Gainesville’s Solar Feed In Tariff:

Lessons Learned

Diane WilsonManaging Utility Analyst

Gainesville Regional Utilities

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Why Solar?

• Regulatory Hedge• In line with goals of City Commission and our

community• Future value in RECs• Good fiduciary and environmental stewards

for our customers - their money and their environment

• Fuel Diversity• Opportunity for tax credits and state rebates

make this an ideal time to begin

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Why FIT, Not Just Net Metering?

• Assure good performance from installed PV systems

• Encourage early private investment and innovation in photovoltaic installations

• Capture tax benefits for customers not directly available to GRU as a public entity

• Make solar PV a good investment for both GRU and our customers

• Economic Development for our community

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How does GRU’s FIT work?• Program began March 1, 2009• 20 year fixed price by contract• Degression schedule to reflect declining system

costs in the future• GRU pays producers $0.32 per kWh for building

or pavement mounted systems and $0.26 per kWh for greenfield systems installed in CY 2009 & 2010

• Price set to assure profitability for investor, based on cost of systems vs. avoided cost to utility

• After tax return of about 5%

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Solar Feed In Tariff ScheduleEffective March 1, 2009

2009 2030 $0.32 $0.262010 2031 $0.32 $0.262011 2032 $0.30 $0.252012 2033 $0.28 $0.232013 2034 $0.27 $0.222014 2035 $0.26 $0.212015 2036 $0.25 $0.202016 2037 $0.23 $0.19

Contract Entered into Under This Policy

During Calendar Year

Fixed Rate per kWh Applied Uniformly From the Date of

Installation Through December 31,

Fixed Rate $/kWh Over Life of Contract

Free Standing (Non-Building or Non-Pavement Mounted)

Building or Pavement Mounted (any size)

or Ground Mounted < 25 kW

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Overwhelming Success

• Annual capacity stop loss limit for FYs 2009 and 2010 reached in one week

• Capacity through FY 2015 reserved in seven weeks – even without price commitment

• Capacity queue had to be created after implementation due to overwhelming demand

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GRU’s Solar Capacity Management

• Stop Loss provision in enacting ordinance • Set to limit the impact on fuel adjustment • 4 MW (DC) installed per year• Capacity assignment is non-assignable

• Challenges • Queuing Process• Defining “Accepted” Reservation Applications

• Set time limits for process completion to prevent invalid projects from tying up capacity

• 60 days for engineering approval• 120 days for project completion• 60 days for proof of equipment purchase

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Financing Requirements

• Language in power purchase agreement for co-lateralization and assignment critical to lenders

• Strong Counterparty (GRU) with AA bond rating

• GRU was cautious about assignment of any parts of the agreements to protect the utility’s system

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We Don’t Want to be the Solar Police

• Many contractors challenged FIT model– Pricing debates – Defining contractor qualifications

• Customer and Price undercutting– Project not assignable until completed – No location, ownership, or size changes

• Multiple applications for the same location or contractor reserving capacity on rooftop without property owner having knowledge– Proof of ownership or leasehold for application to be valid

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Goal: Create Local Jobs• “Out of towners” reserved capacity quickly leaving

residential and not-for-profits without participation– No way to legitimately limit outside companies from

participating– Out of state companies benefit the process

• Bring money in front outside of the community• Pay building owners for rooftop leasing• Hire local contractors• Create more competition to help customers

– Capacity carve outs for residential and not-for-profits would have been an administrative challenge (another policing issue)

– Limit on green field capacity per year did help

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The REC Debate

• Most participants didn’t care about the RECs

• GRU cares strongly about the RECs– Meeting environmental standards– Potential future value – Retail customers paying a premium for solar

need to get some value in return

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• Work with City and County Agencies in Advance – Planning and Development Boards for zoning

& permitting issues – Let them know what you’re planning so they

can staff and plan accordingly– Understand the local codes before setting

policy– Keep in mind that it’s not the utility’s

responsibility to set or enforce the codes

Local Development Codes

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Lessons Learned• Have business process in place (and in writing) prior

to implementation – Don’t forget all departments – engineering, solar

coordinator, accounts payable, IT, metering– Administration must be manageable– Keep it simple

• Be sure organization can absorb added staffing and expense requirements of the program

• Manage the politics• No matter how tight the policy, people will find the

loop holes• Avoid knee-jerk reactions when setting or changing

policy• Look at GRU’s policies and any others you can find

prior to starting program

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Results

• New solar companies and business models came to Gainesville

• Capital infusion• Intense competition• Solar print and radio advertising• Amazing improvement in $/watt (DC!!!)• New market in leasing rooftops!

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Yes – We Would Do It Again!

• Helps achieve Climate Protection goals• Provides jobs and economic growth

– Local solar contractors have increased from one in 2006 to five currently

– Attracting solar developers from other states

• Customers Like it! 75% of respondents in customer survey

said they’d be willing to pay a premium of

up to a dollar on their bill each month

for solar.

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City Commission “Signing Day”A Happy Moment In Our History

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For additional information on GRU’s Solar FIT Program,

contact:

Diane WilsonGainesville Regional Utilities

wilsondm@gru.com(352) 393-1282