-term. In fact, distributed solar energy effectively helps people achieve the goal of using less utility electricity, something the utility companies publicly support.
The goal of this policy is to simply level the playing field and begin to move away from a model where it was previously impossible and impractical to have competition in the electricity generation market due to the capital costs involved with traditional power plants. For all practical purposes the State of Florida is decades away from solar energy becoming a sizable fraction of the fuel mix, but without strong action by state leaders and the FPSC, Florida will remain in the shadows of the booming national solar energy industry.
3. Are there any other policies or programs that could promote the development and deployment of solar energy systems in Florida?
There are certainly many other programs that could be implemented, including a Renewable Portfolio Standard (RPS), Solar Renewable Energy Credits (SRECs), job training, and state rebates. However, these all come at a cost borne by taxpayers and ratepayers.
This questionnaire ignores the ancillary benefits of the proposed programs, focusing on the effect on utility ratepayers. There are far-reaching benefits for Floridians, especially in terms of jobs. The broader economic impact improving the climate for solar energy in Florida is incalculable. The potential for manufacturing, warehousing, distribution, and export of solar energy equipment and supplies is nascent. The ability for Florida companies (like mine) to become leaders in system design, engineering, and testing is palpable. Our unique experience with adverse weather and amply solar resources makes Florida the perfect place to live up to the moniker, “The Sunshine State.”
Sincerely,
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Jason Szumlanski Principal Solar Designer Florida Solar Design Group (239) 491-8010 office |
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License CVC56956 |
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