Guest essay by Eric Worrall
The Guardian has published a revealing piece about how Florida has low household solar penetration compared to some Northern states, because households can’t sell their energy back to the grid. My question – why are buyback schemes needed to make Solar attractive?
Sunshine state shuns solar as overcast New York basks in clean energy boom
Despite its natural advantages, disincentives mean Florida has few solar panels but the Empire state’s policies have boosted installed solar capacity by 800%
If you were to fly a camera-laden drone several hundred feet above Pani Herath’s house in south Miami, Florida, it would become clear his rooftop is an oddity compared with virtually all of his neighbors. Despite living in a part of the world that bakes in the sun throughout the year, just a few thousand people across Florida, such as Herath, have installed solar panels.
“Unfortunately, not many people know about solar. That’s why nobody around here has solar at all,” said Herath. He has become an object of curiosity in his tidy neighborhood, where watering the manicured lawn and scooping debris from the pool is of greater concern.
“I was telling my friend next door about it and he was wondering why I would want to go solar,” said Herath, who has had solar-heated water for the past six years and is now looking to lower his electric bills with more panels. “I wish that everybody would know about it.”
In many states, a solar company can lend panels to a homeowner and then sell the cheap power generated directly to the owner. But that isn’t allowed in Florida. Nor is a homeowner able to sell on his or her generated solar power to anyone else, such as a neighbor or tenants.
By Florida logic, anyone with rooftop panels is providing a utility and therefore must be able to provide power 24 hours a day. And as only the state’s vast monopoly utilities, such as Florida Power & Light, can do this on demand, households are barred from this sort of third-party ownership.
“It’s ludicrous that Florida outlaws such a thing,” said Justin Hoysradt, chief executive of Vinyasun. His West Palm Beach company has instead attempted to boost solar sales through loans structured like car or mortgage repayments.
“Places like New York, Massachusetts and California have recognized the jobs and environmental benefit of solar. We have more of a challenge.”
If the raw economics of solar made any sense, buyback schemes would not be needed to make household solar attractive. Householders could simply switch off the grid supply, and switch their house to cheaper rooftop solar supply, to reduce their electricity bills.
According to the CDC Wonder site, Florida receives an average of 18,581.94KJ/m2 of sunlight every day, but New York State only receives 13,933.79KJ/m2. Solar panels in Florida receive 33% more sunlight than solar panels in New York State.
If solar panels don’t help reduce household bills in a sunny state like Florida, where owners receive 33% more return on investment, how can they possibly make economic sense in New York State?
The reason has to be market distorting government subsidies and energy policies. Government subsidies and energy policies in this case are self evidently causing tremendous resource misallocation, motivating the installation of solar panels in less sunny states. My evidence for the resource misallocation is the simple fact that if market signals were working properly, nobody would install solar panels in less efficient northern locations, until they ran out of optimal southern installation opportunities.
Of course, even sun drenched Florida households are not installing solar panels – because without generous taxpayer funded power buyback schemes they don’t make economic sense. Without subsidies, solar panels can’t compete with cheap, reliable, 24×7 fossil fuel or nuclear generated electricity available straight out of the wall socket.
This gross resource misallocation is a big deal. The money wasted by market distorting government subsidies in New York State could have been spent on hospitals, police, or badly needed infrastructure repair. Or it could simply have been left in the pockets of taxpayers.
Worse, the subsidies for solar panels tend to disproportionately hit poor people. The recipients of these market distorting subsidies are the rich and middle class. Whether they pay through state taxes, or the cost is passed on via electricity bills, poor people who don’t own a home with a nice big South facing roof get slammed – they end up helping to pay everyone elses electricity bill in addition to their own.
The Guardian wishes Florida would follow New York State’s example, by implementing regressive taxes on poor people to subsidise the electricity bills of the middle class. Let us hope Florida sticks to their principles, and continues to refuse to impose this cruelty tax on the poor.