Why Are These U.S. States Fighting Solar Power?

SolarCity (NASDAQ: SCTY  ) is at the forefront of the rooftop solar industry. One of the key reasons is a novel approach to financing the systems it installs. However, solar hasn't yet taken the country by storm. Some states have more installations than others, and it isn't playing out the way you might expect. For example, the Northeast has more solar going on than the much sunnier Southeast. Why?

The sleeping giant
SolarCity spokesman Will Craven describes Florida as the "sleeping giant" of the solar industry. That's because there's lots of sun, lots of roofs, plenty of customer requests, and still no solar industry to speak of. In 2013, for example, Florida installed a whopping 26 megawatts of solar power, enough to place it 18th on the list of largest solar installers. Now juxtapose that against the fact that, according to the Solar Energy Industries Association (SEIA), Florida ranks third for solar potential.

To provide a more direct reference point, No. 1 installer California put up nearly 3.75 gigawatts of solar last year. Even No. 4 installer Massachusetts, a state not exactly associated with its sun, put up nearly 240 megawatts of solar, much more than the Sunshine State.

So what's going on? Here's one reason: Would you pay as much as $40,000 to install a solar system on your roof? Even a small system will set you back nearly $20,000. That's a lot of cash up front, no to mention the headache of getting the project through local red tape.

(Source: ReubenGBrewer, via Wikimedia Commons)

That's why companies like Sunrun (which provides the above estimates on its website) and SolarCity are having such an impact. These installers take care of the permitting, construction, and upfront cost, leasing the systems or selling their power (via a power purchase agreement) to the homeowner. That makes solar a viable option when you don't happen to have $40k kicking around.

So what about Florida
Even with this, the math works better in states that support solar with rules that force local utilities to buy excess power from rooftop solar systems, known as distributed power, and in states in which incentives help cover the cost of installation.

However, some utilities complain that being forced to buy electricity from customer rooftops costs them more than it benefits them, and that customers without solar end up paying the cost. While regulators in many states have decided that supporting solar is worth the ire of power generators, others are more leery.

For example, when a college in Virginia wanted to install solar power on its rooftops it was sued by the local power company. The power company essentially won, as the college altered its lease agreements to forgo tax benefits. The end result was that the ultimate cost of the solar system went up. It's far easier for a large entity like a college to cover the cost of a solar installation than the average Joe.

(Source: ReubenGBrewer, via Wikimedia Commons)

Now back to the Sunshine State. Florida has no renewable power mandates for utilities, which means there's little incentive for a utility to cooperate or help customers become erstwhile competitors. And Florida doesn't allow power purchase agreements, one of the key financial arrangements that installers like SolarCity rely on. In other words, Florida has major road blocks to wider solar adoption.

And Florida isn't alone, for example while the SEIA highlighted that 37 states had some form of renewable mandate, or at least goals, in early 2013, the Southeast (spanning from Louisiana to South Carolina) was notably devoid of these solar supporting initiatives. Only three of the six states had mandatory net metering rules last year (one had voluntary utility programs). In the end, only one state from the Southeast, Georgia (90 MW), made the top 10 in solar installations in 2013.

Action via inaction
While it would be hard to suggest that states are actively looking to stop solar progress, there are times when doing nothing is really doing something. And by making the choice not to support solar installations as strongly as other states, or at all in some instances, the U.S. Southeast has made it very difficult for those who want solar on their rooftops to get it.

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Comments from our Foolish Readers

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  • Report this Comment On August 14, 2014, at 1:48 PM, photonics wrote:

    They're not fighting "solar power". They're fighting the solar leasing companies. We sell PV systems into Florida and other states with no issues encountered.

    Purchasing a solar system as opposed to leasing one, costs the consumer far less anyways, which helps to offset the lack of any utility incentives.

    The consumer gets to keep the 30% ITC which further benefits the consumer when they buy instead of lease.

  • Report this Comment On August 14, 2014, at 5:43 PM, DocScience wrote:

    Residential solar comes in at about 24 cents/kw-hr retail.

    That's DOUBLE the price of retail electricity in America and nearly 10 times the wholesale rate.

    Figure in the transmission costs and the cost of reserve power and you add another 7 cents to the cost of solar.

    These atrocious economics are reason to oppose ANY government coercion, any transfer of costs, any artificial inflation of value of solar.

    But hey, if someone wants to spend their own money on their own roof, go for it. After all, showing one's green piety is priceless.

  • Report this Comment On August 14, 2014, at 6:18 PM, Freddyfreebe1 wrote:

    It always amaze me how Canada will install and maintain your solar system totally free. All they want is the power you don't use or the check get from the power company. Canada don't need to build power plants and the plants are making profit off your power. But in this country you have to grease the deep pockets of the greedy to move into the future.

  • Report this Comment On August 14, 2014, at 7:03 PM, agzand wrote:

    DocScience:

    You must be smarter than Warren Buffet and Elon Musk. Poor guys have no clue but you figured it all out.

  • Report this Comment On August 14, 2014, at 7:46 PM, luckyagain wrote:

    " Florida has major road blocks to wider solar adoption."

    Florida is totally controlled by the Republicans and everyone knows that Republicans consider solar energy to be a sin against God and the power companies. So what else do you expect?

  • Report this Comment On August 14, 2014, at 7:48 PM, jgbech wrote:

    We live in Florida. We were sales reps for a solar company that rented the PV panels and hardware associated with the package.

    Basically, there was no cost to the customer except an agreement charge of $500.

    We had worked hard to encourage the power companies to agree to "net metering" where they would recerve power via the grid and credit the costomer who was generating an abundance of power.

    The monopoly power generators Duke, (formerly Progress Energy), Florida Power and Light and TECO agreed to the connection and terms.

    What happened is history. Governor Rick Scott and the Republican Legislature rejected the plan. It is amazing what politics can do!

  • Report this Comment On August 14, 2014, at 7:55 PM, RenegadeIAm wrote:

    "Why Are These U.S. States Fighting Solar Power?"

    Nobody is "fighting" solar power by NOT forcing people to buy it.

    Orwellian language.

  • Report this Comment On August 14, 2014, at 8:17 PM, speculawyer wrote:

    My self-installed residential solar came in at 6 cents per KWH. And that is before the tax-credit.

  • Report this Comment On August 14, 2014, at 8:19 PM, speculawyer wrote:

    These states are red states where they support the existing businesses (like utilities) instead of the consumers. And they think climate change is some hoax that scientists made up.

  • Report this Comment On August 14, 2014, at 8:45 PM, notyouagain wrote:

    Come on. You know why. So say it.

    Quit being afraid of the KOCH BROTHERS!!!!

  • Report this Comment On August 14, 2014, at 9:54 PM, ThisIsUnReal wrote:

    What they SHOULD be fighting is the fact that Photovoltaic is NOT Green...

    If you believe in man-made Global Warming, then you believe that we do things that hold heat to the surface in un-natural ways...

    Solar Panels do exactly that, they draw heat and hold heat in order to produce electricity

  • Report this Comment On August 14, 2014, at 10:49 PM, 2549 wrote:

    @ThisIsUnReal- Did you figure that out all by yourself? Sorry, not how it works. There are aspects that aren't green, but not that.

  • Report this Comment On August 15, 2014, at 12:06 AM, rodgerolsen wrote:

    These states are not 'fighting solar power". They are refusing to make the tax payers and the utility companies pay for other people's inefficient power systems. The power systems are not economically viable unless you neighbor sucks money out of your wallet to pay for his solar cells.

  • Report this Comment On August 15, 2014, at 5:05 AM, Riggerwo wrote:

    America is way behinde the power curve on Solar..when compared to Europe....the Big Power Generators see Solar as a threat...and will fight it tooth and nail...until they are forced to open up..and the power monopoly is broken. There needs to be incentives to use solar..to make it work..Florida could generate a lot of free power if it made solar affordable. I have a solar water heater on my roof in North Carolina...they all thought i was mad...until I showed them my power bill during the summer months....Politics, money, greed and stupidity is stoping solar

  • Report this Comment On August 15, 2014, at 8:50 AM, beyondo1 wrote:

    I live in Florida and it is rare to see a roof top installation. There is virtually no support on a state level for solar that I'm aware of, which as others have noted, has been under GOP control for a long time. I don't get why this is a "political" thing, where certain groups would rather burn baby manatees for power, than embrace solar in any way. Although it is expensive up front, it will pay itself back over the long haul. That really doesn't ever happen with paying the power company... does it?

  • Report this Comment On August 15, 2014, at 9:59 AM, alcorenilth wrote:

    If there is ever another successful oil embargo, or any significant disruption of trans-Atlantic trade that disrupts the oil supply, it'll be amazing how fast this sort of resistance to solar will evaporate.

    (Rolling blackouts due to supply problems will ALSO encourage folks to put in local storage and stop using net-metering.)

  • Report this Comment On August 15, 2014, at 10:41 AM, ThinkMn wrote:

    The power companies can either embrace home solar producers now or be bypassed in the future. Energy storage technologies (batteries, etc.) are developing rapidly and soon the home owners won't need the electric utility for anything. If the power companies embrace solar, they can be the storage system for excess power for the home owner and stay relevant. Otherwise, they'll be out of business.

  • Report this Comment On August 17, 2014, at 9:25 PM, KayakerRW wrote:

    The state of Virginia just finished 4 years with an attorney general who sued a scientist at one of our leading universities for actually practicing scientific inquiry there and with a governor who spent a good amount of time promoting a company misnamed Star Scientific which hawked the “wonder supplement” Anatabloc for its “anti-inflammatory support of the immune system.”

    So of course, its political leaders didn’t have the time or inclination to look at the science or economics of solar energy.

  • Report this Comment On August 18, 2014, at 11:07 AM, Ax7777 wrote:

    It's time for solar power to pay its own way. Any industry that relies upon government subsidies to survive is not economically viable. Firstly, I don't want that ugly equipment on my roof; secondly, I don't want to pay for my neighbor's "green" fetish.

  • Report this Comment On August 18, 2014, at 3:03 PM, aniaklnp wrote:

    Fossil fuels are inefficient, finite, and will only get more expensive. We should be increasing in efficiency and renewables before we are forced to, in small bites when we can afford. Giving the major players the option of buying into the "incentives" (taxes, credits, caps, etc) will keep these visible, and make them more appealing as fossil fuel prices go up. Too bad utilities see a drop in sales as a bad thing. A huge percentage of that is waste, and less waste is always good.

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