Solar Talking Points

Power Purchase Agreements

 Net Metering

 Solar Rights

Power Purchase Agreements

Broward County is working to increase rooftop solar photovoltaic installations throughout the State of Florida. Accordingly, Power Purchase Agreements are an important issue within the state that may have an impact on solar in the future. This discussion may help you to understand this complicated issue. 

Issue

Concerns

Response

Power Purchase Agreements

(Broward County SUPPORTS legislation allowing Power Purchasing Agreements.)

A Solar Power Purchase Agreement (PPA) is a financial agreement where an installer/ developer arranges for the design, permitting, financing, and installation of a solar energy system on a customer’s property at little to no upfront cost.

In a PPA, the developer owns the solar equipment, but the customer agrees to purchase all the energy from the solar system over a fixed period of time (typically at a price lower than from the local utility).

The advantage of a PPA is that it allows the property owner to obtain renewable energy without paying the up-front costs associated with PV or worrying about maintenance of the system.  The relationship is analogous to leasing a car in which someone else owns and maintains the vehicle, and you only pay for the miles that you actually drive.

Florida law currently prohibits anyone other than an investor-owned or publicly-owned utility from selling electricity to customers, which prevents the use of Power Purchase Agreements.

This option generally has more complex negotiations and potentially higher transaction costs than buying PV systems outright.

Generally, customers agree to pay a fixed per-kW hour price of electricity (with predetermined annual increases) over the term of the contract, and in the event that the price of conventional grid-delivered electricity were to fall (or increase at a lower rate than the PPA annual increases), a homeowner might be stuck paying higher electricity costs with the PPA than if s/he were buying grid power.

PPAs are an attractive option for property owners because there are no upfront capital costs, and the projects can save customers money from day one.

This is also a viable economic development option. It will generate local economic activity and create solar installation and maintenance jobs that cannot be outsourced to another region.

The price of conventional electricity is unlikely to fall over the coming years, so consumers face limited risk from agreeing at the outset to a fixed price with known annual increases.

By not embracing PPAs, Florida is missing out on a huge opportunity to leverage its natural resources to spur economic development and protect itself from potentially volatile energy prices.

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Net Metering

Broward County is working to increase rooftop solar photovoltaic installations throughout the State of Florida. Accordingly, retention of net metering is an important issue within the state that may have an impact on solar in the future.  This discussion may help you to understand this complicated issue.

Concerns about Net Metering can be categorized into three main areas: Grid Equity, Solar is for the Rich, Incentives and Subsidies.

Issue   Concerns  Response
 Grid Equity  

Net Metering

(Broward County SUPPORTS the retention of existing net metering policies.)

Like rollover minutes on a cell phone bill, net metering gives solar customers credit on their utility bills for the excess clean power they contribute to the grid. Currently in place in 43 states, this simple crediting arrangement is one of the most important state policies for enabling Americans to generate their own power from solar and other renewable energy resources. Learn more at: www.protectnetmetering.org

Solar homeowners save money at the expense of low-income consumers who pay for the solar homeowner’s share of electric grid costs.

Solar homeowners still use grid services without paying for them.
The solar industry and its advocates are seeking favored status within the current monopoly system — at the expense of non-solar customers.

Customer-sited solar generation offers many benefits to the electric grid system and by extension to non-solar customers, including but not limited to:

  • Reduction in utility energy and capacity generation requirements.
  • Reduction in need for expensive new power plants funded by all customers.
  • Reduced fuel costs.
    Reduction in the loss of energy as electrons travels hundreds of miles through transmission lines (system losses).
  • Avoidance or deferral of distribution and transmission investments.
  • Localized grid support including increased reliability benefits.
    Fuel-price certainty.
  • Reductions in air emissions and water use.
  • A recent study by votesolar.org, “Evaluating the Benefits and Costs of Net Energy Metering in California” found that net metering does NOT impose costs on non-participating ratepayers, and instead creates a small net benefit.

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Issue

Concerns

Response
Solar is for the Rich

SUPPORT the retention of existing net metering policies.

Solar users are the wealthy elite.

NetMeteringFlorida.com is a grassroots effort made up of people with moderate incomes, as average Floridians are taking energy production into their own hands.

Several reports by the Center for American Progress show that the majority of residential solar systems are being installed in middle-class neighborhoods all across the country.

Net metering may move Colorado toward climate justice. More...

Net metering would help keep rates low in Mississippi. More...

Most Floridians can’t afford solar panels.

According to four different solar installers, the retail cost to install solar panels in 2014 is approximately $4/watt.  For an average residential installation of 5 kW, that equates to $20,000. After taking the 30% federal tax credit, that drops to $14,000. In addition, local governments are beginning to roll out Property Assessed Clean Energy programs which will allow homeowners to receive third-party upfront financing to install solar and pay it back over a number of years through voluntary property tax assessments.

Most Floridians don’t have sufficient credit to finance solar panels.

According to a Sun-Sentinel article in April 2013, the average credit score in Broward and Miami-Dade County was 646.

According to EnergySage, you need favorable credit rating and debt-to-income ratio for a secured solar loan.    Secured loan lenders assume less risk than unsecured lenders since the collateral such as your home safeguards secured loans. As a result, many secured loans have lower credit score requirements than their unsecured counterparts. While this may be good news if you have a credit score on the lower end of the acceptance range, you should keep in mind that a lower score generally results in higher interest rates for your second mortgage.

An example of a secured loan offered in Florida is from St. Lucie County which offers unsecured loans up to $50,000 with a credit score of 650 or better.

Another example of an unsecured loan available in Florida is from Green Sky Credit which requires a 640 credit score or better.

People who can’t install solar due to living in apartments or in shade are locked out of subsidies.

Several municipal utilities and rural electrical cooperatives in Florida allow customers to buy or lease shares in community solar projects. Florida legislators could choose to allow similar programs for customers of investor-owned utilities.

Low-income electricity consumers spend a disproportionally higher percentage of their income on household energy bills.

According to a Center for American Progress article, this is true.  Low-income consumer energy spending is more than twice the average for non-low-income households—8.3 percent compared to 2.9 percent—and four times the median national household energy cost burden—a median of 13.3 percent compared to 3.3 percent.

Access to solar power could significantly reduce the energy burden of low-income households by providing electricity below local utility rates.

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Issue

Concerns

Response
Incentives/Subsidies

SUPPORT the retention of existing net metering policies.

Many state and federal tax incentives encourage consumers to use roof-top solar.

Florida subsidies for solar are some of the most egregious nationwide.

According to the Database of State Incentives for Renewables & Efficiency (DSIRE):

Florida offers a sales tax exemption for eligible equipment and hardware needed for a PV installation.

Florida offers a corporate tax credit of $0.01/kWh for commercial projects.

Florida excludes from residential property assessments any increase in property value attributable to the installation of solar equipment.

Any other incentives are offered by the utility or by individual jurisdictions.

Florida subsidies are small compared to New Jersey, California, New York or Oregon. The federal Residential Renewable Energy Tax Credit allows taxpayers to claim a 30% credit on systems installed on their primary residence before the end of 2016.

Utilities also receive significant subsidies and cost-recovery dollars. For example, the state’s two largest investor-owned utilities, Duke Energy and Florida Power & Light, have received billions of dollars in advance from ratepayers for the construction of nuclear power plants, some of which will never be built (the projects having been canceled).

The fossil fuel and nuclear energy industries continue to benefit from a wide array of generous government subsidies, many of which they have received for decades.

The federal tax credits for residential renewable energy projects will expire at the end of 2016, while fossil fuel and nuclear energy tax benefits will continue in perpetuity.

Prices are still so high that rooftop solar is not competitive without generous subsidies.

The photovoltaic (PV) break-even price is the PV system price at which the cost of PV-generated electricity equals the cost of electricity purchased from the grid. This point is also called “grid parity” and can be expressed as dollars per watt ($/W) of installed PV system capacity.

Environment California’s Research & Policy Center estimated that when the price of installed solar falls to $5.25 per watt, without rebates, that it will have reached grid parity in the market.

“By the end of 2020, solar PV is expected to be cost-competitive with retail electricity prices, without subsidies, in a significant portion of the world,” said Dexter Gauntlett of Navigant Research.

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Solar Rights

Broward County is working to increase rooftop solar photovoltaic installations throughout the State of Florida. Accordingly, Solar Rights are an important issue within the state that may have an impact on solar in the future. This discussion may help you to understand this complicated issue.

The following is an excerpt from an article from Renewable Energy World

“So what can homeowners do? Negotiations are a good starting point. An HOA would be smart to spend time negotiating instead of spending money on court costs. Before starting negotiations, a homeowner can check to see whether their HOA covenant mentions solar systems directly. If not, or if the rules apply indirectly (such as forbidding other rooftop objects), this ambiguity will work in your favor if you go to court. If solar systems are explicitly banned, homeowners may be able to obtain a waiver by demonstrating that certain restrictions are unreasonable. For example, as Colorado recognizes, an HOA may not restrict placement if it causes the panels to lose efficiency—such as positioning them out of public view, and out of optimal sunlight. Homeowners can also initially propose a solar system that is larger than intended, so that the revisions can include a size reduction that may be enough to satisfy the HOA. If these tactics fail, solar rights laws in your state may provide protection, although legal action is typically required to enforce these laws on a case-by-case basis.“

Source: Renewable Energy World 

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