Renewable Energy

The sleeping giant of the solar industry: Florida

If there's any state people may automatically expect to be a busy market for SolarCity, it would be the Sunshine State. But that is not the case. Far from it, in fact.

Solar panel installation on the roof of a home in Gainesville, Florida.
Getty Images

Florida's solar panel industry is very limited compared with states such as California, Hawaii or even New Jersey. A series of legislative barriers, including a property tax, have curbed a thriving solar industry, much to the dismay of firms like SolarCity. (Tweet this)

"These are solvable problems," said SolarCity CEO Lyndon Rive. "You have to change policy to enable them to happen."

Rive is referring to laws in Florida that prohibit third-party power purchase agreements (PPAs). In a state like California, a solar company can lend panels to a homeowner and then sell the power generated by those panels directly to the owner—usually at a cheaper rate than a traditional utility bill.

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But that isn't allowed in Florida. Nor can a homeowner sell power generated on his or her private property to anyone else, such as neighbors or tenants for example. In essence, the only entity that can sell power in Florida, no matter where it is generated, is a regulated utility company. Florida is one out of only a handful of states that do not allow third-party PPAs.

SolarCity relies heavily on such models in its business plan. That is why currently, the company barely does business in the state.

"Solar gives consumers choice, control and financial savings, plus it stimulates the local economy by creating jobs," Rive said. "The incumbent does everything possible to prevent disruption."

The incumbents Rive is referring to are the electric power companies, many of which are monopolies in their respective states. Pushback against solar in Florida is not unique to that state—it's part of a larger trend faced by a burgeoning solar industry that's trying to crack the energy market.

"Solar will win eventually, it always does," Rive added.

Elon Musk fires back on subsidies
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Debbie Dooley agrees that change is inevitable and may be coming sooner than many have expected. She is the president of the Green Tea Coalition and Conservatives for Energy Freedom, part of a growing movement among political conservatives who are advocating for solar across the country.

She, along with a larger coalition, is pushing for a ballot initiative that would take the issue of solar straight to the state's Supreme Court, bypassing the state legislature, which has failed to pass most pro-solar bills in recent years.

Bills have been awaiting passage "for years," she said, "and they have all stalled in committee. Now we are taking the message straight to the people, giving Floridians the right to decide for themselves."

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The ballot measure, if allowed by the court, would be voted on in November 2016. Currently, Floridians for Solar Choice, which submitted the proposal, is gathering signatures required by the state court in order to make a ruling. That ruling is expected to come this September.

"Unless there are any political shenanigans, we have a great deal of confidence it will be approved," Dooley said. "We are going to win this battle in Florida."

Dooley and other pro-solar advocates claim that utilities are spending heavily on lobbying in Tallahassee.

The Florida Public Service Commission, which regulates the utilities, declined to comment for this story.

Who wants solar?

Duke Energy Florida told CNBC that it "is a strong supporter of solar energy and we are committed to helping to grow solar in Florida." Last month it announced an additional 500 megawatts of solar facilities by 2024, among other solar projects.

Southern Co., which owns Florida's Gulf Power, said the following:

"Southern Company is strategically developing solar as part of the full portfolio of energy resources needed to provide customers clean, safe, reliable and affordable power. As part of this commitment, subsidiary Gulf Power recently announced that the Florida Public Service Commission approved three solar projects totaling 120 megawatts, in addition to other customer-focused solar efforts."

Tampa Electric told CNBC that it "believes in the promise of renewable energy, such as solar power, because it plays an important role in our energy future. We have a long history of developing solar power, and we will continue to explore ways to increase our investment in a cost-effective manner that is fair to all customers.

"We now have more than 600 customers with their own solar arrays, and we will continue to work with customers who want to connect to our system," the company added.

CNBC also reached out to Florida Power & Light, which did not respond to the request for comment.

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Patrick Altier, the owner of Solar Trek, a panel installer, said that while utilities tout their own solar projects, they're less friendly to the idea of customers getting hold of solar on their own, he said. Their solution then, is to build solar facilities and charge customers for it.

"The utilities have been doing a good job at protecting their business, but it's not in the best interest of everyone in the state," he said.

Altier is also legislative chair with the Florida Solar Energy Industries Association and has been making frequent trips to Tallahassee to talk with politicians. But he said he has become frustrated with the political process.

"It is very frustrating to see how special interests affect politics," he said. "I'm a Republican solar contractor and I'm frustrated with my party in this state for taking donations that do not allow for competition and free market."

Florida not in the top 10

Florida ranks third in the nation for rooftop solar potential, but drops to number 13 for the amount of solar that is actually installed, according to the Solar Energy Industries Association. SEIA, a trade association, analyzed the number of solar companies in the state, solar electric capacity installed, solar energy already installed and the price of solar, among other factors.

Unlike several states, Florida does not set a target in terms of the portion of its total energy mix that comes from renewable power. The state passed a law in 2013 that exempts solar systems from being assessed toward property tax values, but a separate tax essentially falls on the shoulders of solar firms like SolarCity.

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But while the industry proponents fight the political and legislative battle, other groups are seeking to help Floridians get solar in the meantime. Florida's First Green Bank says it is among the first in the country with an environmental and social objective. It was founded in 2009 and offers solar panel loans similar to car or home loans. As the cost of solar has continued to drop in the last couple of years, financing options such as these are making it much more economically appealing for low- to middle-income residents.

Justin Allender is a credit analyst with the bank. "I installed a system on my home and locked in my cost of electricity for the next 20 years," he said. "People are more comfortable with the economy and are willing to invest in their homes."

His electric bill is now $24 a month, compared to a previous $150.

PPAs are common in California, the state that leads the nation in terms of solar capacity. It has far-reaching implications, like allowing a homeowner to sell power to his neighbors, or for a mall to sell power directly to its tenants.

"PPAs are a necessary piece to growing a large industrial-scale solar industry in the state," said Florida state Sen. Jeff Brandes, a Republican. "If you can sell power to someone you can recover those costs a lot quicker."