Florida is instantly synonymous with beaches and sunshine, which is why its nickname is “the Sunshine State.” On average, it receives more than 200 days of sunny weather each year. While this is certainly a big draw for travelers, there is another benefit that residents of Florida can reap from the abundant sunshine – solar power. Using renewable energy for our power needs is vital today, given the depleting fossil fuels and rising environmental concerns. States all across the United States have been taking measures to encourage the use of sustainable energy, and the solar market in the country has seen significant growth. In fact, solar installations across the nation recently crossed the 2 million mark, and this number is set to rise rapidly in the future.
Florida, too, has witnessed a growth in the awareness and use of solar panels among property owners. According to data from the first quarter of 2019, the state has installed 3,155.51 megawatts (MW) of solar energy, which is enough to power 380,128 homes. Legislators are pushing for 100% renewable energy across the state by 2050.
Cost of Solar Panels in Florida
With solar energy systems rising in popularity all over the state, installers, as well as local and federal bodies, are offering attractive schemes to woo buyers. Moreover, manufacturers have been working on more technologically advanced equipment that improves efficiency, which has been successful in reducing the cost of solar panels. Over the past few years, the prices of solar panels in Florida have decreased steadily, and fallen by around 34 percent.
The exact price of solar panels for your Florida property will depend on various factors, like your county of residence, the size of your solar energy system, the installation company you have chosen, and the equipment used. According to recent data, the cost of installing a solar energy system in the state is around $3.56 per watt. An average system of 5000 watt (5 kW) size will cost you approximately $17,296, before claiming any tax credits or local incentives.
This may sound like a huge investment at first, but the good news is that there are plenty of opportunities for saving on solar in 2020. If you are worried about the cost of installing a solar energy system on your property in Florida, there are several financial incentives available in 2020 that can help you out.
Federal Tax Credit
In addition to these Floridian state incentives for solar energy, you can also benefit from the federal government’s Solar Investment Tax Credit (ITC). One of the biggest solar incentives available in the country, the ITC can help reduce the total cost of purchasing and installing a solar energy system with up to 26 percent credit to your federal taxes. For example, if you go for a solar panel installation worth $14,000, you could get $3640 back as a tax credit – thus getting significant savings. Owners of both residential and commercial properties can apply for this tax credit, provided you meet the eligibility criteria and have the required income.
Another reason to go solar in 2020 is that the ITC of 26 percent is available only until the end of this year. It is set to drop to 22 percent in 2021. From2022 the federal solar tax credit will not be available for residential solar installations.
Florida Solar Incentives
Sales Tax Exemption
If you are planning to buy a solar energy system for your property in Florida, you can get an exemption from sales tax thanks to the Solar and CHP Sales Tax Exemption administered by the Florida Department of Revenue. Active since July 1, 1997, this exemption was initially set to expire on July 1, 2002. After an extension of three years, it was later made permanent in May 2005.
Florida’s sales tax exemption lets property owners enjoy a saving of 6 percent on the purchase of a new solar energy system. To give you an idea, let’s say that you buy a system worth $15,000 in 2020. By using this exemption, you can reduce the total cost by $900 and maximize your savings on the upfront cost of solar panels.
The eligible equipment and hardware for the exemption include solar photovoltaic (PV) systems, solar water heating, solar space heat, and solar pool heating. Here, a “solar energy system” refers to any required equipment and hardware used for collecting, storing, converting, transferring and other uses of solar power that would otherwise require the use of conventional energy sources like manufactured gas or electricity and petroleum products.
Further, the exemption applies to various sectors, which include residential, commercial, and agricultural – so no matter the type of property you own, you can enjoy this tax exemption in Florida. However, make sure that the equipment you purchase for your building is certified by the Florida Solar Energy Center. The center periodically updates the list of eligible solar equipment and hardware. To get this incentive, you may have to complete a form at the time of purchase and present it to the seller.
Property Tax Exemption
There is yet another financial incentive available for property owners in Florida who plan to go solar, and this involves an exemption on your property tax. Known as the Property Tax Abatement for Renewable Energy Property, the state incentive provides an exemption of 100 percent on property tax for residential properties with a renewable energy system. If you install a solar energy system on a non-residential property, you will get an abatement of 80 percent on the property tax. Such properties include commercial, agricultural, and industrial buildings.
Under usual circumstances, in addition to reducing your electricity bills, a solar system installed on a property also raises the value of the home. According to studies, in Florida, this can mean a gain of more than 4.5 percent on your home value – that is a considerable rise since we are talking thousands of dollars here. For instance, if your house is currently valued at $226,000, getting solar panels installed can make this figure go up by $10,170. However, future property taxes can reduce the monetary benefit, since your property taxes will now be calculated according to the increased value of your home. But thanks to the state’s property tax exemption, homeowners in Florida do not have to worry about any increase in their tax bill.
There is a history behind this tax exemption – there was a controversial anti-solar energy law proposed in 2016. Backed by giant utility companies, this measure would have put restrictions on the use of solar in the state. Through the debates caused by this proposal, residents of Florida became more aware of the benefits of solar power and how energy-efficient systems could lead to major savings for them in utility bills. A large number of voters defeated the proposed law that year and later approved a constitutional amendment that created exemptions for properties.
The eligible renewable energy technologies for this exemption include includes solar PV systems, solar water heaters, and solar PV plus storage systems. The property tax exemption is applicable for residential properties with solar equipment installed on or after January 1, 2013. For non-residential properties, the 80 percent abatement is applicable on devices installed between January 1, 2018 and December 31, 2037.
Several states in the United States offer net metering, and Florida is among these. Net metering is a billing mechanism that lets you sell any surplus energy generated by your solar energy system back into the grid. This translates to a significant amount of savings as well as efficient use of energy for owners of homes with solar panels.
For instance, when you are out and about during the day when there is warm, sunny weather, your rooftop PV system continues to produce a good amount of energy. This quantity is way more than what you need on an average to power your home and use various appliances once you are home in the evening. Under normal circumstances, this additional energy would simply go to waste. But with Florida’s excellent net metering and interconnection rules, homeowners with net-metered properties are billed only for the net energy used per month. The additional energy is exported back to the grid and can be used by others who require it. Plus, you get paid for it in the form of renewable energy credits (RECs). You can later sell the RECs back to your utility company.
Opting for the net metering arrangement means you get dual benefits. First, you save money on your future electricity bills, since credit is provided by your local utility depending on the amount of energy you provide to the grid. For instance, if you use $60 worth of energy and contribute $40 worth of energy, your monthly utility bill will be just $20. Second, since every bit of energy produced by your system is being used efficiently, it has excellent benefits for the environment. This way, you can save energy generated by your solar panels during the summer and use the RECs earned to pay for your utility bills during monsoon or winters, when your solar energy system may be producing less energy than usual.
Utility services that offer net metering in Florida include Florida Power and Light (FPL), Duke Energy, and Tampa Electric (TECO). You can use net metering on renewable energy systems of capacity up to 2 MW. The net excess generation (NEG) of solar power on your property can be carried forward at the retail rate provided by your utility service. Once a 12-month billing period is over, the utility will pay the customer for any remaining NEG.
Florida PACE Loan Program
Florida is among the US states that have a residential Property Assessed Clean Energy (PACE) loan program, which is good news for homeowners who are looking to install solar panels. This government-backed loan program is particularly helpful for Florida residents who wish to get solar panels installed, but cannot afford to buy them outright, or have a low credit rating.
With the PACE program, you can get 100 percent financing for the installation of eligible solar equipment, including labor, materials, and soft costs. This means that there is no requirement for money down. Any residential or commercial property owner can qualify for PACE financing, provided that you are current on your mortgage payments and are not part of a bankruptcy filing. There are multiple PACE financing providers in Florida, making it convenient for you to find one near you.
These loans are available for long terms (around 10-20 years) at fixed rates, and are repaid through property tax once a year instead of the usual monthly installments. Another benefit of PACE is that the loan is attached to the property– this means that in case you sell the house before the loan amount is paid off, the remaining amount transfers to the new owner of the property.
Since 2010, the PACE program has helped many homeowners in Florida switch to renewable energy. As of 2019, the number of homeowners who made improvements to their properties using PACE financing is 200,000. It has made getting a solar energy system more affordable than ever before – another reason to purchase yours at the earliest and start saving on your utility bills.
Many solar companies and local bodies in Florida also offer financial incentives for those wishing to make the switch to solar. Solar power production in the state is predicted to increase almost tenfold over the next decade, so hurry to enjoy your share of financial incentives while these are still available. For more details about the specific incentives and rebate programs available in your area in 2020, talk to a local solar installer. They will also be able to help you in the process of applying for the financial incentives available to you.