Understanding Florida net metering and HB 741

Colloquially referred to as the "Sunshine State," Florida doesn't disappoint: on average, about two-thirds of Florida days are sunny! Florida has risen to the top of solar states with its ample sunshine, coming in at third in the Solar Energy Industries Association (SEIA) 's list of top 10 states with cumulative solar electric capacity installed through 2021.

However, the Florida House and Senate just passed House Bill (HB) 741, which can potentially damage Florida's solar industry significantly. In this article, we'll explain what you need to know about HB 741 and what it could mean for you if you're a Florida resident.

Note: on April 27, 2022, Governor DeSantis vetoed HB 741, which was not passed into law!

Let's say your solar panels produce more electricity than you're consuming – what happens to that excess energy? Assuming your system is grid-tied, that energy is sent back to the grid. If you live in an area with net metering, this energy is credited back to you, so on days when you consume more electricity than your panels generate and have to pull electricity from the grid, that energy is counted against your credits.

Importantly, in Florida, utilities currently pay you the retail electricity rate (what they charge their customers for) for the energy you send back to the grid. However, HB 741 would significantly reduce the amount utilities pay you for the energy you send to the grid.

HB 741 is a bill drafted initially by Florida Power & Light, the main subsidiary of NextEra Energy Inc., the largest power utility in Florida. The bill aims to phase out net metering in Florida from the retail rate to the wholesale rate (the price the utility would've paid to produce that electricity or purchase it on the market).

Essentially, this would mean that when you're consuming more electricity than your solar system produces, you'd still pay the retail rate for the electricity you pull from the grid. However, when you're generating more electricity than you're consuming, your utility would only compensate you for the wholesale rate, which is significantly lower than the retail rate.

The bill was recently passed by the Florida House (83-31 vote) and Senate (25-15 vote) but is still pending sign-off from the governor of Florida, Ron DeSantis.

Phase-out timeline

Under HB 741, the net metering wouldn't immediately drop from the retail rate to the wholesale rate; instead, it would phase out over time. Here's a breakdown of the phase-out timeline if the bill is signed into law:

• July 1, 2022: HB 741 takes effect

• 2023: one-year hiatus in which net metering is still set at the retail rate

• 2024-2025: rate drops to 75%

• 2026: rate drops to 60%

• 2027-2028: rate drops to 50%

• 2029: rate drops to the wholesale rate

The bottom line is that HB 741 will negatively impact most Florida residents – but the magnitude of that impact will vary depending on if you currently have solar, if you plan on installing solar, or if you don't plan on installing solar.

You currently have solar.

According to SEIA, net metering has helped over 100,000 homeowners go solar in Florida. Notably, HB 741 has a grandfather clause, meaning if you have solar when the phase-out begins, it will not impact your net metering rate for another 20 years. However, the bill also allows utilities to charge fixed charges to customers with grid-tied solar systems starting in 2026, which could still lower your return on investment.

You plan to install solar

If you plan to install solar, we recommend you do so as soon as possible if you live in Florida. If Governor DeSantis signs this bill into law and you don't have solar by 2024, you'll miss out on significant net-metering savings. When you install your system, you'll be grandfathered in at the net metering rate, so you want to ensure you get in at the highest rate possible.

You don't plan to install solar.

You might think that if you don't have or plan to install solar, this bill won't affect you – but that's not the case. According to SEIA, the solar industry employs about 11,000 people in Florida and generates over $10 billion in economic activity. Furthermore, suppose the number of people going solar in Florida sharply increases over the next two years to lock in current net metering rates. In that case, utilities might ask state regulators to charge more to existing customers to recoup any lost revenue.

A poll conducted by Mason-Dixon Polling & Strategy from February 7 through February 20, 2022, found that, of the 625 registered Florida voters surveyed, 84 percent support net metering, and only 8 percent oppose it. Interestingly, the poll shows that net metering has bipartisan support from Florida voters: 94 percent of Democrats and 76 percent of Republicans expressed support. Additionally, 47 percent of voters stated that they would be less likely to re-elect their state legislator if they voted for bills that would significantly raise the cost for customers to install solar panels on their rooftops (like HB 741).

We'll be honest: if HB 741 is signed into law, your payback period for a solar system in Florida will definitely increase, and it won't be worth it as much as it is now. However, by installing a solar-plus-storage system, instead of sending your excess electricity to the grid, you can store it in your solar battery, reducing your reliance on grid energy substantially.

Protecting net metering is important for the solar industry. Florida isn't the only state with net metering at risk: Net metering 3.0 – currently on pause – could similarly disrupt California's solar industry, the country's leading solar state.

To express support for net metering in Florida and California, you can contact the governors of these states; ultimately, they will have the final say on whether these bills are signed into law:

• Contact Governor DeSantis (Florida)

• Contact Governor Newsom (California)

The best way to protect yourself from HB 741 is to go solar as soon as possible so you're grandfathered in at the current net metering rate. To get started, sign up for a free account on the EnergySage Marketplace, where you can compare quotes from our network of pre-vetted installers. If you want to reduce your reliance on grid energy further, express interest in receiving quotes for storage as well.