Policy Memo - Shiqi Li

MEMORANDUM

To: Commission of Florida Department of Agriculture and Consumer Services, Adam H. Putnam.

From: Shiqi Li

Subject: Incentivizing the State of Florida to use more solar energy

Date: 11/09/2014

Florida has abundant solar energy resource: it ranks third in the nation for solar energy potential. However, Florida ranks only twelfth for total installed solar power capacity. [Valentine, 2014] Despite the advantage of Florida’s climate and geography, to use solar energy as a replacing energy resource is sustainable to the environment and propels the economy. While many other states are significantly increasing solar energy usage, Florida falls behind due to its current policies. The current policies do not offer a healthy environment for solar energy and utility companies. On the other side, the rules prevent investment and innovations to thrive in Florida. Many companies complained that their businesses are inhibited here and some of them choose to leave the state.

Florida has one of he highest rates of home electricity consumption in the country, since it uses air conditioner frequently. To generate electricity from traditional resource, such as fuel, is such a burden to both the environment and economics. Studies showed that the solar panel’s installation cost has lowered by 100 times since 1977, [Shahan, 2014] and 39% since 2010[SEIA, 2014]. Moreover, the cost for solar generated electricity is lower than retail electricity for most people in other states, due to their incentives and rebates programs. Besides, the environmental impact is significant. The current three solar power plants in Florida will prevent the emission of more than 3.5 million tons of greenhouse gases. And a single plant will cut Florida’s oil consumption by 600,000 barrels and save customers $178 million in fuel costs over its lifetime. [NRDC, 2014]

In order to incentivize Florida to use more of its copious sunshine, the current policies need changes. To remove the impedance and add incentives are the primary solutions to this problem. The Department of Agriculture and Consumer Services have three options to consider for current stage.

Option 1: Status Quo

Florida can remain with its current policies, with tax exemption and rebate programs.

Pros: The current policies offer financial support for industries and utility companies to save cost on solar module installation and its operation. On a smaller scale, it also helps building owners to rebate their solar energy cost. Many companies and individuals are attracted to use solar energy by the financial benefit.

Cons: The rebates programs and tax exemption only covers specific categories. For example, the tax exemption applies only on industrial manufacturing, and retail stores or restaurants are not included. The rebates program is also very narrow. Each city has its own rebate program, and some of the programs only consider certain types of implementation of solar panels. The current policies do not offer a promising incentive for energy users and utility companies.

Option 2: Renewable portfolio standard (RPS)

Department of energy should implement the renewable portfolio standard in Florida. RPS requires investors-owned utilities to supply a minimum percentage of electricity from renewable energy resources.

Pros: This policy has been used in many other states to increase solar energy use and it is proven to be very effective and efficient. RPS mainly applies to utility companies. Thus, an increasing solar energy use is realized at the source of energy distribution. By assigning a minimum percentage of renewable energy, solar energy, as a form of renewable energy, will see increasing investment.

Cons: Renewable energy is not limited to solar energy. Wind, biomass, biogas and cellulosic ethanol are also common renewable energy in Florida. The implementation of these energy forms can be easier than solar panels for some industries. On the other hand, the utility companies that are committed to traditional energy will feel inequitable, since they need to invest more money to satisfies this standard.

Option 3: Financial incentives for solar energy companies

The department of revenue should lower the registration fees, tax, or provide partial rent rebate for outstate and international investors in solar energy sector.

Pros: It provides financial incentive, which is the priority consideration for companies. By calculating the benefit and cost of solar implementation in Florida, these outstate companies can see a potential growing market in solar energy in Florida. These investor in solar energy are the promoters for this renewable resource. Once they are attracted by this policy into Florida, they will positively impact the local economics and advertise solar energy use, thus, enlarging the market. As more investors coming into the Florida market, they will bring new ideas and innovations to further promote the solar energy environment and policy-making in Florida.

Cons: This policy will be unfair to traditional energy companies or other renewable companies. The government will lose a large amount of tax income due to this benefit to the solar energy sector. But the lose can be made up by the economic growth brought by the incoming investment. On the other hand, the local business can feel unfair treatment due to this policy.

Reference:

Valentine, Katie. (2014) “How the Florida governor’s race could unleash solar power in the sunshine state.”

http://thinkprogress.org/climate/2014/11/03/3580293/florida-solar-governors-race/

Shahan, Zachary. (2014) “13 Charts on solar panel cost and growth trends”. Clean Technica.

http://cleantechnica.com/2014/09/04/solar-panel-cost-trends-10-charts/

Solar Energy Industries Association. (2014) “Florida Solar”.

http://www.seia.org/state-solar-policy/florida

Natural Resources Defense Council. (2014) “Renewable energy for America”.

http://www.nrdc.org/energy/renewables/florida.asp