Recently, the Florida state legislature passed House Bill 741, a provision that lowers the rate paid to solar customers that export their excess electricity back to the grid. Industry advocates, environmentalists, and Florida citizens are now calling on Governor Ron Desantis to veto the bill as a last measure to prevent its passing.
A Mason-Dixon poll showed 74% of Republicans and 94% of Democrat respondents wanted net metering to remain intact, and 68% of all respondents said they believe the state legislature should make it easier to go solar. However, the bill passed, and now net metering payments are scheduled to taper down.
However, things could have been much worse. Rather than a slow taper, which gives the industry time to react and innovate, earlier models of the bill called for a swift change that would have left the industry reeling. Palmetto’s market development officer Ryan Barnett joined pv magazine to discuss the policy effort.
Residential solar and storage developer Palmetto, along with other industry actors and advocates, worked closely with the bill’s negotiation process. “Costs likely won’t come down as quickly as the loss in value caused by the credit lowering, so this is a loss for consumers and for the industry,” said Barnett. “While this is bad for consumers in the short term, the solar industry will still thrive in the US.”
Senator Jennifer Bradley and Representative Lawrence McClure introduced the bill in January, and the original proposal was described fast-moving and heavy handed. Rep. McClure was reported to have accepted over $20,000 from Florida utilities, and at that time he requested the Florida Public Service Commission to review rules and regulations of net metering, citing a utility argument that rooftop solar hurts middle-income Americans.
The bill that has now been passed was “successfully modified beyond recognition,” said Barnett. Several changes were made that may save the industry from being throttled by the new policy.
Perhaps the biggest win was buying the industry and Floridians valuable time. Original timelines of the Bradley/McClure proposals had the rate paid for net metering lowered from a retail price (what consumers pay for electricity end-use) to an “avoided cost” rate (essentially the wholesale cost to utilities) at the start of 2023. Payments for net metering would be slashed to a fraction of what they are today overnight. This would have been particularly damaging to the local businesses who have helped almost 1% of Floridians top their rooves with solar thus far, giving them little time to react and adjust business practices.
Instead, the bill has been built with a “glide path.” Rates will lower by 25% starting in 2024 and will taper off to the avoided cost rate in 2029, six years later than originally planned.
Grandfathering & fixed charges
Another victory was scored for the customers that Palmetto and other PV installers have served, as the “grandfathering” of net metering rates was extended. Now, customers will be able to lock in their net metering rate for 20 years instead of 15. Plus, whatever rate you install solar under will remain locked in for 20 years, so there is opportunity to secure net metering before it goes away by 2029.
The original bill also had broad language that allowed utilities to levy fixed monthly charges on solar customers, something that has been described as a “tax on the sun.” Barnett said the new bill does still have provisions for fixed charges, and that it was a “tough pill to swallow” for the coalition of solar-supportive policy advocates.
However, the new fixed charge language tightened up the process. Rather than being able to add charges unchecked, utility companies will have to go undergo a public stakeholder process with Florida citizens and the Public Service Commission. This means that by 2026, the 68% of Floridians who responded they would like solar to be easier to access have an opportunity to block such fixed charges.
Barnett said he is optimistic going forward that Florida citizens will have the opportunity to choose rooftop solar. Palmetto is well-positioned to continue to serve the state for years to come. The company is a technology-focused developer that works on a hub-and-spoke model. It enables “build partners” in active markets to use its design, sales, and customer service platforms. The company operates in 24 states.
Palmetto’s build partners are local solar installers, electricians, and entrepreneurs that have real connections to their communities and the needs of local solar markets. It has a partner program called “Build+” where it trains startup-minded solar entrepreneurs. By operating with the hub-and-spoke model and being a well-capitalized company that is asset light and operational expense light, Palmetto is well-suited to adapt with strength to the many policy changes facing the nation, said Barnett.
Barnett added that he believes the conversation is changing around renewable energy policy, that it is becoming less confrontational, and that utilities and rate designers are beginning to recognize the undeniable benefits of distributed, customer-owned rooftop solar.
Barnett added that there is an opportunity for policy to bring solar to more Americans. One such change would be the federal “direct pay” option, which would allow the solar investment tax credit to be paid against taxes. Currently, you need tax liability, or taxes owed, to qualify and take advantage of the tax credit.
This provision has an outsized impact on low-to-middle income people, tax-exempt people, and taxpayers with substantial losses. Direct pay would open solar access to these individuals who have historically not been able to enjoy the benefit of the tax credit.
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