2010-07-29 / Business News

Solar solution?

Incentive programs plagued with cuts, uncertainty
BY EVAN WILLIAMS ewilliams@floridaweekly.com

The solar power industry is poised to create jobs and spur economic growth, not to mention reduce carbon emissions.

“It’s way more on the front burner for people,” said Brian Goldberg, owner of Advanced Solar & Spa in Fort Myers. “We’ve invested in our marketing campaign more dollars in the last year than we probably ever have. People are ready for it now.”

Governments are trying to encourage that growth by alleviating the most significant hurdle: upfront costs. But it’s often been one step forward and one back in the process.

A federal tax incentive allowing a 30 percent tax deduction on solar heaters or photovoltaic panels is still good through 2016. But Florida’s program to provide rebates on solar products ran out of money even before it ended on June 30, and wasn’t renewed.

“That shows you the demand that’s out there,” says Steve Hart, head of Collier County’s Energy Task Force.

FGCU solar field FGCU solar field The latest effort by Florida lawmakers allows cities and counties to create a pool of money, through municipal bonds or other means, to lend to property owners for energy-saving improvements. However, this program has run into a major snag recently after the Federal Housing Finance Agency pulled its support.

Here’s how the program works, in general. You get to choose whatever products or contractor you like to retrofit your home, if they’re related to saving energy or storm-proofing your home. The cost is added to your yearly property tax assessment with interest over a 20 year period. It’s passed on to whoever owns the real-estate during that time.

Called PACE, or Property Assessed Clean Energy, it was signed into law by Gov. Charlie Christ in June. Lee, Charlotte and Collier counties are all moving forward to start their own versions of PACE.

“Not only will it save energy, it will

put people to work and also maybe create

a new industry in Charlotte County,” said Charlotte County Commissioner Bob Starr.

PACE comes as other efforts have been phased out or ended. For example, mayors and commissioners from every Southwest Florida county supported a plan to switch the region’s homeowners, over a few decades, from electric hot water heaters to solar water heaters. The idea stalled when a federal grant fell through.

A solar water heater averages $4,000.

“Without the (Florida) rebate program they don’t look very attractive, is what it amounts to,” said Bob Long, owner of Stilwell Solar in Port Charlotte.

Some say PACE could solve the problem of cost for many.

“We’re excited,” Mr. Goldberg of Advanced Solar & Spa said. “From a business point of view, wow, what a great idea to help everybody get into something without a lot of pain, without a lot of money. We’re apprehensive to see what the counties do. Some are more aggressive than others. But from a consumer point of view, it’s a wonderful program. People can choose who they believe is the best contractor to do the work for them.”

Ideally, savings from energy improvements to homes would offset the cost added to property tax. The value of the property would go up and so would the county’s property tax base.

“(PACE) puts people back to work, it reduces energy use, and it doesn’t increase the financial burden of property owners or the debt obligations of local governments,” said Mr. Hart of Collier’s Energy Task Force. “One of the inhibitions of property owners is upfront cost. The beauty of the PACE project is the local government provides the capital to do that. And the retrofits can be anything from bracing up doors and windows to solar installation on the roof to wind turbines.”

Twenty-two states have approved PACE, modeled after a program started in California in 2007. The program also received federal backing when the Department of Energy awarded various states $150 million to kick-start the programs.

But in the last few weeks, Fannie Mae and Freddie Mac, which secure more than half the nation’s mortgages, stalled the program almost everywhere by refusing to participate in it. The Federal Housing Finance Agency, which oversees Fannie and Freddie, supports that.

The FHFA argues that it’s not in its best interest because PACE loans secured by municipal bonds hold first lien on the property. But others argue those same types of bonds have long been issued to make improvements to projects such as roads or sewers.

In response to the FHFA’s actions, a group of 30 U.S. congressmen organized the PACE Assessment Protection Act of 2010, which would order the lenders to adopt the PACE program.

“I don’t think anyone’s in a position to move forward right now (with PACE), even though we’d love to,” said Don Root, director of the Charlotte County Economic Development Office.

Some business owners also say PACE programs might allow consumers too much control over what kinds of improvements they add to their home. For example, if someone bought an expensive solar panel that didn’t work very well, the cost would still be added to the property tax assessment each year.

“PACE is a very creative idea, but it was rushed and they didn’t put consumer safeguards in place with it,” said Jamie Johnson, owner of Solar Power Electric in Port Charlotte. “There’s nothing in it that essentially stops a consumer from putting into place a system that doesn’t generate as much energy as they were promised by the contractor.”

Dell Jones, vice president of Regenesis, a clean-energy company that has worked on large-scale solar projects including electric and hot water, shares that concern.

“If you buy a system and put it under the PACE program, you’re stuck with it,” Mr. Jones says. “Stuff breaks, lightning strikes, manufacturers go out of business and you can’t get warranty or replacement parts.”

His company has designed projects such as the 2-megawatt field at Florida Gulf Coast University. But Mr. Jones isn’t entirely impressed with large solar electric fields, including Florida Power & Light’s 25-megawatt field in DeSoto County, when it comes to saving money.

“Every FPL rate payer is paying for that project despite the less-than-attractive return on investment,” Mr. Jones said. “By putting in these big glitzy projects, they’re causing rate payers’ bills to go up, not down. If they spent the same money on water-heating incentives, bills would go down.”

Regenesis has also partnered with cities, including Lakeland and Cape Canaveral, to make solar hot water a public utility. It is advocating the approach in Southwest Florida as well.

“It creates jobs in the county,” Mr. Jones says. “It creates revenue for the county. It’s green energy. It doesn’t use public funds. And there’s a whole lot of consumer protection. If you don’t want it, you just tell us and we take it out.” ¦

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