by Julia Pyper
July 27, 2016

Florida is known as the Sunshine State, but it isn't known as the most accommodating place for the solar energy.

Florida doesn’t have a renewable portfolio standard, nor does it allow for power-purchase agreements -- two policies that have been key to advancing solar markets in many other states around the country.

The clean energy market in Florida has been growing even in the absence of these policy measures, but many in the state believe there’s an opportunity to do much more. According to the Solar Energy Industries Association, Florida ranks third in the U.S. for rooftop solar potential, but 14th in terms of cumulative solar capacity, with a total of 287 megawatts installed. In 2015, Florida installed 41 megawatts of solar electric capacity, ranking 17th in the country for that year.

Solar Power Rocks, a research and advocacy organization, gives the Florida solar market a “C” grade, noting the lack of solar-friendly policies.

Last year, the bipartisan political action committee Floridians for Solar Choice launched a ballot initiative that sought to permit third parties to sell solar directly to customers through power-purchase agreements. Florida is one of just a handful of states to specifically prohibit residents from buying electricity from an entity other than a utility. However, despite building a strong grassroots movement, the PPA measure ultimately failed.

Meanwhile, a controversial ballot initiative -- launched in response to Floridians for Solar Choice -- continues to advance. The Consumers for Smart Solar campaign has raised more than $16 million in campaign funding, largely from utilities. The solar industry claims that utility-backed Amendment 1 is misleading and would do nothing to grow the state’s solar sector.

To help move Florida up the solar leaderboard, Republican State Senator Jeff Brandes, along with Representatives Ray Rodrigues (R-Fort Myers) and Lori Berman (D-Boynton Beach) are sponsoring a separate ballot initiative that Brandes believes will lay the groundwork for a major expansion of clean energy in the state.

Amendment 4 would authorize the legislature to exempt solar projects on commercial and industrial properties from both the real property tax and the tangible personal property tax for leased equipment in Florida. The proposed amendment (HJR 193) builds upon existing law that exempts residential customers from paying property taxes on renewable energy devices, including solar PV, wind turbines, solar water heaters and geothermal heat pumps.

“I really think that this constitutional amendment serves as a catalyst,” Brandes said in an interview.

“When this policy passes, and we have more commercial solar available, then I think you'll start seeing a wider adoption and a more robust discussion inside the legislature about distributed generation,” he added.

Another attempt at a pro-solar policy

In order to pass, Amendment 4 needs to win 60 percent of the vote in Florida’s primary election on August 30, 2016. The ballot is a necessary first step to passing the tax incentive that will ultimately need to be passed by the legislature, in general law, before it can be implemented.

Amendment 4 is not to be confused with Amendment 1 -- the utility-backed solar petition that will appear on the November 8, 2016 ballot.

Ballotpedia reports that the two initiatives have different aims and appear on different ballots. However, they could potentially be in conflict with one another. Amendment 1 states that state and local governments must “ensure consumers who do not choose to install solar are not required to subsidize the costs of backup power and electric grid access to those who do.” Amendment 4, which allows property owners to avoid paying additional taxes, could theoretically be considered a solar power subsidy by other taxpayers. So if Amendment 1 passes, lawyers could potentially use it to undermine Amendment 4.

This is the third year Sen. Brandes has attempted to advance a pro-solar policy in Florida. Last year, he sought to pass a bill that would allow businesses with leased solar systems to sell excess energy to neighboring businesses, but the initiative failed. This year’s ballot initiative “really was launched with the goal of finding what is that secret formula to getting a major piece of solar policy through the legislature,” Brandes said.

As written, Amendment 4 would offer the tax exemption on commercial- and industrial-owned renewable energy projects for 20 years starting on January 1, 2018. According to Brandes, the exemption would apply in full in the early years of the program, and then be reduced over time.

He added that the tangible property tax exemption on leased equipment is likely to have a significant impact, given that most customers don’t want to fork out large sums of money to buy the equipment upfront and third-party financing isn’t permitted in the state. Reducing the tangible property tax would reduce the overall cost of a solar lease, providing a meaningful incentive for large commercial solar developments.

While there is no guarantee the amendment will ultimately be approved by the legislature, lawmakers would have a strong incentive to uphold voter wishes, said Brandes. Plus, it helps that the ballot has the support of key business groups, including Florida Realtors, the Florida Retail Federation and the Florida Restaurant and Lodging Association.

“I think the politics of it are that the commercial players have advocates in Tallahassee that are interested in saving money, and they have people on the ground that are ready to make a business case that have relationships with legislators,” Brandes said. “I think that's what has been missing in the individual residential space. You don't have individual residents going to Tallahassee every day, talking to legislators.”

The contribution of advanced energy

A number political and environmental groups are backing the amendment. It also has the backing of Advanced Energy Economy (AEE), a national association of clean energy businesses, as well as some utilities.

“One of the reasons we got involved in the Amendment 4 effort was because we knew that the utilities…did not oppose the proposed amendment during the legislative session, and have since come out in support of it,” said Trish Fields, vice president of partnerships and strategic engagement at AEE.

“Our strategy in [Florida], in terms of advocating for different policy mechanisms, is really to be focused on developing relationships with the utilities in the state to figure out what would work for...utilities, as well as our membership,” she added.

A number of AEE’s member companies are already doing business in Florida or are looking to enter the Florida market. Projected population growth in the state and the corresponding load growth creates a major opportunity to deploy advanced energy technology, which is also an economic opportunity for the state, said Fields.

A recent report conduced by BW Research Partnership on behalf of AEE found that there were more than 140,000 advanced energy jobs in Florida last year -- nearly double the number of jobs in agriculture and on par with colleges and schools.

Roughly three-quarters of advanced energy jobs are in the energy-efficiency sector, and 17 percent are in fields dealing with advanced electricity generation, including natural gas. Solar jobs make up roughly half of the electricity generation segment’s 23,500 workers.

Furthermore, there are about 25,500 employers engaged in advanced energy in Florida, the majority of which are in small businesses, with 81 percent of companies employing up to 24 permanent employees.

Florida ranks second in the nation for retail electricity sales, and has one of the highest rates of home electricity consumption in the United States because of the high demand for air conditioning. According to a 2014 Energy Information Administration survey, household electricity costs in Florida are 40 percent higher than the U.S. average.

That provides a big opportunity for technologies and services to save energy, and for distributed generation that can provide power at a lower cost than the grid, said Robert Keough, vice president of communications at AEE.

“I think the takeaway overall from the report is that advanced energy is a substantial industry in Florida,” he said. “It is growing as an employer and contributing to the state's economy. We hope that policymakers in Tallahassee take note of the contribution of advanced energy and keep it in mind as they are considering policies relative to energy.”

A real opportunity

While Florida doesn’t have in place two of the main renewable energy policies that have helped grow the sector in other states, there are a number of other clean-energy and energy-efficiency incentive programs in the state, including net metering. The effect of net metering has been curbed given Florida’s relatively low electricity costs, property taxes, and the restriction on third-party ownership.

The property-assessed clean energy, or PACE, model has been one of the most instrumental policies in growing the advanced energy market in the state.

Last fall, Florida’s Supreme Court upheld the state's law against challenges, including a case brought by the Florida Bankers Association. Since then, applications for the innovative financing mechanism have been rapidly increasing, as Southwest Energy News reports. Orlando recently passed PACE legislation, Broward and Miami-Dade counties also have PACE in place.

PACE allows property owners to borrow money to make energy-efficiency improvements or to install rooftop solar. Participants then pay back the loan through a surcharge on their property taxes, while also enjoying energy savings, which helps to cover the PACE repayment. To date, PACE providers say the tool has been used predominantly for hurricane protection and efficiency upgrades, with very little funding going to solar, given its relatively high cost.

PACE has also been an important policy for commercial electricity customers, according to Mary-Suzanne Powell, Miami-based area general manager for energy solutions at Johnson Controls.

Johnson Controls helps its customers understand the intricacies of various PACE options provided in Florida, in order to help them access energy saving opportunities. While Johnson Controls has not been actively involved in advocating for other clean energy policies in Florida, Powell said she’s seen the Florida market begin to thrive in recent years.

“We, as a technology innovator, have to be on the leading edge of things like energy storage and distributed energy solutions and just generally how to make buildings smarter and more energy efficient for our clients,” Powell said. “The point there is that [we see] a lexicon of clean energy and energy efficiency and sustainability and responsible use of our natural resources that's becoming quite commonplace [in Florida].”

The advanced energy market is growing in Florida, with 5,000 new jobs expected this year, according to the AEE report. But at the same time, the state has a mixed bag of energy policies that have different effects on different technologies. Solar is a technology that Powell and others believe more could be done with.

“There are some technologies where there is no issue with policy. For example, energy saving performance contracting…that legislation has been in place for years. You have many schools, hospitals, universities and cities that are at phases three or four in energy savings performance contract,” she said. “But as it relates to things like incentives for solar and energy storage and things like that, I think there's real opportunity there.”