What Do Florida's Two Solar Amendments Actually Mean For The Sunshine State?
At noon on a cloudless day, the sun beats down on the rooftop of a Coconut Grove hotel. Daren Goldin, a solar contractor, walks around rows of solar panels installed at angles on the white roof. The sun’s reflection is almost blinding, like snow on a sunny day.
This kind of installation is at the heart of a constitutional amendment about solar energy that is on the Aug. 30 ballot alongside races for mayor, Congress and judicial posts. (Scroll down for a full explanation of both August’s Amendment 4 and November’s Amendment 1)
This particular installation is comprised of more than 30 solar panels, which together create a roughly 90-kilowatt system.
“It's helping the hotel save thousands on their power bill every month,” says Goldin.
He says a decade ago solar was $8 per kilowatt installed. Now residential is down to about $3 and commercial about $2.50, “which is a game changer.”
So for something the size of this hotel’s installation, we’re talking somewhere near a quarter million dollars.
“Certainly I’ve gotten into this industry because I believe and love clean energy,” says Goldin. “But when we sit down with our customers and try to compel them that this is a wise move to make, really, it's a financial conversation and we've come to view ourselves as selling a financial product.”
And part of that financial calculation is the increase in property value that solar installations contribute to.
Property value is the key phrase for what’s on the ballot right now: “Florida Property Tax Exemptions for Renewable Energy Equipment Amendment,” aka Amendment 4.
Homeowners already get tax cuts when they install solar, but businesses don’t. Amendment 4 would change that.
“A commercial property owner, if they add solar panels to the roof of their business… it could be substantial because solar panels on a large facility like that could be $10, $20, $30,000,” says Stephen Smith, executive director of the Southern Alliance for Clean Energy and a board member of the political action committee that’s financially backing the amendment.
When you add something this valuable to your property, your property value goes up. And when your property value goes up, your property taxes go up - which sometimes makes solar seem less financially attractive.
Amendment 4 would prevent solar panels from being counted towards your property value.
But there’s another part to this amendment having to do with tangible personal property tax. “And that really is a tax on equipment,” says Smith.
Think of it this way: You’re a businesses and you have 10 computers and a copier and maybe a water cooler for people to gossip around. You have to pay taxes on this equipment; that’s tangible personal property tax.
So if you’re a solar company, trying to lease solar panels to people, you have to pay taxes on those solar panels, which means you can’t offer as good a deal to your customer.
Amendment 4 would do away with that.
“Approximately 70 percent of the homeowners who have solar on their homes in the leading states have used a lease option for buying down those upfront costs,” says Smith, talking about states like California, Arizona and Nevada
Smith says this solar leasing option could be big businesses in Florida too.
Hardly anyone opposes this amendment.
A few people think it’s government overreach and Rev. Al Sharpton thinks tax cuts would mean less money for public services.
Other than that, it’s got support across the board from the Christian Coalition to the Sierra Club to Broward County to Florida Power & Light.
But, there’s another amendment, Amendment 1, that’s going to be on the Nov. 8 election ballot and people have been confusing the two. And the difference is confusing, even to people supporting Amendment 4, like the solar contractor, Darren Goldin.
“I’ll meet people collecting signatures for getting these amendments on the ballot,” explains Goldin, “and they’ll tell me, ‘well we know that there’s one that's pro and we know that there’s one against.’ “
And it’s not always clear which is which and who is supporting what.
The central issue in Amendment 1 is the following:
“State and local governments shall retain their abilities to protect consumer rights and public health, safety and welfare, and to ensure that 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.”
In order to understand what this means, you first have to understand the concept of net metering.
Individuals or businesses with solar panels are rarely off the grid; they are still connected to power lines that bring in electricity from the utility companies like Florida Power & Light or Duke Energy.
During the day, solar panels produce electricity and sometimes you generate more power than you need. That extra power goes out onto the grid, down the power lines and maybe to your neighbor’s house. Nothing changes for them; they wouldn’t even know that the power they’re using came from the sun. You get paid for supplying this power.
At night or when it is cloudy, by contrast, your solar panels are not generating electricity.
So your building pulls power from the grid, power generated by the utilities. You have to pay for this power.
So at the end of the month the credits for selling electricity from your system and deductions for using grid electricity are added up. You pay or get paid the difference.
The question Amendment 1 raises is: Who should pay for infrastructure like the power lines and power plants that everyone uses?
“People that don’t choose solar shouldn’t have to subsidize in some way the people who do choose solar,” says Screven Watson with Consumers for Smart Solar, which backs Amendment 1.
The way he sees it, people who use solar and don’t end up paying for electricity don’t contribute enough to the maintenance of power lines and power plants.
He argues that even if you are generating more electricity than you use, you still rely on the grid for those dark hours and the ability to sell your excess. It’s about convenience.
The way persons who own solar would pay their fair share is unclear. The language in this amendment does not specify. But people on both side of the issue suspect it could mean a change in the rates solar generators are paid for their excess power, or it could be in the form of some monthly fee.
Supporters of Amendment 1 have raised millions of dollars, the vast majority from utility companies: FPL, Duke Energy, Tampa Electric Company and Gulf Power Company.
Watson says he doesn’t think anyone would take this amendment and implement any outrageous rate hikes or usages fees.
“This is sort of anticipatory, if you will. I think we’re going to see the cost [of solar] come down, which means more people are going to avail themselves of it,” says Watson. “We just have to be very careful that we don’t end up raising the rates somehow on people that either choose not to [install solar] or can’t afford it.”
Smith, of the Southern Alliance for Clean Energy, says utility companies are not fans of people with solar simply because they’re losing out on revenue from customers.
“It sounds good on the surface, but let’s thinks about that.” says Smith of the argument in support of Amendment 1. “If you go in your home and you put in a more efficient refrigerator, a new LED light bulb that’s a lot more efficient than an incandescent bulb or you put in a new air conditioning system, you’re going to use less power. Now, does the utility have a right to say that you’ve got to continue to pay them even though you’re not using as much? I don’t think so.”
Smith and Goldin, the solar contractor, don’t support Amendment 1 because they say the Legislature could use it to make solar prohibitively expensive or create more barriers to solar.
SOLAR FUTURE IN FLORIDA
Even though this amendment debate has been pretty heated within the solar world, people on both sides are happy the Sunshine State is talking about solar at all.
While the Sunshine State is third in the country for solar potential, it is the 18th in actual installation as of 2014. At this point, only 0.06 percent of Florida Power & Light’s energy comes from solar. However, the company will bring three new solar farms online before the end of the year, roughly doubling the amount of solar currently in the state, according to the company.
More solar is certainly coming to the state, but it is unclear if that growth will come mostly from individual homeowners and businesses, from large-scale utility solar farms or some combination of the two.