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.