Florida Utility’s New Solar Program Is A Mixed Bag

Earlier this week, the Jacksonville Electric Authority (JEA) board approved a new solar package that was put together by its staff on a very tight timeline despite a months-long stakeholder process. JEA is the largest municipal utility in Florida with about 450,000 customers. Here’s what we at the Southern Alliance for Clean Energy (SACE) consider the good, the bad, and the ugly of JEA’s new solar initiatives.

The Good: significant utility-scale additions and batteries

JEA is planning to add another 250 MW of utility-scale solar, with a projected in-service date of 2020. The systems (five 50 MW projects) will be on geographically dispersed JEA-owned land and the power procured through power purchase agreements (PPAs) with independent power producers. The solar additions will give JEA about 300 MW of total utility-scale solar, which is significant relative to its size. The additional utility-scale solar will make JEA a leader in Florida in solar development on a solar watts-per-customer basis – which is an apples-to-apples comparison of solar development by utilities across the state.

Utility-scale solar is clean, plentiful and, as JEA staff have discovered, also dirt-cheap. The utility projects the levelized cost of the PPAs to be the same as its current 3.25 cents/kWh fuel rate costs. That’s great news for customers, as those low rates will be locked in long term. Additionally, the utility has introduced its SolarMax program that will allow large commercial customers to lock in their energy rate at the projected solar power rate of 3.25 cents/kWh – helping them meet sustainability goals.

The utility is also offering a 30% rebate on batteries of up to $2,000 to its customers. The utility expects 500 customers annually to take advantage of the offer, and the program has a $1 million annual cap. In theory, JEA says that customers will be able to store excess energy produced by their systems in their batteries and use it later in the day to offset their power use at the retail rate. It expects 4 MW of customer-owned solar to be added annually. But, the devil is in the details.

The Bad: limiting customer solar choice

Here’s where things start heading south. JEA staff didn’t engage with stakeholders to determine if its plan is economically viable for new solar customers. It’s not clear if any meaningful analysis was done to determine the value proposition for new customers of the program. Existing net energy metering (NEM) customers will remain on the retail rate for 20 years. The utility will drop the credit for providing power to the grid from its current retail rate of 10.5 cents/kWh to its fuel rate of 3.25 cents/kWh, effective March 31, 2018, for all new customers.

That’s right: JEA is operating under the primitive paradigm that customer-owned solar value is limited to avoided fuel costs. We reject that utility industry talking point, as it has been clearly disproven by a number of reputable studies.

In adopting that position, JEA has potentially damaged the customer-owned solar market going forward. At the very least, it has created great uncertainty in the customer-owned solar market by ending retail-rate NEM for new rooftop customers. We all know how markets react to uncertainty. Additionally, this plan was sprung on the public and stakeholders only 48 hours prior to the JEA board vote. More on that in a minute.

Clearly, JEA is sending a draconian economic signal to push new solar customers on to batteries. This is an untested program in an area that has no mature battery market, and questions remain, such as: 1) Did JEA adequately size the battery incentive to provide customer value? 2) Is the battery size contemplated by JEA adequate to allow customers to offset all of the systems excess power at the retail rate?, and 3) Ultimately, how will this impact the rooftop solar market – and solar jobs and the local associated economic development? Without going through a methodical process to answer those questions, JEA is needlessly endangering customer solar choice.

Moreover, new solar customers that try to size their system smaller to avoid the cost of batteries will find it almost impossible to match their system generation with onsite use for NEM. That’s because JEA will be metering in 15-minute intervals, so if a customer doesn’t generate and consume power at effectively the same time, the customer’s power gets a mere 3.25 cents instead of offsetting the retail rate at 10.5 cents. That violates the spirit, if not the letter, of the state’s NEM law.

The (Really) Ugly: beware of “stakeholder outreach”

The announcement of this new solar package blindsided stakeholders. There had been debate on the JEA NEM policy dating back to late 2015, as JEA was approaching a self-imposed 10 MW cap on customer-owned systems. JEA proposed to reduce its retail NEM credit to 7.5 cents/kWh – to the cost for power from existing utility-scale solar. At that time, SACE encouraged JEA staff to undertake a value-of -olar study to identify all the economic benefits of customer-owed solar on its system, such as capacity value and ancillary benefits, but executives dismissed the notion.

Due to community opposition, JEA dropped its proposal and instead the board opted to wait on the voter’s decision on Florida’s Amendment 1. Voters roundly rejected the anti-solar amendment in November 2016.

That’s when staff moved to conduct outreach to stakeholders for their recommendation on solar policy. SACE engaged in good faith in a multi-month stakeholder process over this summer on the NEM issue. The stakeholder group, which was comprised of a cross section of the Jacksonville area community, came to a very different proposal on NEM. The stakeholder group requested that JEA extend its current NEM policy until there was 25 MW of customer-owned solar on JEA’s system to allow for JEA staff and the stakeholders to dig in on a policy that would grow the market without injecting great uncertainty – like the one the JEA board approved earlier this week.

The stakeholder recommendation was essentially ignored by JEA staff, and by the JEA board – at the urging of its staff. SACE and other clean energy stakeholders engaged in good faith, only to be ultimately blindsided by the JEA staff’s proposal. As a public power company, JEA should be leading on issues in support of customer choice, not holding customers back. An abrupt change to a popular solar program, without stakeholder input on the new plan, is the type of action one might expect from a private monopoly utility, not public power.

Moving forward

SACE is disappointed with JEA’s lack of community engagement on the new customer-owned solar plan. That said, we will do our part to help educate JEA customers on their options, but will be watching to see whether this proposal does indeed lead to a significant downturn in customer-owned solar development and will hold JEA accountable. After all, good solar policy is critical to moving our communities and state to a lower-cost, lower-risk, cleaner energy future.

George Cavros is the Florida energy policy attorney for the Southern Alliance for Clean Energy, where he focuses on advocating for state policies that sustainably ramp-up energy efficiency programs by Florida’s power companies and that encourage meaningful renewable energy development in the state. This article was adapted from a blog post originally published on SACE’s website and was republished with permission from the group. The views expressed in this article do not necessarily reflect those of Solar Industry.

 

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