Years Before Solar Shines On Miami Rooftops

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Miami Solar Disruption Graph

The dashed lines represent the cost per kWh of residential rooftop solar assuming installed costs of $3.00/Wp in 2013 (reflects Federal income tax credit) dropping to $1.50/Wp in 2020 (DOE SunShot Residential Rooftop target), and 5% annually thereafter, and different return requirements as indicated. The yellow line represents the variable price portion of the current residential rate escalated at 2% per year. The green line represents an escalation of 5% per year.

Miami is blessed with lots of sun, so it must be great for solar, right? Not on your rooftop!

Somewhat surprisingly, a rooftop solar PV system in Miami would produce only about 8% more kWh annually than one in Boston. And given the difference in kWh prices, that is not nearly enough. The current variable price, the costs charged by kWh, in Boston is about 15.6¢. Miami, served by Florida Power & Light, (FPL) has one of the lowest variable prices in the country for an investor-owned utility, about 8.65¢.

As you can see from the graph above, even as the installed costs of solar photovoltaics fall to the DOE SunShot target of $1.50/Wp for residential rooftops, it would still take large increases in FPL rates to make it economical for customer to install solar themselves. If FPL can hold variable price increases to 2% per year, it might well be 2028 before it is cost-effective for residential customer to install solar PV.

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Of course, the case is different for FPL. They can build large utility scale solar installations like the De Soto Solar Energy Center and get it included in rates. This means there is a mismatch between FPL’s marginal costs and their variable prices; it is unlikely they can add new generation for 8.65¢ at the residential customer’s meter.

FPL does want to do solar, but on their terms. It says on its website,

If the state were to enable utilities to pursue renewable energy projects up to 2 percent of revenues, FPL would immediately begin construction on more than 500 megawatts of new solar projects.

Perhaps if FPL were to install solar on residential and commercial rooftops, pay the owners a hosting fee through lower electricity prices, and put the installations in rate base, everyone could win.

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