Regulations Hinder Growth of Florida’s Solar Energy Sector

By Sam Stadtlander and Giovanna da Silva

In 1883, Charles Fritts created the first solar cell and established the path towards developing renewable solar energy.  Since then, the 20th and 21st centuries have seen increased demand for technological innovation in the solar sector as an alternative to natural gas and other conventional energy sources. Due to the state’s geographic location and warm climate, Florida is in a position to potentially benefit economically from producing solar energy. While current statutes incentivize solar production, permitting third-party financing for solar would allow individual consumers and small businesses to finance solar energy at an affordable rate. This would increase accessibility of solar production outside of the commercial sector.

Florida provides tax credits, financing opportunities, and rebates to those seeking to invest in clean-energy equipment. The 2006 Florida Energy Act resulted in the formation of the Solar Energy Systems Incentives Program, which provides rebates to those who purchase solar generation equipment. Section 212.08 of the Florida Statutes allows a sales tax break to anyone who purchases solar generation machinery certified by the Florida Solar Energy Center.

Some local governments in Florida offer residents loans to purchase eco-friendly appliances. The city of Tallahassee, for example, provides Energy-Efficiency Loans at 5 percent interest in exchange for purchasing energy efficient generators, refrigerators, water heaters, air conditioners, lighting, solar systems, and other appliances. Additionally, the city offers rebates and grants for investing in eco-friendly products such as replacing conventional electric water heaters with natural gas water heaters. Similarly, the Orlando Utility Commission provides solar energy rebates to commercial businesses at $0.03 per kilowatt hour of energy produced and homeowners with a $1,000 rebate to purchase solar equipment. Loans are also available to Orlando residents.

While these incentives help increase solar production, the major obstacle solar energy producers face is that Florida prohibits customers from directly purchasing power from solar energy developers. In other words, few generators of solar power–with the exception of a handful of utility companies such as Florida Power and Light–are allowed to sell the energy they generate directly to consumers.This consequently prohibits third-party financing.

Third-party financing takes two forms: the purchase power agreement (PPA) model and the leasing model. Under the PPA model, a private solar energy developer builds and maintains a solar energy system for free on the customer’s property. The consumer signs a contract to buy solar power from the developer, often paying lower rates for electricity. With the leasing model, the customer pays the developer over the course of several years for installing solar equipment on the person’s property. Both options are beneficial to consumers seeking low-cost and environmentally friendly energy alternatives to conventional energy sources.

Section 366.91 of the Florida Statutes provides financial incentives to those that use solar panels. Through net metering, Florida Power and Light offers discounted energy rates to those who generate excess energy via solar panels. Florida further incentivizes solar energy production by providing tax exemptions to solar energy producers. Without third-party financing, however, these incentives are limited to a select group of people who can afford to pay the costs of solar equipment upfront.

Florida’s solar industry has been steadily increasing in large part due to the sales tax exemption program, rebates, and other incentives offered on a local level. While progress has been made, the legalization of third party ownership will encourage the growth of the solar sector.

About DeVoe Moore Center

The DeVoe L. Moore Center is conducts economic research and policy analysis focused on state and local policy issues and is located in the College of Social Sciences and Public Policy at Florida State University in Tallahassee. As an educational institution the DMC provides professional research experience to undergraduate and master’s students through an extensive program of internships and independent study, preparing them for a future in public policy, economic development, public sector accountability and entrepreneurship.
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