Florida Solar – Everything You Need to Know

#2 Options for buying solar panels in Florida

Cash Upfront

Ah, the cash purchase. No matter what you’re buying – a solar installation, a car, a private plane – you can pretty much rest assured that you’re making the most financially responsible decision if you can simply purchase the item outright. It’s simple and cost-effective. No interest rate, no loan fees, no annual rate increases (like with solar leases). However, you need a pretty big sack of money saved up to buy something as big as a solar installation. After applying the 30% federal tax credit, an average-sized (5 kilowatt) installation in Florida runs about $11,600. Many of us simply don’t have that kind of change just lying around. Thankfully, there are some excellent alternatives available to Florida homeowners! Take a look below to learn more.

If you can afford it, outright ownership of your solar installation comes with some definite perks. First, you’ll see a better return on your investment than with a loan or lease. Secondly, as the sole owner of the installation, you are eligible to receive all available financial incentives, including the federal tax credit, state sales tax exemption, and state property tax exclusion. These tax incentives drop your installation price by over 30%! That’s a sweet deal! Keep in mind though that with ownership comes the responsibility to maintain, repair, and monitor your installation. Solar is fairly hands-off. There are no moving parts, and major equipment like the panels and inverter comes with long-term warranties, so maintenance responsibility isn’t really something you should worry about. It’s just something you need to be aware of.

Leases

Leases and power purchase agreements (PPAs) are two very popular types of third-party ownership for residential solar. With leases and PPAs, solar installers provide the initial funds to install the solar system and homeowners are required to pay little to no upfront costs. To the homeowner, leases and PPAs look very similar – you pay little upfront and then pay off the installation in monthly increments over 20 years.

The state of Florida is one of the very few states in the United States that outlaws third-party ownership of solar. Utilities are the only businesses that are legally allowed to sell electricity.

Legalizing solar leases was one positive piece of Amendment 1, the solar amendment that was thankfully voted down by Florida residents during the 2016 election. Why, you ask? Most in the solar industry agree that legalizing solar leases would be a huge step forward for the state’s solar, but the amendment also included provisions backed by utilities that would’ve allowed them to charge solar customer more money. The solar industry ultimately breathed a sigh of relief when the amendment didn’t pass.

More: Solar Leases

Loans

Loans are becoming increasingly popular to finance residential solar installations. They give the benefits of ownership (higher financial savings than with leases and eligibility for financial incentives) while not requiring the high initial investment. The financial savings of a loan-financed solar installation depends greatly on the size and total cost of the installation as well as the loan details like interest rate, fees, and loan term.

Banks, credit unions, third party solar financiers, and even utility companies will offer loans for solar installations. Oftentimes solar installers will have a preferred lender they work with, so if you’re interested in taking out a loan for your solar installation, go ahead and start talking to a few different installers to see what options are available in your area.

There are also a handful of utilities throughout Florida that offer solar loans with low interest rates, including:

• The City of Tallahassee Utilities offers 5% interest loans up to $20,000 to residential customers for a variety of renewable and efficiency measures, including solar installations, home insulation, and high-efficiency air conditioners.
• The City of Lauderhilll’s Revolving Loan Program mainly provides small loans for high-efficiency appliances like dishwashers and washing machines, but solar installations are eligible as well. The maximum loan amount is capped at just $2500 – likely lower than your solar installation’s total cost – but the loans are interest free for the first two years! If you live in the area and are eligible for the loan, take advantage of this incredible offer from the city to at least partially pay for your installation.
• The Solar and Energy Loan Fund, a non-profit solar and energy efficiency financier, has partnered with the Orlando Utilities Commission, St. Lucie County, and the City of Orlando to offer unsecured loans to local residents for solar installations. Interest rates range from 7% to 9.5% and the loan can last between 3 and 7 years. These interest rates are fairly high, so make sure the financial savings are there before signing the agreement.

More: Solar Loans

PACE Financing

PACE (Property Assessed Clean Energy) financing is a fairly new –and exciting – way to finance solar installations that is currently available to Florida homeowners in certain cities. Through PACE, local governments provide financing for solar installations for homeowners and/or businesses, who then repay the installation costs through assessments on their annual property tax bills.

The city of Berkeley, CA, began the first solar PACE program in the 2000s, but unfortunately this financing type has been mired in controversy since it began, mostly revolving around property liens and who would be paid first – the PACE financing or the home loan- if a homeowner defaults on her mortgage. The struggle culminated in Fannie Mae and Freddie Mac publishing a notice refusing to issue mortgages to homes involved in the PACE program.

Since that tumultuous time though, Fannie Mae and Freddie Mac have jumped on board the PACE train and have agreed to work with homeowners with PACE financing as long as certain criteria are met. With these roadblocks cleared, PACE has grown across the country and Florida is one of the first adopters for residential solar!

PACE financing offers some really excellent advantages to homeowners. First, there is no large upfront payment required like a cash purchase. Secondly, unlike a lease or loan that is tied to the homeowner, PACE financing is tied to the home address, so the trouble of transferring a lease or PPA agreement to a new homeowner (which can sometimes get messy), is a non-issue! The local government typically ensures low interest rates and long terms, so going solar is easy and cost-effective.

To offer PACE financing, local governments partner with organizations that provide funding and can run the program on their behalf. There are currently three PACE organizations in Florida, each working in different areas:

• Residents in the certain cities in the counties below can secure PACE financing through The Ygrene Energy Fund and their local government. Be sure to check Ygrene’s website to see if your city is on the list!
  • Alachua County
  • Broward County
  • Charlotte County
  • Marion County
  • Miami-Dade County
  • Orange County
  • Palm Beach County
  • Pasco County
• The Florida PACE Funding Agency, an organization originally created to facilitate PACE financing in the Kissimmee area, has grown in size and now runs PACE programs throughout Florida, including:
  • Fort Meyers area
  • Fort Lauderdale area
  • Ocala area
  • Gainesville area
  • Pensacola area
• RenewPACE also offers PACE financing through local governments to homeowners in certain cities in the following counties.
  • Alachua County
  • Broward County
  • Charlotte County
  • Indian River County
  • Levy County County
  • Martin County County
  • Miami-Dade County
  • Orange County
  • Palm Beach County
  • Pasco County

Savings Comparison for Different Financing

We’ve compared the financial savings from the different financing options to help you decide what makes the most sense for you. Using Florida-specific industry averages for cost, we compare the savings between financing with full cash upfront and through loans.

We looked at financial savings of an average-sized 5 kilowatt installation over a 25 year period. To compare the cost of going solar to utility rates, we used the state average of $0.1139 per kilowatt-hour with an annual increase of 2%. We also assumed a 0.08% decrease in the production of the solar panels each year, to account for degradation of the panel components (a standard allowance, as solar panels produce a little less electricity each year they are installed).

For our financial savings calculations with a solar loan, we used 12 year term with 5% interest, a fairly standard loan agreement for solar.

First off, no matter the financing type, you can save between $5,700 and $13,000 over 25 years by going solar in Florida! If you’re looking for the absolute best savings, cash upfront is the way you’ll want to go. For an average-sized installation, you can expect to save about $12,755 over 25 years!

If you don’t have enough cash to fork out for a solar installation, you can still almost $6,000 with a solar loan. Keep in mind though that when financing with a loan the total financial savings will vary by interest rates. Higher interest rates will see lower savings. At the end of the day though, even with a higher interest rate, you’ll still be realizing thousands of dollars in savings – all with no upfront payment!

Payback time is the amount of time it takes to recoup your investment. In the solar industry, a payback time of 5 to 10 years is considered excellent to very good, and 10 to 15 years is considered average. Over 15 years is quite a long time to wait to recoup your investment….

For cash purchase, payback time for Florida solar hovers around 13 years. Certainly not the best, but the longer payback is no surprise considering the real lack of any financial rebates to decrease the total cost of installations.

With a 5% loan, the payback period jumps to 20 years. That seems like a long time – and admittedly it is – but once the installation is paid off, you’ll be enjoying your renewable, no-cost electricity!

#3 Solar Policy Information

Renewable Portfolio Standards

Renewable portfolio standards (RPS) are an important driving undercurrent of solar adoption and lawmakers in many states like California and New Jersey have adopted RPSs, which set a goal for how much energy in the state must come from renewable sources by a certain date. Colorado, for example, set a mandate in 2004 that 30% of all electricity generated by investor-owned utilities must come from renewable sources by 2020. Hawaii has set a goal of 100% renewable energy by 2045! RPS mandates force utilities to adopt and encourage renewable energy much faster than they would otherwise do naturally.

Unfortunately Florida has yet to adopt any RPS goals for any sort of renewable energy. It’s actual quite amazing the solar industry is so large in the state without these mandates! If they really want to push the solar industry forward, Florida needs to look into adopting mandates like so many other states have. RPSs encourage the solar industry to expand and drive forward, which can lead to lower prices for homeowners as installers become larger, more efficient, and more streamlined.

Net Metering

Florida has fantastic net metering policies that are very similar to other pro-solar states. The law, passed at the same time as the interconnection guidelines, requires investor-owned utilities to offer customers net metering incentives for residential solar installations by providing full retail credit for any excess electricity produced by the installation. Homeowners accumulate net metering credits over the course of the month and the credits roll over month to month. At the end of 12 months, homeowners can cash out their credits at the utility’s avoided cost, which is typically based on what the utility pays for the electricity they produce. This is usually only a fraction of retail cost, but, hey, cash is cash!

The best part about these net metering incentives? They’ll be around a long time, as the law makes no provision to phase out the incentives as more people install solar (a common tactic in other states). So no matter how many people install, these incentives will always be in place!

Through passing these net metering rules, the state of Florida allows you to save even more money over the life of your installation.

More: Net Metering

Interconnection Process

The state of Florida has setup some great policies to encourage homeowners to go solar in the state. These policies ensure a quick installation process as well as fantastic net metering rates. Remember though that policy is just one part of the equation. Read on to learn about solar incentives in Florida.

Interconnection is the process to connect your solar installation to the electricity grid, usually involving an application to and approval from the utility. As you can imagine with utilities involved, this is sometimes a slow and arduous process for homeowners. Utilities need to keep tabs on how much electricity is going into the grid so they can better plan for the future and ensure their infrastructure isn’t overburdened (and potentially cause blackouts). To this end, pretty much every homeowners across the country, regardless of the state they live in, must receive approval to connect to their installation to the utility grid. In some states, there is a long, long wait before your installation can get up and running – a few years ago, Maryland homeowners going solar had to wait more than 2 ½ months for approval from their utility Pepco!

Thankfully, in 2008 the state of Florida passed interconnection rules that make it easy for homeowners to apply for and receive interconnection approval. The state created a three tiered system, based on the size of the installation, with each tier having its own interconnection rules:

• Tier 1: Solar Installations under 10 kilowatts. Unless your installation is extremely large, most homeowners fall into this category. The application process is straightforward – homeowners aren’t required to pay application fees and no study is needed to assess the impact the installation will have on the electrical grid (large scale solar installations typically require this assessment).
• Tier 2: Installations between 10 kW and 1 MW. Homeowners installing large systems on their roof will likely fall into this tier. As a safety precaution, the state requires installations larger than 10 KW to have an external safety disconnect installed along with the rest of their installation – a requirement that can be found in other states as well.
• Tier 3: Systems over 1 MW. These are mainly large-scale commercial installations. Most homeowners don’t have the need or space for an installation this large.

All installations must be inspected by the city or county for safety – an extremely common requirement across the country.

These tiers only apply to investor-owned utilities like FPL and Duke-Progress. The law does require municipal utilities and electric cooperatives to offer standardized net metering and interconnection, but doesn’t explicitly address how these organizations should go about this process. No matter your utility, if you’re looking to go solar in Florida, the interconnection process should be easy, simple, and relatively fast.

Solar Access Rights in Florida

Over the past 5 years, solar access rights have become an increasingly important issue across the country. More and more situations have popped up where solar homeowners have had to defend their right to go solar and even their right to sunlight.

Sound crazy? Well, imagine that you want to install solar panels on your roof, but your Homeowners Association doesn’t like the look of rooftop solar and denies approval for your installation? What recourse do you have to continue moving forward?

Imagine still yourself in a situation where you just spent $15,000 on beautiful new solar panels. The next day, your neighbor, unaware of your solar panels, plants trees that block the sunlight from hitting your panels and your energy production drops to almost nothing in an instant! What do you do? Ask her to remove the trees? What if she says no? Sue? Call the police? What if you installed your panels while the trees were just little saplings, but 10 years later they’re shading your installation and your production drops?

All of these situations have been experienced by homeowners across the country and many pro-solar states, seeing renewable energy as more important than the aesthetics of a neighborhood, have passed laws protecting solar installations as well as access to sunlight.

In 1978 (and amended a couple times since then), Florida passed a law making it illegal for HOAs to block approval of rooftop solar installations. This is great news for Florida homeowners. In other states, homeowners aren’t so lucky and HOAs can deny rooftop solar. The Florida solar law does allow HOAs to request that homeowners move panels from a visible front portion of the house to the back if, and only if, the change doesn’t affect the installations’ energy production – a fairly standard allowance in other states as well. If you’re going solar in Florida, no need to worry about your HOA. Some can be finicky or picky, but in the end they cannot block your solar installation!

Shading issues on the other hand, are a bit more nuanced. There are currently no laws in Florida protecting the ‘right to sunshine’ for solar homeowners. If your neighbor plants a tree that blocks sunlight from hitting your solar panels, even if they planted the tree after you installed your solar system, you have little legal recourse to make them trim or remove the offending trees. Florida courts typically sides with whoever is acting in accordance with state property rights, so if your neighbor isn’t doing anything illegal on his property (planting trees is legal, after all), there’s not much you can do about the shading since it’s his legal right to plant trees on his property.

Other states have solar access laws protecting the ‘right to sunshine’ for solar homeowners. After a 2008 lawsuit in northern California, state lawmakers passed regulation giving solar homeowners the power to force neighbors to cut or trim trees shading their installation if the trees were planted after the panels were installed.

The best course of action for Florida homeowners going solar is to intelligently plan were to install solar panels, taking into account the height of any nearby trees over the next 20 years. Just as important, having good relationships with neighbors allows you to find solutions peacefully and amiably if any issues arise. For more information on solar access laws, check out our article Stop Shading My Solar Panels! Solar Access Rights in the US.

2016 Florida Solar Amendment

In late 2016, Florida residents narrowly voted down a state constitutional amendment that many (including Al Gore and Elon Musk) saw as a thinly-veiled attempt by utilities to hold onto their control over electricity in the state. Those against the bill called out both the utilities’ confusing and deceptive language while promoting the bill as well as the actual nature of the bill.

Consumer for Smart Solar Choice, the organization that promoted this Florida solar amendment, promoted it as a “pro-solar” constitutional amendment that guaranteed all homeowners’ right to go solar while also protecting non-solar residents from unfair costs.

That sounds pretty good, right? How can you argue with that? Well, you might sing a different tune when you find out that Florida Light and Power and Duke Energy (2 big utilities in the state) gave Consumers for Smart Solar $8 million and $6.7 million respectively to fund the campaign – the highest and second highest amount ever spent on a ballot initiative in Florida! Something seems a little fishy here. Let’s find out what’s going on.

The ballot actually contained two parts:

1. A guarantee that all homeowners have the right to produce solar electricity. No real issues here. This part’s great!
2. Here’s where it gets a little messy. Part 2 allows state and local governments to prevent non-solar homeowners from subsidizing other solar homeowners’ electricity production. What exactly does that mean? In essence, the state government (ie the Public Service Commission that makes the rules governing utilities) can allow utilities to charge solar customers additional fees to cover infrastructure costs (maintain poles and wires, for instance). This is the part that’s not so good.

If you think about it, you’ll see how deceptive this is. By voting no, you’re saying you don’t want to protect people’s right to go solar! Of course, in reality by voting no you’re actually voting to protect solar homeowners. Confusing, right? We agree.

If the amendment passed, it would’ve set the legal stage for utilities to start charging solar homeowners additional fees simply for going solar. That seems like a far cry from being “pro-solar” like the utilities touted!

Once word got out exactly what was going on, celebs like Al Gore, Elon Musk, and Jimmy Buffet came out in opposition to the bill. Even after utilities poured millions of dollars into promotion, the amendment thankfully did not receive the 60% approval that was needed to amend the constitution, thereby narrowly missing a huge blow to the solar industry (and solar homeowners) in the state!

Good job, Florida homeowners!

#4 Financial Incentives, Rebates, and Tax Credits 

Federal Tax Credit

All homeowners across the country who install solar are eligible for the federal residential renewable energy tax credit. This tax credit is equal to 30% of the total installation cost and goes to the owner of the installation (so if a homeowner leases the installation or finances through a power-purchase agreement, the credit goes to the installer-though they usually pass these savings on indirectly through a decrease in homeowners’ monthly bills). Originally the tax credit was supposed to phase out at the end of 2016, but lawmakers extended the credit to the end of 2019, which then decreases to 26% until 2021, and 22% until 2022.

Unlike tax deductions, tax credits are a dollar-for-dollar reduction, so in essence homeowners who purchase their installation through cash or loan enjoy a 30% discount on their installation! Homeowners apply for the credit when you fill out your next tax return.

Florida Solar Rebates (or lack thereof)

Seeing the importance of encouraging growth in solar, many states mandate that utilities, or at least investor-owned utilities (as opposed to municipal utilities or cooperatives) must offer some form of financial rebate to homeowners going solar.

For example Energy Trust of Oregon, the state-wide organization that provides rebates for renewables and energy efficiency, offers up to $0.60 per watt to residential customers of local investor-owned utilities (the organization is funded through fees on customers’ bills of local investor-owned utilities).

Through Energize Connecticut, an organization similar to Energy Trust of Oregon, Connecticut homeowners going solar can receive rebates equal to $0.40 to $0.51 per watt for going solar.

These incentives add up to a lot of savings for homeowners. Even at $0.40/watt –the lower end of the spectrum- a homeowner installing an average-sized 5 kilowatt system knocks $2000 of her total installation cost!

For all those homeowners in Florida though, you’re unfortunately not so lucky. There’s currently no state-wide solar rebate program. In fact, there’s only one solar rebate program in all of Florida! This goes to the City of Longwood, which provides rebates for a variety of efficiency and renewable energy upgrades to homeowners. Through the Raising Energy Efficiency Program, the city provides 10% of the project cost, up to $500.

That’s a fraction of the rebates in other solar-friendly states, but we still give mad props to the City of Longwood for being a shining beacon in an otherwise dark state (at least in regards to solar rebates). And as a bonus, homeowners can apply for this rebate once a year, so if you want to install efficiency upgrades after your solar (or vice-versa), go for it!

Sales Tax Exemption

One thing Florida has done right in regards to solar incentives is the sales tax exemption, which allows homeowners to save hundreds of dollars at the outset of the installation.

Passed in 1997 as a three-year financial incentive, legislatures made the bill permanent in 2005. The exemption is for the hardware and equipment for the solar installation (so labor costs aren’t exempt), including the solar panels and inverter, but also the mounting hardware, electrical conduit, wiring, and even the nuts and bolts. In the future, as solar with storage becomes more common, solar batteries are also exempt from the purchase! The state publishes a list of installation components that are sales tax exempt as well as a form that homeowners can show their installer to document the exemption.

The state typically charges a 6% sales tax, so you can see big savings when you take advantage of this incentive! According to the National Renewable Energy Lab’s 2016 benchmark of costs in the solar industry, in an average-sized installation of 5.6kW the cost of the solar panels, inverter, and hardware equal about $1.25 per watt, totaling $7000. So, in this example, the sales tax exemption would save homeowners $420! (6% of $7000)

Property Tax Exclusion

In the same vein as the sales tax exemption, the state also provides a property tax exclusion for 100% of the added value a solar, wind, or geothermal installation brings to the property. As an example, if your home is worth $140,000 and you install a $20,000 solar system on your roof, your property tax is still only based on $140,000, not the total $160,000 value of your property.

Compared to the sales tax exemption, this is a relatively new incentive, with the state legislature only passing the bill in 2013. The value of this tax exclusion obviously depends on the size of your installation as well as the market value of your home, but stands to save homeowners quite a bit of money.

Even with Florida’s poor record in regards to solar incentives, homeowners can still knock thousands of dollars off the initial price of the installation by taking advantage of all the federal and state tax credits, exemptions, and exclusions.

What to Do Next?

Going solar in Florida is a smart choice to save money and contribute to a healthier environment, but you need to make sound decisions towards financing to ensure you see the financial savings you expect. Choose your financing wisely and take advantage of every tax incentive you’re eligible for! If you do that, you’ll be sitting pretty with a beautiful solar system that helps both the planet and your wallet!

Photo Credit: Flickr via CC License