Gainesville, Florida is a Bigger Per Capita Solar Producer Than California — Thanks to Feed-In Tariffs

Advocates for feed-in tariffs (FITs) have long claimed that the policy is the fastest, most efficient method for deploying renewable energy. One need only look at the rapid adoption rates in European countries to see their effectiveness.

FITs require utilities to purchase renewable electricity from system owners over a certain period of time, typically 15-20 years. The rates are calculated to ensure a specific rate of return for different technologies. By providing a guaranteed contract for the electricity over the life of the system, project financing is often simpler and less expensive than a tax-credit or renewable energy credit system.

Here’s one more experience that advocates say favors FITs: In just three years since Gainesville, Florida adopted the policy for solar PV, the city has deployed almost 7.3 megawatts of systems. That means that this city of 100,000 people has more solar deployed per capita than California — a state with solar incentives in place for more than a decade.

FIT expert Paul Gipe put together this chart showing where Gainesville stacks up with other areas of the world:

Officials at the municipal utility running the program, Gainesville Regional Utilities (GRU), say that by the end of the year, cumulative installed solar capacity will be generating about 1.5 million kilowatt-hours per month. That’s enough electricity to service roughly 1,600 average American homes.

Some continue to criticize FITs, saying they’re too inflexible to match market conditions quickly. Indeed, in some countries and provinces, rates have been set too high, leading to unsustainable development and grossly high profits for project developers. But in most cases, like in Germany, rates have been adjusted downward to reflect the changing economics of the technology.

Oddly, even though this is exactly how a FIT program is designed to work, people within the industry react negatively to these changes.

To some critics, Gainesville’s program has been just that — a program, not a market. The popularity of the FIT causes a burst of activity when GRU starts taking applications. The program quickly becomes over-subscribed and is halted for months while the projects are completed.

However, one need only look at the ups and downs in states like New Jersey and Pennsylvania — states with tradeable credit mechanisms that were supposed to create a sustained market — to see that similar problems can occur with a floating market-based approach to incentives.

Over the years, states have opted to develop credit-based programs over FITs. But if the city of Gainesville continues to put up impressive numbers and show that it can support a sustainable industry, perhaps the mechanism will get more attention from U.S. regulators.

3 Responses to Gainesville, Florida is a Bigger Per Capita Solar Producer Than California — Thanks to Feed-In Tariffs

  1. Raul M. says:

    If Gainesville was to calculate how much coal it has used over the years, Gainesville might figure that it needed to put a great deal of biochar back in the ground. It would help make the soil rich and productive.
    Solar power goes around the issue for the most part, as the power isn’t generated with coal. Don’t know how the new bio(?) elec. plant stacks up to the equation but, I hear it is an improvement

  2. malexy says:

    Actual performance of the Gainesville program teaches a variety of lessons. In addition to those touched upon in the article, we might consider:
    1. Actual installation was severely capped annually. Had the cap been higher, the installed based would have been (much) higher. this is well demonstrated by the fact the each year the program was quickly fully subscribed.
    2. The fact that the program was quickly oversubscribed each year is also a clear indication that the FiT rate offered was too generous.
    3. The program proved that interest exists and that a FiT type program can be very effective. It is a shame that Gainesville, having learned those lessons, has not been more innovative or interested in experimenting with other variations. As an example, rather than offer a fixed rate, prospective subscribers could have been asked to bid on the rate they were willing to accept, with the “present fixed rate” acting as a cap. Such an approach could have substantially increased the program impact while also encouraging market responsiveness. Other variations on this exist.
    4.One of the major arguments against FiTs, and other subsidies for that matter, is the impact on customer utility rates. In fact, the impact has been roughly 70 cents per month on each customer’s bill. While this could be an issue for the utility’s smallest customers, in general it is hardly an onerous burden.
    5. The preceding fact on the cost impact of the Gainesville program highlights another potential for experimentation. With several years of experience, it would be interesting to assess the demographics of the FiT subscribers. It may be likely that a 1/3% increase on customer charges would be more just (large, wealthy customers seem more likely to use the FiT) and could potentially generate more revenue while impacting fewer customers.
    6. As successful as this program has been as a pilot program, the actual energy generated is still trivial relative to that consumed within the City. To have a meaningful impact the program needs to be expanded. However, simply doing more of the same, say increasing the cap and customer charges 10 fold is unacceptable. Thus, as successful as it has been, the program demonstrates that the model, its payment size and type, its cost structure (each potential subscriber is an individual project with minimal economy of scale), and its charge method are ripe for experimentation.

  3. Mike#22 says:

    Malexy, Gainesville’s FIT program is very uncommon here is the US. Where did the support for this progressive program come from? –Mike