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Gainesville utility places premium on solar power

James Mulhearn, left, owner of Interstate Mini Storage in Gainesville, had a 50-kilowatt solar system installed on one of his storage buildings. “It’s a new frontier,” he said.

ASJYLYN LODER | Times

James Mulhearn, left, owner of Interstate Mini Storage in Gainesville, had a 50-kilowatt solar system installed on one of his storage buildings. “It’s a new frontier,” he said.

GAINESVILLE — James Mulhearn clambered up a ladder and surveyed a gleaming stretch of flat metal roof and a newly installed solar panel, one of 288 that would soon cover the shed's roof with 50 kilowatts of solar power.

The retired electrician scanned the rows of flat-roofed storage sheds that make up his business, Interstate Mini Storage in Gainesville. If the numbers worked out, he might cover them all.

"It's the first thing in this business in 30 years that has gotten me excited," Mulhearn said. "It's brand new. It's a new frontier."

In a bid to become the nation's Solar City, Gainesville recently became the first in the country to adopt a feed-in tariff, which pays a premium price for electricity from the sun. Pioneered by Germany, feed-in tariffs led to a national solar boom.

Gainesville Regional Utilities is betting that if temperate Germany can become a world leader in solar power, then Gainesville can do the same.

• • •

At first, the idea seemed outrageous to Ed Regan, the assistant general manager for strategic planning at Gainesville Regional Utilities, the state's fifth-largest municipal utility with about 90,000 customers. He had heard that the German program paid as much as 60 cents per kilowatt hour for solar electricity — more than three times what Regan's utility charged its customers. Intrigued, Regan wrote a grant proposal and got the money last summer to travel to Germany.

"I wanted to find out, how do they possibly justify that?" Regan said.

Gainesville already had generous rebates for solar. Florida also allows net-metering, which runs the meter backward as the solar panels produce power. Still, some businesses were telling Regan it wasn't enough. Installing solar just didn't make financial sense.

Meanwhile, in far-cloudier Germany, farmers installed solar panels in pastures and on barns. The roofs of factories and office buildings gleamed with panels. In German villages, house after house had solar power.

Other countries took note of the German solar boom, said Jerry Karnas, Florida climate project director for Environmental Defense. The country is forecast to grow to 18 percent renewables by the end of the year from 2 percent in 1997. It also created 250,000 jobs in renewable energy. Dozens of other countries adopted similar tariffs, and a handful of U.S. states began considering it.

"It's a strategy that worked all over Europe, particularly in Germany," Regan said.

He was convinced he could make it work in Gainesville.

• • •

The feed-in tariff works by offering customers a higher price for solar than customers pay for power from the grid.

Gainesville Regional Utilities signs a 20-year contract to buy electricity from a homeowner's new solar installation at 32 cents a kilowatt hour, well above the average of about 17.5 cents the residential customers pay for electricity from the utility's fossil fuel plants, explained Barry Jacobson, founding partner of Solar Impact, Gainesville's leading solar installer. The prices are different for commercial and industrial customers, and depend on the size of the solar installation.

The 20-year contract — and the above-market rate — helps homeowners secure financing to pay for the panels, which can cost up to $40,000 for a 5-kilowatt solar home system, Jacobson said. The contract shows the bank that the homeowner has a revenue stream to repay a loan.

Over time, retail electric rates catch up to the premium feed-in tariff rate. The hope is that by that time, the prices of solar will have come down, and a sustainable market will have been created that makes solar power more competitive with fossil fuels.

Jacobson said he's working with developers who want to install solar on the rooftops of small office buildings and parking garages to see whether the feed-in tariff makes sense for them.

Some businesses may even see profit of up to 5 percent, Regan said. Considering the stock market's dismal performance last year, he said, 5 percent isn't all that bad.

• • •

Like many great ideas for renewable energy, it isn't free. The rest of Gainesville's customers pay a surcharge to subsidize those that go solar.

To Regan, the architect of the Gainesville system, the beauty of the program is that it distributes the cost over so many people that it has a negligible impact on the average consumer. In Germany, the average customer paid about $2.50 a month for the subsidy. In Gainesville, it will come out to about 40 cents a month for the average residential customer. To keep that cost from soaring, the City Commission agreed to revisit the program if more customers than expected signed up.

Regan expects that Gainesville will add about 1 megawatt of solar capacity every year. That's just a fraction of the 611 megawatts the city's fossil fuel plants can produce, but it's twice as much solar as the city has installed.

The price tag doesn't tell the whole story, Regan said. More solar power will result in more local jobs, greater energy independence and reduced pollution. It adds a value to the community that's not reflected in dollars and cents.

"It may not be the least expensive form of energy," said John Crider, an analyst with Gainesville Regional Utilities. But it is the most valuable, he said.

Feed-in tariffs have been adopted by 45 countries, and a handful of U.S. states are debating it, Karnas said. Florida Public Service Commissioner Nathan Skop recently proposed a similar measure. Last month, the sprawling metropolis of Los Angeles adopted feed-in tariffs, crediting Gainesville for leading the way.

Asjylyn Loder can be reached at aloder@sptimes.com or (813) 225-3117.

Gainesville utility places premium on solar power 01/01/09 [Last modified: Monday, January 5, 2009 9:56am]
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