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

Solar panels are big in New Jersey and virtually non-existent in sunny Florida -- What gives?

Aug 14, 2014 at 10:40AM

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.

Do you know this energy tax "loophole"?
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends SolarCity. The Motley Fool owns shares of SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers