Five years ago, Gainesville, Fla., launched a solar energy program that became a model for other cities looking to reduce their contributions to climate change. Now it’s been suspended amid a torrent of criticism. What happened to the so-called ‘golden child’ of solar energy?
Before the lawsuit, before the Chamber of Commerce report, before the stepped-up nationwide attacks on solar power, Ed Regan took a fact-finding trip to Germany.
The year was 2008. The city of Gainesville, Fla., like hundreds of other U.S. municipalities, had pledged to cut carbon dioxide to meet targets set in the Kyoto Protocol, an international climate treaty. So Regan, then the assistant general manager for strategic planning at the city-owned utility, known as GRU, was looking for ways to help the city burn less coal and instead capture more energy from the sun.
One option was to follow the example of Germany, a country that — despite receiving only about as much sunlight as Alaska — had transformed itself into a world leader in solar power. (See The Yale Forum’s 2013 series on Germany’s efforts.)
When he got to Germany, Regan met with the pioneers of the country’s feed-in tariff, a policy that encouraged solar development by guaranteeing large, long-term payments to people who installed solar panels and fed the electricity to the grid. The policy made it possible for anyone, not just utilities, to become an electricity provider — and to earn money from it.
The policy seemed to be working: By 2013, Germany would generate 5 percent of its electricity from solar power. (In 2012, the comparatively sun-rich U.S. produced just 1 percent of its electricity from solar.)
Amazed by what he had heard, Regan presented his findings to Gainesville’s city commissioners, who moved rapidly to adopt their own policy. On March 1, 2009, the city launched a local feed-in tariff, becoming the first U.S. municipality to do so.
To pay for the program, the Gainesville utility increased its bills.
“It was the easiest rate increase I ever had passed,” Regan recalls. “I was kind of stunned.”
The new program soon attracted national attention. Publications like Washington Monthly, Fast Company, and Renewable Energy World profiled the city’s experiment. Eventually, other cities, including Los Angeles, Calif., San Antonio, Texas, Long Island, N.Y., and Fort Collins, Colo., would start their own programs. Gainesville, it seemed, had found an approach to addressing climate change that could have widespread appeal.
Solar panels atop the roof of the Millhopper branch of the Alachua County Library District in Gainesville, Fla. Photo: Barry Jacobson.
The city was “the golden child for this whole industry for a year or two,” says Charlie Coggeshall, renewable energy manager at the Southern Alliance for Clean Energy, a renewable energy advocacy group. “And so for it to abruptly kind of disappear, without much notice, is a little bit odd.”
Alligators, Quran-burning, and Solar Panels
Like most American cities, Gainesville, pop. 126,000, is a complex and contradictory place. It’s the home of the University of Florida — the Gators — and of live alligators, too. (In 2012, a man used a cinder block to beat off a nine-foot, three-legged alligator that attacked a friend who had gone for a swim, The Gainesville Sun reported.)
The Dove World Outreach Center, whose pastor Terry Jones sparked a global controversy by threatening to burn the Quran, made its home in Gainesville until 2013. But it’s hardly a conservative city: In 2012, voters in Alachua County, of which Gainesville is the seat, chose President Obama over Mitt Romney by a 17-point margin.
When city commissioners voted in 2009 to start the feed-in tariff, some wondered if the idea would soon spread nationwide. After all, feed-in tariffs sprouted up in German cities before they were adopted by the national government. And it’s true that in the early days, before all of the controversy, the solar program was wildly popular.
To limit costs to utility customers, the city capped the amount of solar energy it would add to the program each year. Leaders set the annual cap at four megawatts, enough to power about 400 homes.
Within days of the program’s launch in 2009, the city utility announced that enough people had applied to participate that it had met its four-megawatt cap for 2009 — and for 2010.
“Everybody was rushing to try to be the first in line,” solar project manager Rachel Meek told The Gainesville Sun at the time.
By the time city commissioners voted to suspend the program in December 2013, Gainesville had added 18.1 megawatts of solar capacity to its grid, according to GRU. Solar panels appeared in fields and lined the roofs of big-box stores, homes, schools, and churches. The city’s solar installation market mushroomed, creating new jobs for solar contractors, roofers, and electricians.
“It has become a point of civic pride,” says Pegeen Hanrahan, who was Gainesville’s mayor when the program launched — and a champion of it.
The city also exceeded its Kyoto Protocol goals, cutting carbon emissions by 13 percent below 1990 levels by 2012 — although an analysis provided by GRU said that most of the carbon reductions were a result of switching from coal to natural gas as a fuel source, plus a reduction in electricity demand.
Who and What Killed the Solar Program?
The suspension of Gainesville’s program comes at a time when many in the solar industry feel under attack. In December, The Guardian reported that the American Legislative Exchange Council, a conservative legislative and business group, was planning to paint homeowners who install solar panels as “free riders” and to support legislation that would block state support for renewable energy. Across the nation, 92 bills were introduced in state legislatures in 2013 to roll back or modify state renewable portfolio standards, according to the Center for the New Energy Economy. (None of the attempts to end state renewable standards were adopted.)
But Hanrahan says that the fate of Gainesville’s solar program had nothing to do with national politics.
Instead, officials interviewed for this story point to a surprising culprit: the city’s decision to build a biomass plant.
City commissioners approved a contract for a biomass plant just two months after Gainesville launched its feed-in tariff. The 100-megawatt plant, which went into operation in late 2013, generates electricity by burning waste wood.
The city needed to replace an aging coal-fired power plant, says City Commissioner Lauren Poe, and the commissioners wanted to find an alternative to coal.
The public’s reception of the biomass plant was cooler than it had been for the solar program.
“Solar is sexy,” says Regan, the former GRU manager. “Solar is like magic.” Biomass doesn’t have quite the same image, he says.
The city commissioners considered building a 50-megawatt biomass plant, but ultimately chose a plant with twice that capacity — with the idea that the utility could sell excess electricity to others in the state. The city entered a 30-year contract to pay about $3.1 billion for the plant’s electricity.
But the commissioners didn’t account for falling natural gas prices, says City Commissioner Todd Chase, who was elected in 2011 — after the decisions on the feed-in tariff and the biomass plant. By late 2013, when the biomass plant started operation, many utilities were producing cheap electricity by burning natural gas. That made it difficult for Gainesville to find buyers for its excess electricity. And to pay for the cost of building the plant itself, utility rates rose.
Chase began raising questions about the biomass plant and the solar feed-in tariff soon after he took office.
He says his mother, who died last year, had lived on a fixed income during the last years of her retirement. She once cried when she learned a local fee would increase, he says.
“I watched my mom struggle in her retirement, and I felt like the decisions that our local government were making were affecting her life more than decisions being made in Washington,” he says.
City Politicians Feel Pains from Rising Costs
In January 2014, a residential Gainesville customer who used 1,000 kilowatt hours of electricity paid $141.15, according to Florida Public Power, an association of municipal utilities. That’s the highest residential rate of any municipal-owned utility in Florida.
But that number doesn’t tell the whole story. In part because the Gainesville utility has enacted aggressive efficiency programs, its residential customers had the second-lowest average monthly consumption in the state in 2012 — 768 kilowatt hours — says Dianya Markovits, a GRU spokeswoman.
Still, controversy over rising costs put pressure on the city’s politicians.
Because the city is locked into a 30-year contract for the biomass plant, city commissioners eyed the solar program as a way to control costs. For residential customers, the program adds about $3 per month per 1,000 kilowatt hours.
A Florida state representative, Keith Perry, R-Gainesville, floated a proposal to hold a referendum on removing control of the Gainesville utility from city commissioners, giving it instead to an appointed board. In November 2013, the Gainesville Area Chamber of Commerce issued a report supporting such a move.
And the solar feed-in tariff itself didn’t escape controversy. In 2011, Khepera Solar LLC, a local company, filed a lawsuit alleging that the city had shown “impermissible favoritism” and “improper manipulation” in selecting among contracts to participate in the feed-in tariff program. A judge ruled in favor of the city in September 2013. But Annie Orlando, owner of Khepera Solar, may soon hold a seat on the city commission: She will compete in a runoff election April 8.
All of this debate was the setting for the December 19, 2013 meeting in which the city commissioners voted 5-2 to suspend the solar feed-in tariff program.
Commissioner Poe, who voted against the suspension, says he wanted to continue the program for one more year.
“I felt like it was such a marginal difference in what the rates would be that it was worth preserving,” he says.
Hanrahan, the former mayor, says the biomass plant and the feed-in tariff will ultimately pay off.
“I do believe that over the long course of time, these both will turn out to be good public policies and ultimately good financial decisions as well,” she says. “But it’s just like when you buy a new house or a new car — that first number of years, you’re paying the capital cost of that asset, and that can put you in a pinch.”
But Chase, who voted to suspend the program, says the city commission should have considered costs more carefully when looking for ways to address climate change.
“I don’t think the citizens of any one community should be asked to do so much and pay so much because of an issue like this,” he says.
What’s Next for Solar in Gainesville?
Technically, the Gainesville feed-in tariff isn’t dead — only suspended for 2014. But commissioners are unlikely to vote to revive it, say Chase and Poe.
That’s left Gainesville’s solar installers looking for other options.
Barry Jacobson, president of Solar Impact, Inc., a solar installation company in Gainesville, says the feed-in tariff generated 70 to 80 percent of his business in the last few years. “That’s a lot to lose,” he says. “It was a scary prospect.”
His customers increasingly are turning to net metering, a program that enables customers who generate electricity to receive credit on their utility bills.
He is pragmatic about about the future of his industry. “I would have preferred a little slower phase-out, but in order for solar to really be successful, it needs to stand on its own,” he says.
He adds that the fact that solar panels are now an ordinary sight in Gainesville has changed perceptions.
“A lot of what solar is about is for people to be comfortable with it,” he says. “For a lot of people, it’s weird and it’s new, here in the U.S., especially in Florida. And the biggest thing holding it back is not enough people have done it.” But because of the feed-in tariff, he says, “virtually everyone in Gainesville has seen a solar project.”