Not even a month ago Nevada’s public power company, NV energy, dropped its net metering credit for solar generated electricity in the state. The net metering credit is how homes with solar panels get paid back for the excess electricity they produce. Soon after NV Energy changed its net metering credit the two largest solar installation companies, SolarCity and SunRun evacuated from the state. They shuttered operations, closing their offices, and laying off 6,000 employees who devoted their careers to the solar industry in its infancy. JEA is learning from the kill operation in Nevada.
The Jacksonville Energy Authority (JEA) has seemingly taken a page out of Nevada’s stifling energy policy and is now investigating a similar reduction in solar net metering rates in Jacksonville. Previously JEA only paid solar producers equal to the cost of purchasing a kilowatt-hour at $0.104, but is now proposing to drop the payment to solar producers from $0.104 to $0.075 per kilowatt-hour. This means if you were producing solar power, for every kilowatt of energy you produced, JEA would make a $0.029, or 27.88% profit off of the energy you produce, and likely increase the time needed to return your investment on your new solar panels by 6 years from 18.69 years to 24.76 years.
Installing solar panels can be expensive; a typical installation on a home can cost as much as a new car, up to $30,000. Even with the 30% federal tax rebate you’d still be on the hook for $21,000. You must also own the home or land you install them on. Additionally if you don’t have that kind of money laying around you’d need a loan from the bank for the full amount, which would also likely require you’d have an excellent credit score. The alternative to buying the solar panels outright would be a solar leasing program; however Florida, “The Sunshine state” is one of the few states that have conveniently decided to make Power Purchase Agreements (PPA’s) illegal.
Despite all the red tape involved, let’s say you just flipped the switch on your new solar array. You paid one of the two solar contractors still in business in Jacksonville to install them, and you’re in about $21,000 in debt. The only way solar panels pay for themselves is by reducing the electric bill. Although the sun might be out for 12 hours in a day, solar panels are only effective during a 5 to 6 hour window in the day. Moreover, even in a sunny place like Jacksonville, we on average will have only 270 sunny days out of a 365 day year. This is important to understand, because your home consumes energy 24 hours a day, 7 days a week, 365 days a year. If you want a near-zero electric bill your solar panel array actually needs to be sized 4 times what’s necessary to power your home during that 6 hour window in order to make up for the rest of the time in the day the sun isn’t shining. So if your home consumes 30 kilowatt hours in a day your solar array would need to be generating 5 kilowatts an hour, for the 6 hour window.
Similar to how the tides roll in and out, solar producers make a surplus of energy during the day that’s exported to the electrical grid then at night when the sun is down, electricity is bought and imported into a home. Before JEA’s proposed changes the exchange was one to one. One kilowatt hour generated by a solar array was equal to one kilowatt hour produced by one of JEA’s coal fired power plants. With JEA’s proposed changes, one kilowatt hour produced by solar will only be worth roughly three-fifths (3/5ths) of a fossil fuel generated kilowatt hour. Instead of breaking even, with this change you would now owe JEA 2/5ths of the electric bill you once eliminated. Not only is it insulting to value solar power at 3/5ths what fossil fuel power is valued, it’s unfair to the consumers that have jumped over all the necessary hurdles to get cleaner energy.
Before JEA’s rate reduction, a solar producer would produce a surplus during the 6 hour window, and get a credit on their electric bill. The credit would cover the cost of the electricity bought later when the sun went down so at the end of the day they’d break even. If we break down a typical day with solar power using JEA’s new reduced rates, if you produced 30kwh during the 6 peak hours of the day, roughly 25% or 7.5kwh would go to powering the house while the sun is out. Because that saves you from having to buy those kilowatt hours you’re effectively saving 7.5kwh at the retail rate of $0.104 per kilowatt hour. But the remaining 22.5kwh or 75% that you would normally produce in that 6 hour window as a surplus to sell back to JEA and get a credit on your electric bill would only be credited at $0.075. So you would get a $1.6875 credit, you’d get charged $2.34 for the power you use during the other 18 hours of the day for a loss of $0.6525 per day, $19.575 per month, $234.9 per year on a home that produces the same amount of electricity that it uses. In fact if you compare this new bill to the same home’s bill without solar power, the home would still be paying for 24.5% of its electric bill annually.
You might be wondering why JEA would think it’s necessary to tax the brave few Americans that have chosen to invest in solar power, especially considering around 99.9 to 99.5% still use JEA’s fossil fuel power. JEA will argue that these changes in net metering rates are only fair to the other utility subscribers in order to maintain the grid but if you truly consider the burdens to the benefits JEA would at most gain $500,000 from an estimated 2000 or so homeowners in Jacksonville that have solar panels while adding a total of 12,000 years to their return on investment. That $500,000 in new revenue from solar producers would only be about 0.00364% of JEA’s $1.3 Billion in total operating revenue for 2015. But JEA’s intent with these rate changes likely has very little to do with making solar producers pay their fair share, and more to do with disincentivizing and discouraging potential home owners from making the switch to clean energy. It’s also ironic that JEA imposes surcharges for fuel charges, conservation, and the environment on every subscriber’s bill while now proposing to bill solar producers for their service to the grid. JEA is a public utility with investors, and has lost 7% of its revenue in the last year (2014-2015), and 18% of its total revenue from electricity in the 4 years since 2011. It would be in JEA’s best interest to keep as many subscribers as possible for revenue so it would go a long way to discourage the further deployment of solar panels.
One of the biggest selling points to a solar contractor is saying that your new solar array can practically pay for itself, and that you’ll never have to pay another electric bill again. But that point is lost if a potential buyer is going to be keeping 24.5% of their electric bill if the system was sized 1 to 1 before the rate change, or that a new system designed with enough capacity to account for JEA’s rate change would need to cost an additional $6,000-$10,000 more in order to reach a net-zero electric bill. For the home in the example here before the rate changes, the return on investment would be 213.675 months or 18.69 years with the same house and the same system with JEA’s changes in rates from $0.104 to $0.075 the return on investment would become 297.23 months or 24.76 years. In comparison to the return on investment of solar panels without the 30% federal tax rebate ($30,000) with a 1 to 1 energy credit the return on investment would be 320.5 months or 26.7 years, which shows that JEA’s rate changes very nearly negate the benefit of the 30% federal tax rebate.
In Germany, a northern European country with not nearly as much sun as “The SunShine state” they produced 6.2% of country’s total energy usage from solar power in 2014. In the same year The United States, one of the richest and most influential first world countries on the planet only produced an infinitesimal 0.4% of its total energy from solar power, the single cleanest and abundant energy sources on the planet. That’s 0.4%, as in one tenth less than a full half of one percent. Perhaps if JEA had its way, it’d want to keep it that way. Germany actually pays solar producers higher than the retail rate for electricity with a Feed-in-Tariff in order to incentivize and encourage people into installing solar panels. Meanwhile JEA is trying to change the net metering credits so they can bill solar producers.
Jacksonville University is holding a meeting on Wednesday March 9th from 6:30pm to 9pm in the Gooding Auditorium to discuss reducing JEA reducing the net metering credit. All are being welcomed to voice their opinion on the future of solar power in North East Florida.
text and graphics by wyatt sanders