Policy issues can be complicated in our increasingly technical world. A timely example is the proposed changes to net-metering for rooftop solar in Florida.
While it is true that rooftop solar customers pay a smaller electric bill each month and still receive the full benefits of being connected to the grid, it is also true that open rooftop space is a key component in expanding the use of renewable energy.
By making underutilized rooftop space available to solar energy production, net-metered customers are investing their personal wealth in helping to build a clean energy future for us all.
When a solar power system generates more electricity than the customer can use, he/she receives a credit for the excess kilowatt-hours (kWh) sent to the grid. If less electricity than needed is produced, the customer must buy electricity from the utility to make up the difference.
Under this arrangement, the customer pays for the “net” amount of electricity used (kWh purchased minus credit for KWh exported). It does this via a bidirectional electric meter that is installed along with the solar panels.
Bills would change credit rate
Senate Bill 1024 and its companion House Bill 741 have been filed this session to change the way electricity rates for net metering are calculated. At the direction of the Legislature, in 2008, the Public Service Commission (PSC) adopted a net metering rule that allowed residential and commercial customers with systems sized up to 2,000 kilowatts to be credited for their excess generation passed back to the utility at the same full retail price the solar customer is charged for electricity purchased.
The filed bills would allow the utility to credit the rooftop solar customer instead at the utility’s “full avoided costs.” “Full avoided costs” means “the incremental costs to the utility of the electric energy or capacity, or both, which, but for the purchase from cogenerators or small power producers, such utility would generate itself or purchase from another source.”
Or, as most explain, the “wholesale” rate the utility pays for the electricity it then turns around and sells to its customers at the retail rate.
These regulations and the bills filed apply only to customers of investor-owned utilities (i.e., Florida Power & Light, Duke Energy Florida, Florida Public Utilities Company, Gulf Power, and Tampa Electric Company), which serve approximately 75% of the state’s population.
Municipal utilities (such as the City of Tallahassee) and electric cooperatives (such as Talquin Electric), which serve the remaining 25%, can set their own net metering rates.
Total solar still only 4 percent
The primary argument for the legislation is that rooftop solar users are getting non-fuel utility services (power plants, wires, and maintenance) that everyone else pays more for. Customers without solar pay more because they use more grid electricity and the fixed costs for those non-fuel services are usually incorporated volumetrically into the retail rate charge.
Thus, as the number of rooftop solar users increases and the number of non-rooftop solar users decreases, the greater the financial burden on the non-solar customer.
Total solar electric generation, including utility owned solar farms, accounts for about 4% of the state’s electrical energy. Assuming a typical array size together with the number of solar customers, rooftop solar generates about 0.5% of the state’s total electrical energy.
A 2017 analysis by the Lawrence Berkeley National Laboratory examining utility and ratepayer impacts of utility-sponsored energy efficiency programs found that rooftop solar has a minimal impact on non-solar customers when penetration is 10% or less and grows quite slowly after that. Where distributed solar penetration remains below 1% of electricity sales the fiscal impact is estimated to be less than a 0.1¢/kWh.
No breaks for new customers
The filed bills also provide solar customers who install solar before Jan. 1, 2023, a 10-year waiver period before they would be subject to any new rates and charges. This would allow such customers to recoup their costs since the payback period (the time you stay in your home to break even) for homeowners who self-finance is around 10+ years, while for those who obtain a loan about 15+ years.
The bills provide no breaks for new customers raising the important concern that the incentive for putting solar on your rooftop be significantly curtailed. In fact, in those jurisdictions where utility purchase rates for exported rooftop solar kWh have been reduced, solar installations have significantly decreased.
In 2017, Jacksonville reduced the amount it reimburses solar customers for excess energy sent to the grid (from 10.3 to 3.25¢/kWh). Reportedly, rooftop solar installations plummeted.
Because the installed cost of a 10-kilowatt rooftop solar array can be $30,000 or more, another argument is that rooftop solar incentives benefit only the wealthy. However, the falling price of solar panels has made this home investment more accessible to the middle class.
In comments presented to the PSC in October of 2020, Florida Power & Light reported that 67% of its net metering customers had a household income under $100,000.
Diversifying power mix
Rooftop solar is a great resource in combating the urgent climate change problem. Significant emissions reductions will be required in the next few decades to reduce long term climate damage.
While it is true that rooftop solar is more resource intensive and a less efficient way to generate solar energy, rooftops are ideally suited to capture solar energy and reduce the need for utilities to acquire large tracts of land and build costly transmission lines to meet renewable energy needs.
Rooftop solar also diversifies the energy mix and gives homeowners a choice in how they obtain their energy.
For these reasons we should be incentivizing rooftop solar in Florida.
With the limited number of rooftop arrays in the state today, it seems reasonable to keep the full retail credit method of net metering in place to encourage more investors to use their personal finances to grow a system of zero-carbon electricity generation — even though the issue is indeed complicated.