April 2006

Is Florida Really the “Sunshine State for Solar Energy?”

If Florida is the “Sunshine State,” how come we don’t use more solar energy than the Golden State (California) or the Garden State (New Jersey)?   Are we really the Sunshine State?

We asked FSEC’s Jennifer Szaro to give us some idea how we really measure up in terms of the attractiveness of our state for the development of a sustainable solar market.  She took a look at world solar resource maps and noted that Florida ranks tenth in the continental U.S. for solar availability, so it clearly is not just the amount of sunshine that dictates the market. 

The overall U.S. market for solar energy products and systems is far behind Japan and Germany (both of which have lower solar availability than Florida).   Moreover, several states (including northern ones like New York, New Jersey, and Pennsylvania, all of which have lower solar availability than Florida), have done a far better job of installing solar capacity than Florida. 

World Solar Resource Map
World Solar Resource map illustrates average daily solar insolation in Watts/square meter.

Research conducted through the National Renewable Energy Laboratory (NREL) signifies that Florida currently ranks 11th in the country for solar market attractiveness.  This ranking is based on a number of factors including energy policies, amount and quality of solar resources, utility rates and customer load match.

So why aren’t we seeing more interest in buying solar energy products and systems in Florida?  The main issue appears to be not the solar resource we have in our state, but the level of financial incentives compared with the rest of the country.  Florida trails much of the country in our solar incentive policies, meaning that solar energy costs the average residential consumer more in our state than it does in more than two-thirds of the other states. As shown in the figure below, which includes the new federal tax credits, many residential consumers around the country can purchase the first kW of photovoltaics for their homes at half the cost of what consumers in Florida pay! 

Cost to Consumers bar graph

The next figure shows the cost equivalence in dollars per kWh of electricity generated from 4-kW photovoltaic systems installed on residential rooftops throughout the U.S. as determined by the U.S. DOE.  The 2005 actual year cost equivalence of $0.32 per kWh appears at first to be much higher than the $0.12 per kWh that many of us in Florida pay to our utilities.  But if the state of Florida were to provide a wrap-around rebate that augments the federal tax credit at 50 percent of the purchase price, this $0.32 per kWh is reduced to $0.16.  If the tradable renewable energy credits (TRECs) for this electricity are sold on the Chicago Mercantile exchange at $0.04 per kWh, then the cost is reduced to $0.12 per kWh – the same amount that we are paying today for electricity coming out of the wall.  Future DOE cost projections show the cost of a 4-kW system without financial incentives decreasing from a present value of $0.32 per kWh to $0.09 per kWh by 2020. 

This decrease in cost is due to several factors including improvements in efficiency, endurance of the invertors and increased total markets.  We must remember that the cost of the solar photovoltaic power plant is high today, but the cost of the fuel is free today and will be forever!  The solar fuel also does not pollute!  Can we say either of these for coal and natural gas?

We remind you that you pay $0.12 kWh from the utility today, but you paid $0.10 kWh last year, a 20 percent increase and $0.075 in 2000.  If one assumes that the cost of electricity from Florida utilities only goes up by 3 percent per year, by 2010 we will pay $0.135 kWh and by 2020 $0.18 kWh.  So with no incentives at all, in 2020 the photovoltaics on your roof will cost half of what you will be paying the utility! 

It should be noted that if we began to build nuclear power plants today to help with our future energy needs, those plants will not be producing power until 2020.

Actual PV costs according to DOE

The bottom line is that we do, in fact, have a significant solar resource here and we do have many favorable conditions for economic success of a thriving solar industry.  Photovoltaics on our roofs lets Florida become energy independent.  Financial incentives may be the only missing piece to truly making us the “Sunshine State.”

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