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A solar free market in Florida? Not under this ballot proposal

on March 27, 2015

The debate is intensifying in Florida as to whether a pending statewide ballot issue to expand the use of solar power would create more competition and a freer market for electricity consumers—or, instead, open the floodgates to more tax-funded subsidies that ultimately come out of the pockets of the very consumers who are supposed to benefit.  The inconvenient truth that those supporting the ballot initiative don’t want you to know is that solar companies receive massive amounts of federal, state, and local subsidies.

While expanding solar power might seem like a win-win to hardcore advocates of more green energy at any cost, it poses a dilemma for fiscal conservatives and, for that matter, for any policy maker sincerely concerned about rank-and-file ratepayers and the taxpaying public at large. The well-oiled lobby of the rooftop solar industry has used the initiative as a wedge issue in the Sunshine State to win over some Tea Party libertarians and others on the traditional political right with the fetching—yet deceptive—proposition of taking on the regulated-monopoly public utilities.

The proposal purports to do that by permitting homeowners, landlords and businesses to buy electricity from private, non-utility solar companies supplying up to 2 megawatts of electricity at the same location as the solar installations, or from a connected property. What self-respecting free marketer wouldn’t be for that, right?

Not so fast. As noted in a news report this week by FloridaWatchdog.org, the superficial philosophical appeal of busting up big energy conglomerates with renegade solar systems on every home and business obscures the reality that the entire rooftop solar industry is propped up on a shaky foundation of federal, state and local subsidies.

While the proposal’s defenders are quick to point out it authorizes no additional subsidies, that is beside the point. There are already abundant subsidies in place to grease the skids for solar installers—in some cases huge corporations in their own right, like billionaire Elon Musk’s SolarCity. Florida not only offers a statewide sales-tax exemption on installed solar-system hardware, but it also maintains a net-metering program in which pubic utilities must credit rooftop-solar users at the prevailing retail rate for excess electricity they produce. That rate, which utilities point out overvalues the excess solar power, effectively is a back-door subsidy borne by non-solar ratepayers.

Florida also offers a renewable-energy production tax credit on corporate taxes, and one of the state’s largest public utilities, Florida Power and Light, has a solar-rebate program. Alongside those incentives, assorted local governments in the state offer a host of financing programs, utility grant programs, sales-tax incentives and many other perks all aimed at stoking solar power.

And atop all of those is the hefty 30-percent federal tax credit for investing in solar.

Not only will the ballot proposal piggyback on that trainload of subsidies, but by incentivizing more demand for a product so heavily dependent on tax dollars, it arguably will also prompt policy makers to expand those subsidies. Indeed, as the proposal’s critics note, the ballot issue’s actual language almost assures it with this troubling clause:

“It shall be the policy of the state to encourage and promote local small-scale solar-generated electricity production to enhance the availability of solar power to customers.”

Sounds to us like a recipe for a whole new round of subsidies. Meaning, the resulting “free” market would come with one heck of a price tag.

 


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