City OK's Higher Buyback Rate in Solar Program

December 19, 2008

Gainsville Sun, By Megan Rolland, Staff writer

Gainesville Regional Utilities agreed with members of the solar industry Thursday and recommended a higher rate for the proposed solar energy incentive program.

Known as a feed-in tariff, the program would allow GRU to purchase energy produced from privately owned solar photovoltaic panels at a rate to be profitable to those installing the expensive equipment.

While many have been excited if not giddy about the program, there has been debate about what a "profitable rate" would be.

On Thursday, GRU staff increased their recommended rate. Ed Regan, assistant general manager for strategic planning with GRU, had originally proposed 20-year contracts with solar investors, guaranteeing a rate of 26 cents per kilowatt hour of electricity generated by the solar panels.

That rate jumped to 32 cents per kilowatt hour Thursday night after a unanimous vote by Gainesville city commissioners.

Regan said original analysis had indicated that 26 cents per hour would have provided a 5.87 percent rate of return, but that did not consider taxes.

With taxes that come with smaller investments, the rate of return would have only been .67 percent.

"Which would not be a good investment at all," Regan said.

He said 32 cents per kilowatt hour would provide 2.93 percent return on investment and up to 5 percent for more efficient or less expensive systems.

The expense of the program will be passed on to customer bills through the fuel tax exemption portion of utility bills.

Regan said in 2009 with the lower kwh purchase rate the impact on an average bill would have been 32 cents, while the adopted more expensive 32 cents per kwh will be an average increase of 42 cents per bill.

Commissioners voted to implement a "stop-loss" element that would pause the program if the impact on utility bills increased to 1 percent.

Regan said it would take 4 megawatts of solar panels installed in a single year - a highly unlikely scenario - to have that great an impact.

Other considerations were whether the commission should create regulations to ensure all solar installations are done by licensed solar providers. Regan cautioned against selecting regulations for a market that was still developing. "We're getting a lot of pressure to pick this certification over that certification, and we're not sure what business model is the best," Regan said.

Commissioners voted to look into various consumer protections that could be put in place. "This is such cutting edge technology, I think it leaves the door open for businesses that might not have their customers' best interests in mind," Commissioner Lauren Poe said.