Why Doesn’t Florida Have Solar PPAs?
Despite an abundance of year-round sunshine, Florida lags behind many states in solar PV installations and those supportive policiesthat could help boost adoption.
The “Sunshine State” currently offers no tax credit programs or solar rebates, and its property tax exemption is fairly limited. In stark contrast to many states, Florida doesn’t even have a Renewables Portfolio Standard (RPS) mandating that utilities incorporate solar energy into its power portfolio.
One can, perhaps, forgive Florida for its relative inaction. Rebates and incentives can be costly affairs since they typically rely directly or indirectly on tax dollars. But there exist a range of financial vehicles that operate almost exclusively outside the public sphere. Power purchase agreements (PPAs), for example, are private arrangements between independent power producers and property owners who host solar installations on their sites. The former pays for the set-up and maintenance while the latter pays only for the electricity consumed.
Such arrangements provide both parties with exactly what they want. Property owners receive competitively priced electricity without worrying about set-up costs or maintenance. By contrast, PV system owners receive regular electricity checks from site owners in addition to many of the renewable energy credits and tax breaks that come with solar power generation. 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.
So why hasn’t this model taken root in sunny Florida?
For starters, Florida’s relative lack of supportive solar policies removes one of the key incentives behind the PPA – namely the ability to claim renewable energy credits as a power producer. This alone makes PPAs a much harder sell for both parties. Either system owners must extend their payback periods or property owners must pay more for the electricity they consume.
But the problem runs even deeper. Because power generation has traditionally been the sole purview of utility companies, it was relatively easy to regulate. Now that distributed power generation has become more mainstream, many states debate whether or not individual solar PV installations should have to play by the same rules.
Several states have already voted against placing the same regulatory requirements on PPAs that exist for utility companies. A handful of states have decided to let the question remain ambiguous or unanswered altogether. But for reasons that are still unclear, Florida has actually erected legal roadblocks that explicitly prevent solar PPAs on a massive scale.
Perhaps state officials fear that taxing independent power production won’t bring in as much money. One could also argue that utility companies are incentivized to maintain monopolistic control rather than seek alternative energy partnerships given the relative lack of statewide Renewables Portfolio Standards.
The reasons are still blurred, but this much is certain – 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 increasingly volatile energy prices.
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