Let the Sunshine In: Is There a Future for Residential Rooftop Solar Energy in Florida?
In an interesting and somewhat shocking development, on April 28, 2022, Gov. Ron DeSantis vetoed legislation that would have altered the current solar energy net metering alternative energy generation option in Florida. The major investor-owned utilities drafted and lobbied hard for House Bill 741: Net Metering, substituted for Senate Bill 1024: Renewable Energy Generation, arguing that electric utility customers who do not have rooftop solar units are paying extra every month for the few who do, thereby putting a disproportionate and negative economic burden on their utility customers. The governor, however, did not agree with this argument, stating strongly in his veto letter: “Given that the United States is experiencing its worst inflation in 40 years and that consumers have seen steep increases in the price of gas and groceries, as well as escalating bills, the state of Florida should not contribute to the financial crunch that our citizens are experiencing.” As a result of the veto, stakeholders including rooftop solar companies, residential solar panel owners, and the general public that supports alternative energy, have a reprieve — at least for now — from the negative economic and environmental consequences of the proposed net metering rollback; however, this likely will not be the last time a bill is proposed to change the current net metering option. All stakeholders should continue to shine the light on this proposed initiative and contact local legislators and the governor to urge opposition to any future bills that attempt to limit the economic and environmental benefits of net metering and solar energy in Florida.
By way of background, the U.S. Energy Information Administration projects renewable energy generation to supply 44% of U.S. electricity by 2050. Today, 21% of the electricity generated in the U.S. is from renewable energy sources, such as solar, wind, geothermal, hydroelectricity, and other methods. Although wind currently accounts for 43% of renewable generation, while solar accounts for 19%, solar energy is projected to substantially bypass wind energy and produce 51% of the renewable generation by 2050. According to the U.S. Department of Energy, Office of Energy Efficiency & Renewable Energy, solar power is more accessible, prevalent, and affordable than ever before. Since 2014, the average cost of solar photovoltaic panels has dropped more than 70%, and the cost of a concentrating solar-thermal power (CSP) system has dropped by about 50%. As market demands continue to increase for both residential and commercial consumers, as well as investment firms looking to capitalize on the lucrative renewable energy market, technology companies have begun to compete to reduce the cost of renewable energy production in order to meet the increased demand. To reduce costs, technological companies research and develop cheaper ways to reengineer modules, hardware, inverters, and storage components to reduce the overall cost of renewable solar power generation.
The state of Florida has, at least until recently, a solar energy-friendly regulatory climate. Indeed, F.S. §366.92 expressly states:
It is the intent of the [l]egislature to promote the development of renewable energy; protect the economic viability of Florida’s existing renewable energy facilities; diversify the types of fuel used to generate electricity in Florida; lessen Florida’s dependence on natural gas and fuel oil for the production of electricity; minimize the volatility of fuel costs; encourage investment within the state; improve environmental conditions; and, at the same time, minimize the costs of power supply to electric utilities and their customers.
The Florida Legislature created the Florida Solar Energy Center (FSEC), a research institute of the University of Central Florida (UCF), in 1975 to serve as the state’s solar energy research institute. FSEC was promulgated to conduct research on issues such as Florida-made energy and it’s efficiency, to create criteria for testing solar energy systems, to develop and adopt standards for solar manufacturing, and to develop educational programs. Florida also encourages renewable energy generation through the use of small customer-owned renewable energy generation equipment through a cost incentive called net metering. Florida Administrative Code Rule 25-6.065 allows customers who own renewable energy equipment, such as solar panels, to produce their own energy to offset their use of utility-produced energy to reduce their utility energy.
Above and beyond the environmental benefits of using renewable energy, the concept of “net metering” is another significant and monetary benefit. Net metering is a billing mechanism that allows customer-owned renewable energy generators to not only offset their consumption onsite, but also earn credits for the excess electricity they add to the grid. For example, during the day, a PV system on a residential customer’s roof can generate more energy than what the home uses because energy generation during daylight hours is likely to be higher than the energy consumed within the home during workday hours. If the home has been approved for net-metering, the excess energy produced will cause the electricity meter to run backwards, creating a credit that can be placed toward the customer’s utility bill at times when the home’s electricity use exceeds the solar system’s output. As a result of this give-and-take scheme, customers are only billed for their “net” energy use, and any excess exported energy will be used to service nearby customer’s energy demands.
In 2008, Florida established its net metering rule, which requires investor-owned electric utilities (IOUs) to offer a standardized interconnection agreement for expedited interconnection and the net metering of customer-owned renewable generation up to 2 MW. The rule’s purpose is to:
Promote the development of small customer-owned renewable generation, particularly solar and wind energy systems; diversify the types of fuel used to generate electricity in Florida; lessen Florida’s dependence on fossil fuels for the production of electricity; minimize the volatility of fuel costs; encourage investment in the state; improve environmental conditions; and, at the same time, minimize costs of power supply to investor-owned utilities and their customers.
Although there is no overall cap for the utilities as a whole, the Florida Public Service (PSC), whose mission to ensure that Floridians receive their essential services in a safe, affordable, and reliable manner as well as regulate the rates and services of IOUs, allowed Florida’s largest electric utility, Florida Power & Light Company, to limit individual systems to produce no more than 115% of the household’s monthly kWh consumption.
Under the 2008 net metering rule, the value of customer-produced solar energy was equivalent to the utility’s retail rate, which includes cost of generation, transmission, distribution, fuel, operating and maintenance expenses, and other costs. At the end of the year, any remaining unused energy credits would be purchased by IOUs at a rate based on the utilities’ avoided cost of generating the energy. The avoided cost of generating energy, also known as the as-available tariff rate, is primarily fuel costs and variable operating and maintenance expenses. Under F.S. §366.051, the fixed rate for power purchased by public utilities should equal the utilities full avoided costs. A public utility’s “full avoided costs” are equivalent to the “incremental costs to the utility of the electric energy or capacity, or both, which, but for the purchase from co-generators or small power producers, such utility would generate itself or purchase from another source.” The full avoided costs rate is a higher rate because it includes capacity and energy-avoided costs, while the as-available tariff rate is largely fuel costs.
In 2008, there were 577 customer-owned renewable generation interconnections. As of December 31, 2020, Florida electric utilities reported a total of 90,552 interconnections, of which 90,518 were solar. Less than 1% of Florida’s electric customers have installed renewable generation equipment as of the 2020 report. In comparison, there were 10,504,960 electric utility customers in Florida, as of January 1, 2021. Under favorable renewable energy laws, Florida surpassed Arizona to become the fourth in the nation in total solar power generation capacity in 2020.
Notwithstanding the success of such a policy, the 2022 Florida Legislature, by a largely party-line vote of 24-15 in the Senate, and 83-31 in the House, considered and approved H.B. 741, which had the potential to reduce if not eliminate this practice. The former bill relating to renewable energy generation likely would have had a substantial chilling effect on residential and commercial customers who participate in net metering. There were four main components to the former proposed net metering bill: 1) a glide path to phase out net metering, 2) a provision to ensure non-solar customers do not subsidize solar customers, 3) a provision that requires net metering to be eliminated by 2029, and 4) a provision that can override the glide path and eliminate net metering prior to 2029 if certain conditions are met.
First, H.B. 741 would have revised the current net metering scheme and proposed a glide path that would have gradually eliminated net metering by shifting the price of energy generated by solar customers from the utilities’ retail rate to the utilities’ full avoided cost. Under the 2022 proposed legislation, all energy bought by the customer from the utility would have been purchased according to normal billing practices at the retail rate. On the other hand, any excess energy produced by customers and sold to the grid, would have been credited to the customer’s next monthly billing cycle depending on when the customer’s net metering application was approved. If a customer’s net metering application was approved prior to January 1, 2024, the customer’s energy credits would have been for the full net metering amount currently in place. Customers, with net metering applications approved between January 1, 2024, and December 31, 2025, would have received 75% of the current net metering credit for the next month’s billing cycle. Customers with net metering applications approved between January 1, 2026, and December 31, 2026, would have received 60% of the amount credited to their next month’s billing cycle. Lastly, any customer whose net metering application was approved between January 1, 2027, and December 31, 2028, would have received an offset of 50% of the amount credited to their next month’s billing cycle.
H.B. 741 also contained a grandfather clause which would have allowed customers who have been approved for net metering before January 1, 2029, to continue to use the net metering design and rates that applied at the time their application was approved for 20 years. The grandfathering clause extended to both customers who purchase or lease real property where solar energy equipment is installed for all or part of the 20-year period. Although a 20-year long grandfathering clause seems generous, those in opposition to the bill argued that solar panels are built to last more than 25 years. Therefore, the legislation would have diminished the bargain-for benefit of solar panel owners who have already purchased panels in reliance that their credits will be net metered for the lifetime of their panels.
Second, to ensure that public utilities received the fixed cost of serving solar customers and that non-solar customers did not subsidize solar customers, the former legislation included a provision that would have allowed public utilities to petition the PSC to allow them to impose any combination of fixed charges and monthly minimum bills. Of all the points of contention between those in support and those in opposition to the bill, the issue of whether non-solar customers are subsidizing solar customers was the most controversial point discussed at public committee meetings. Today, only 0.8% of Florida’s 10.5 million electric utility customers have installed renewable energy equipment. The main proponent of the net metering bills, Florida Power & Light, states that they spent $30 million last year on “subsidies” funded by its 5.6 million non-solar customers to provide services to its less than one percent of solar customers.
Those opposed to the bill argued strongly that no evidence had been provided to the legislature to conclude that a subsidy exists, let alone that the subsidy is burdening non-solar customers. City of Tallahassee citizens, who appeared before the legislative committees during the 2022 session, also refuted the cost shifting argument by stating that, regardless of if they use the utility’s energy and infrastructure, they are still paying upwards of $400 a year in fees to maintain the grid, even though most of their energy comes from solar. Arguably, it appears that solar users pay high yearly fees that benefit and subsidize non-solar users. Opponents of the bill argued that public utility companies have proffered differing figures for the amount of subsidy and have failed to demonstrate how they calculated the murky figures.
Florida school districts also spoke out against the bill as districts shift towards clean energy through solar panels. As fuel prices and utility prices continue to increase, school districts look to leasing out their roofs to solar installers in exchange for energy for the school. These power purchase agreements could have the potential to save Florida school districts $100 million by 2030, but that is only under the current net metering scheme.
Perhaps the most salient fact against the bill was the fact that Florida’s public utilities failed to make their solar subsidy claim when submitting rate requests to the PSC. In October 2021, Florida Power & Light Company was approved to charge some ratepayers to subsidize others, including a $1 billion subsidy on residential users to pay for large commercial and industrial operations. Even more telling, utility companies in Florida were approved for their own solar subsidy that will allow the utilities to impose a $2 billion subsidy on non-participants to participants for their own “SolarTogether” program. Furthermore, beginning January 1, Duke Energy’s residential and some commercial and industrial accounts will be charged a minimum monthly bill of $30, regardless of renewable energy generation. Although prices are rising for both solar and non-solar customers, Duke Energy representatives ensured that the minimum fee had nothing to do with the 2022 proposed net metering legislation.
Third, H.B. 741 also required the PSC to adopt new rules and establish a new solar rate program, effective January 1, 2029, that would ensure that solar customers pay the full cost of utility service without subsidies from non-solar customers. To ensure that there were no unfair subsidies, the rules would have required that energy purchased by solar customers from the utility be purchased at its applicable retail rate while energy generated by solar customers would be sold to the utility company at the utility companies’ full avoided costs. At a time when the shift to renewable energy generation is becoming essential, H.B. 741 would have ensured that those who chose to take a step in the right direction for society’s sake would not receive monetary benefits for their choice that would benefit the world.
The net metering legislation also included a provision that could have eliminated the glide path scheme prematurely, if the penetration rate of solar customers in a public utility’s territory is reasonably expected to exceed 6.5% within the succeeding 12 months. The penetration rate would have been “calculated by dividing the total summer peak demand of all IOUs in the state by the aggregate gross power rating (alternating current) of all in-service customer-owned or leased renewable generation in the IOU’s service territory.” The PSC would have then have been required to initiate rulemaking to adopt a new solar metering scheme, upon petition or on its own motion, which complies with the same scheme requirements for the new program effective January 1, 2029. The new program would have become effective either 60 days after the date the PSC determined the actual penetration rate was reached or 60 days after the rule was adopted, whichever was later.
Lastly, the legislation provided utility companies with a cause of action to recover lost revenues due to the addition of solar customers’ generation between July 1, 2020, and December 31, 2023, through the utility’s fuel and purchased power cost recovery charge. For a utility company to recover lost revenues, the additional solar customer generation would have had to have been above the level that was estimated to be installed in the utility’s territory during the same period used to set base rates at the utility’s most recent base rate proceeding. To ensure that utility companies were not unjustly compensated, the utility company would have had to file a petition with the PSC between December 31, 2023, and March 31, 2024, to prove that the requested relief would not cause the utility “to exceed the rate of return on equity authorized by the PSC” at its most recent rate proceeding.
While the former bill states the program requirements for a utility’s net metering program, the proffered scheme is the minimum requirement. A utility company may petition the PSC to offer a program on terms that are not less favorable to customers who own or lease renewable energy generation than what is included in H.B. 741.
Florida’s strong, consumer-friendly net metering policy has undoubtedly increased solar adoption throughout the state. Since the 2008 net metering scheme was passed in Florida, the number of renewable energy generation systems has increased more than 10,000%. Opponents of H.B. 741 rightly feared that the legislation will curb renewable energy enthusiasm, jeopardizing the solar industry. In fact, Nevada similarly passed legislation to stop net metering in 2015, which caused the two largest solar installers, SolarCity and Vivint, to halt sales within the state and SolarCity to eliminate more than 550 Nevadan jobs. The overall damage to the solar industry, economy, and state employment ultimately pushed legislatures to back pedal and reinstate a consumer-friendly solar scheme. In 2008, the Florida Legislature understood the importance of making the transition to solar energy. Now that less than 1% of utility customers switched to solar, utility companies are pressuring the legislature to turn back the solar tides.
Although the rooftop solar industry dodged a solar flare in the 2022 legislative session, they will likely continue to be a target for major electric utility companies in the years to come. If only 1% of homeowners using such solar energy is enough for utility companies to challenge this clean and renewable energy source, the continued success of solar energy likely will further encourage continued efforts to stifle it. Again, all stakeholders should monitor this closely in upcoming legislative sessions, reach out to local legislators and the governor stating opposition to future bills that limit the economic and environmental benefits of net metering and solar energy for Floridians. Keep the light shining on this important consumer and environmental issue!
 Letter of Veto signed by Florida Governor Ron DeSantis, April 28, 2022.
 U.S. Energy Information Administration, EIA Projects that Renewable Generation Will Supply 44% of U.S. Electricity by 2050, https://www.eia.gov/todayinenergy/detail.php?id=51698.
 Office of Energy Efficiency & Renewable Energy, U.S. Dep’t Of Energy, Solar Energy in the United States (2021), https://www.energy.gov/eere/solar/solar-energy-united-states.
 For a more in-depth examination into the cost declines for solar systems, see David Feldman, et al., Nrel/Tp-6a20-77324, U.S. Dep’t of Energy, U.S. Solar Photovoltaic System and Energy Storage Cost Benchmark: Q1 2020 (2021), https://www.nrel.gov/docs/fy21osti/77324.pdf.
 Fla. Stat. §366.92 (2021).
 See generally FSEC Energy Research Center, https://energyresearch.ucf.edu/.
 Fla. Stat. §377.705 (2021).
 F.A.C.R. 25-6.065.
 Andrew Sendy, Are Solar Panels in Florida Worth It? Your Expert Savings Guide for 2021, SolarReviews (May 3, 2021), https://www.solarreviews.com/blog/solar-panels-florida-worth-it-expert-savings-guide.
 Fla. Stat. §366.91(d) (2021). See also House of Representatives Staff Analysis, CS/CS/HB 741 Net Metering 1 (Feb. 24, 2022), https://www.flsenate.gov/Session/Bill/2022/741/Analyses/h0741d.COM.PDF.
 U.S. Dep’t Of Energy (USDE), Grid-Connected Renewable Energy Systems, https://www.energy.gov/energysaver/gridconnected-renewable-energy-systems.
 F.A.C.R. 25-6.065(3).
 F.A.C.R. 25-6.065(1).
 House of Representatives Staff Analysis, CS/CS/HB 741 Net Metering 2 (Feb. 24, 2022), https://www.flsenate.gov/Session/Bill/2022/741/Analyses/h0741d.COM.PDF.
 Confucius Institute at University of Cape Coast, Gulf Power Net Metering Agreement, http://confuciusucc.com/gulf-power-net-metering-agreement/#:~:text=. In Florida, individual systems are not allowed to rank and track the net metering app.
 Pub. Serv. Comm’n (PSC), Bill Analysis for SB 1024 at 2 (Dec. 20, 2021) (on file with the Senate Committee on Regulated Industries).
 Fla. Stat. §366.051 (2021).
 USDE, Grid-Connected Renewable Energy Systems.
 PSC, Bill Analysis.
 Id. at 3.
 Id. at 2-3.
 U.S. Energy Info. Admin., Florida: State Profile and Energy Estimates, https://www.eia.gov/state/analysis.php?sid=FL#:~:text=Renewable%20energy,generation%20came%20from%20solar%20energy.
 H.B. 741, 2022 Leg. at 2-3 (Fla. 2022).
 Id. at 2.
 Id. at 2-3.
 Id. at 3.
 Luke Richardson, How Long Do Solar Panels Last? Solar Panel Lifespan Explained, Energysage (Oct. 8, 2021), https://www.energysage.com/local-data/net-metering/fpl/.
 H.B. 741 at 3-4.
 PSC, Bill Analysis at 5.
 Mary Ellen Klas, FPL Wants Some Customers to Pay Subsidies, But Not for Rooftop Solar, Tampa Bay Times, Feb. 22, 2022, available at https://www.tampabay.com/news/florida-politics/2022/02/22/fpl-wants-some-customers-to-pay-subsidies-but-not-for-rooftop-solar/.
 Klas, FPL Wants Some Customers to Pay Subsidies.
 Sam Sachs, Duke Energy Florida Customers to Have Minimum $30 Bills, News Channel 8 (Jan. 28, 2022), https://www.wfla.com/news/florida/duke-energy-florida-customers-to-have-minimum-30-bills/.
 H.B. 741 at 4.
 PSC, Bill Analysis at 6.
 H.B. 741 at 4-5.
 Id. at 5.
 PSC, Bill Analysis at 7.
 H.B. 741 at 5.
 Solar United Neighbors, Net Metering in Florida, https://www.solarunitedneighbors.org/florida/learn-the-issues-in-florida/net-metering-in-florida/#:~:text=. Net metering supports increased solar adoption. This is a clean source and encouraging investment in Florida.
 Scott Gibson, Nevada Reverses Unpopular Net-Metering Rule, Green Building Advisor (Jan. 4, 2017), https://www.greenbuildingadvisor.com/article/nevada-reverses-unpopular-net-metering-rule; see also Sean Whaley, SolarCity cuts 5550 Nevada Jobs, Blames New Net Metering Rate, Las Vegas Review-Journal (Jan. 6, 2016), available at https://www.reviewjournal.com/business/solarcity-cuts-550-nevada-jobs-blames-new-net-metering-rate/
This column is submitted on behalf of the Environmental and Land Use Law Section, Susan Roeder Martin, chair and editor.