by Emma Foehringer Merchant
February 10, 2020

In Florida, the creep of new solar installations has become inescapable, according to local solar entrepreneur Justin Hoysradt.

“Every highway you drive down, every back road you drive across, if you decide to drive to Tallahassee — all you can see for miles and miles is what used to be orange groves that were affected by [citrus] canker…or even cattle land [that] is now covered in solar panels,” said Hoysradt, who owns the West Palm Beach-based company Vinyasun and also serves as president of the board of directors for Florida’s SEIA chapter.  

The numbers paint a similar portrait. Last year Florida added nearly 1.3 gigawatts of new large-scale solar. In the next five years, the state is slated to add more than 7.4 gigawatts of utility-scale projects, projected capacity that ranks behind additions in only California and Texas during that time.

Much of that will come from utility Florida Power & Light, a subsidiary of NextEra Energy that serves more than 10 million people in the state. Another NextEra unit, NextEra Energy Resources, is the leading U.S. developer of wind and solar projects.

Florida Power & Light started 2019 with a commitment to install 30 million solar panels by 2030, which amounts to approximately 10.5 gigawatts. FP&L’s target briefly pushed Florida to the top of utility-scale forecasts from Wood Mackenzie Power & Renewables before it was eclipsed by Texas, another growing market.

With additional commitments from utilities in the state including Duke Energy Florida and Jacksonville Electric Authority, Florida will remain near the top of the solar rankings for years to come. But market dynamics in the state mean opportunities for the wider industry are relatively narrow for large-scale installations.

And now the utilities are moving in on the community solar market. The industry remains divided over whether that’s a problem.  

Less competition, more solar

Being owned by the same parent company as NextEra Energy Resources gives Florida Power & Light a significant advantage among utilities grappling with the changing economics of generation resources. NextEra says it operates more than 2 gigawatts of solar in the U.S.

That in-house development prowess has filtered down to FP&L and, along with Florida’s Solar Base Rate Adjustment, which allows utilities to rate-base solar projects without undergoing an entire regulatory rate case, makes it advantageous for the utility to self-develop projects.

“[FP&L is] less open to competition because they consider solar development one of the core competencies of their DNA,” said Stephen Smith, executive director at the Southern Alliance for Clean Energy.

Among Florida utilities, Smith categorizes FP&L as being the most averse to developer competition, with Duke Energy Florida ranking second. Both of those utilities have significant solar development experience.

So far, Duke has contracted 345 megawatts out of a total 700 megawatts that it plans to add in Florida through 2022. A spokesperson said 270 megawatts will be completed through third-party development.

Smaller regulated utilities in Florida, including Tampa Electric (TECO) and municipal utilities, are generally more open to working with developers, said Smith. TECO told Greentech Media that it’s built 400 megawatts of solar with another 200 megawatts on the way, and has contracted with “several” developers on that capacity.

But because investor-owned utilities often favor self-development and state law allows streamlined permitting for power plant projects under 75 megawatts, solar advocates worry that the lack of competition and contract scrutiny hurts the market.

“It creates a real question about whether consumers are getting the best deal,” said Katie Chiles Ottenweller, Southeast director at advocacy group Vote Solar, in an email. “Florida has some catching up to do to stay competitive and meet these customers’ evolving clean energy needs.”

Despite the lack of competition, it’s undeniable that Florida’s utilities are moving more aggressively into solar than many of their peers in the U.S. — despite the fact that Duke Florida now only gets about 2 percent of its electricity from renewables, while FP&L got 1.5 percent from solar in 2018. Natural gas makes up the largest portion of both utilities’ generation mixes and accounts for a significant majority of Florida’s overall electricity mix.  

While the Southern Alliance for Clean Energy supports competition, Smith added that the significant utility commitments to solar in Florida indicate that the market appears to be working despite the challenges for independent developers. “I’m not sure that competition would necessarily have been able to come up with those kinds of numbers on the scoreboard,” he said.

For now, there are no “significant ongoing campaigns” to further open the market, said Vinyasun’s Hoysradt.

“Until there is a change, whether it’s legislatively or at the public service commission in order to direct the utilities to mandatorily participate in a fair, open bidding RFP process, there doesn’t seem to be a market currently available for utility-scale developers to participate” in, Hoysradt said.

A different story for residential solar

For developers, opportunities in Florida are most plentiful in the residential solar space. The state ranked (a distant) second to California in Q3 2019 for residential installations, according to the most recent data from WoodMac.

That success is due to “clear free-market principles,” said Hoysradt. The state has strong net-metering and interconnection policies for residential solar and doesn’t charge sales tax on solar equipment or tack on additional property taxes for homes going solar.

Recently, those principles have faced headwinds as the Florida Municipal Power Agency, which provides power to the state’s municipal utilities, suggested higher fixed fees on customer utility bills. Clean-energy advocates say those fees most heavily impact ratepayers who use the least power, including low-income consumers and residents with solar installations.

Smith calls the fees “lazy ratemaking” that could foreshadow a trend of the state’s utilities becoming less friendly to customer-sited solar. The Southern Alliance for Clean Energy is girding for a possible battle over net metering in the future.

“We’ve already seen skirmishes going on at the local level, and we anticipate [that] it’s coming on a broader statewide level,” Smith said.

For now, though, Florida’s market looks strong, hurdling stumbling blocks such as the state’s disallowance of power-purchase agreements. A victory for the solar industry in 2018 cemented the ability for residential companies to offer leases. And a redoubled emphasis on resilience has highlighted a longstanding trend toward backup power in the state, where hurricanes mean often lead to power outages.

Florida's community solar ideas

“Generac is a household name in the state of Florida, similar to that of LG and Samsung,” said Hoysradt, referring to the generator company that recently started selling solar paired with battery storage using its unique infomercial-driven sales format. Hoysradt’s own company, which installs largely on Florida’s eastern coast, has hit storage attachment rates of between 30 and 50 percent.

The state’s community solar market has also gotten a recent boost, with FP&L proposing a shared solar program totaling nearly 1.5 gigawatts of capacity. Its SolarTogether initiative didn’t win the immediate support of solar advocates, but after the utility created a carve-out for low-income subscribers that guarantees immediate savings, groups including Vote Solar got on board.

Led by a large investor-owned utility in a state without the structure for much third-party competition, the FP&L program has been criticized for not hewing closely enough to traditional definitions of community solar. For most customers, it takes years of payments before any appreciable savings can be achieved. What's more, the program includes 20 new solar projects at 74.5 megawatts each — a larger size than projects generally located on the distribution grid, which community advocates hold as a standard.  

Still, SolarTogether would substantially grow Florida’s nascent community solar market, which saw its biggest year yet in 2017 with installations of just 43 megawatts. Approval for the program now rests with regulators. If it gets the green light, Duke Energy has indicated it would work to create a similar model.

For commercial and small distributed offtakers, the inability to secure a third-party PPA has created difficulties. Advocates such as Vote Solar are trying to alleviate some of that burden, supporting state legislation that would allow schools to sign up for solar contracts. A report from the state’s Department of Education found that Florida schools shelled out more than $500 million for energy costs during the 2017-2018 fiscal year.

Another proposed bill now moving through the legislature would allow for the creation of a special “solar power license plate,” with proceeds disbursed to the nonprofit Florida Solar Energy Research and Education Foundation for job training. Hoysradt noted that Florida is experiencing the same labor crunch that many state markets across the U.S. are currently facing.

Out-of-the-box proposals represent the kind of innovative thinking that will need to continue driving Florida’s solar market, according to Smith.

“We’ve got to get creative about how we work the politics and policies...because we don’t have all the policy mechanisms that some other states...with a more progressive regulatory and political landscape” enjoy, he said.