In Atlanta, Georgia, on May 11, 2017, at Solar Power Southeast in the Doing Business in Florida seminar, a panel of participants in each of Florida’s three solar market segments—residential, commercial, and utility-scale—discussed market and regulatory milestone achievements in the Florida market. Tim Hughes discussed the recent advancements in utility-scale solar development and the creative ways that developers are adding value in Florida’s traditionally restrictive regulatory environment.
Ben Cowart discussed the City of Tallahassee’s agreement to purchase power from a sixty-megawatt project under construction at the Tallahassee airport. Mike Garret of Solar Impact reported on residential and commercial solar installation from the perspective of his role within the Florida Solar Energy Industry Association. Angela DeMonbreun presented FL SUN’s tremendous results in bringing cost savings to home owners, facilitating the adoption of solar power in a state that does relatively little to promote customer-sited solar energy.
Factors affecting utility-scale solar development include Florida’s unique mix of off-taker interface scenarios, with PPAs primarily occurring within the municipally owned context, while investor-owned utilities, to the extent that they are engaging third-party developers, are proceeding under a build–own–transfer model.
Due to Florida’s method of calculating avoided cost, which produces markedly low avoided cost figures, FERC qualifying facility development has been unattractive due to the relatively high hurdle rates demanded by investors under traditional project finance structures. Highly competitive EPC pricing, however, continues to propel Florida toward parity with wholesale power rates, and Florida could conceivably see its first QF projects in the near to medium term.
Another factor affecting utility-scale development includes the solar property tax exemption recently passed by both houses of the Legislature and expected to be signed by the governor. This provides a welcome exemption of 80% of the assessed value of solar equipment from ad valorem taxation. Some developers, however, particularly in locales most responsive to currently circulating RFPs and RFIs, are seeing these savings somewhat eroded by speculation-driven increases in rental rates and land purchase prices.
Smart developers not only capitalize on the few hundred megawatts of immediately available opportunities in the state, but they are also coordinating with consultants and counsel experienced in solar development to position themselves for Florida’s larger addressable solar market over the medium term.
Tim Hughes is an attorney in the Solar Industry Practice Group at Shumaker, Loop & Kendrick, LLP, where he monitors regulatory developments and market trends and provide experienced counsel and representation in the development, financing, and construction of utility-scale solar projects.