Miami Solar – Everything You Need to Know

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Miami Solar

For those of you living in Miami, you'll find a lot of good news and some bad news about the state of solar Florida.

As a solar customer there, you’ll find that you will come out way ahead in areas such as property taxes, sales taxes, net metering, and tax credits. Unfortunately, you will be left behind in state-specific tax credits and energy policies.

If you are interested in purchasing a solar system in Miami, then I advise you to read through all of the various options included in this article to find which one works best for you.You will find that solar is a compelling investment no matter where you live, but specifics to the state of Florida will be important to any decision that you make.​

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#1 Are Solar Panels Worth it in Miami

C Overall State Grade
13 years Avg. Payback Time
6.4 % Estimate IRR (Return on your investment on cash purchase over 25 years)
$12,755 Your Net Profit Over 25 Years (Cash Purchase)

* Note that these are estimated values for informational purposes only, and do not take into account the full complexity of all financial projections. They also only apply to cash purchases, which means your numbers will be different if you lease your system or pay for it with a loan (factoring in interest). 

#2 Options for Buying Solar Panels in Miami

As with the rest of Florida, the best return for investment in solar comes from a cash purchase.

For the purposes of this article, we’ll use an average install price of $16,600 before any incentives or discounts for a 5kW system. This system size is a great balance between savings and costs for an average home. Below we will talk about the three main ways to purchase a solar system for your house: cash, leasing, and loans.

We’ll look at the upfront costs and expected returns on your investment over a 25-year period. How long does it take to pay off the system? When will you start making money? What is your average return? Which is the best route to take? Read on!

Let me explain a little bit. Consider solar power to be an investment. Investments usually offer some kind of return.

Following me so far?

If you think of the savings that solar provides as the “return” on your investment, then you can look at the value of the system over its 25 year life. 

Cash Upfront

If you are able to come up with the cash to buy your solar system outright, it would make sense that this would be the best approach to getting a new solar system for your home. This, however, is not the case.

With cash, you will be plunking down the $16,600 out of your own pocket during that first year. This is a big upfront payment. Here’s where it gets interesting. Your system will produce roughly the same amount of power each and every year that it is operating, but the cost to produce that energy will stay the same (nothing).

Your power company, on the other hand, will typically increase their prices each year. While the Florida average has increased by about 2% per year on average since 2001, some areas can see higher or lower increases.

With the cash method, your system will typically pay for itself after the 13th year and you’ll see a $12,755 income from the system for its remaining 12 years in service. Again, if you look at solar as an investment you’ll be doing a lot better than any kind of savings accounts or bonds.

Leases

Unfortunately, Florida has currently outlawed any leasing agreements between solar producers and potential customers in the state. This is unfortunate, because while it may not always be the best financial method to get access to solar power it is definitely the easiest method to create widespread adoption because of the zero-down nature of leasing.

More: Solar Leases

Loans

Although it may seem a little counter-intuitive, loans may actually the best overall method to pay for your new solar system (in terms of return on investment). The reason is simple: you are using someone else’s money to save money. Financing isn’t usually associated with saving money in the long run, but due to utilities’ yearly price increases, the math will work out in our favor.

Let’s take that same $16,600 system from the cash example. We’ll also assume that you are taking out a home equity line of credit (HELOC) to provide the financing for the solar system, but this scenario works for any loan that has a 5% or less interest rate.

The interesting thing about taking out a loan for solar is that you, as the loan purchaser, actually still get access to the 30% federal tax credit. So, you’ll be taking out a loan for the $16,600, but when you file your first year’s taxes you’ll be getting $4,980 back in your pocket (you’ve already made money!).

Of course, it’s not a perfect scenario. Due to your loan payment, you’ll end up paying about $60 per month for solar in the first year (this is your total loan payments minus your energy savings). The good news is that because your utility bills tend to increase each year, you’ll be paying less and less for your solar system as the years go by. Also, after you’ve paid off your system, you’ll start to see savings of up to $1100 per year from your system until the end of its 25-year life.

This scenario will give you about $5,726 in profits over the life of your system and you never took a dime out of your pocket to pay for the system up front!

There are tons of credit unions, banks, and loan companies that can provide a loan for you in Florida.  You also have the option to take out a HELOC to finance your solar panels.  If you are shopping for a solar loan, just be sure that you are getting fair terms and keep in mind that all of my scenarios below assume that you are getting at least a 5% interest rate or better.

More: Solar Loans

#3 Solar Policy Information

Miami’s solar energy policies are complicated because Florida, as a whole, seems to be a bit confused in terms of its solar energy policy. On the one hand, they are extremely enthusiastic with certain areas while completely shutting out solar in the other. It can be shown that Miami does have some interest in bringing solar power to various parts of the city, but there are still no real incentives for average customers.

The landscape of solar policy also stays rather turbulent because of the state’s four major energy companies actively trying to circumvent solar progress. Let’s take a look at how the main areas of Florida’s energy policy stack up.

Renewable Portfolio Standard

Florida, and therefore Miami, does not currently have a Renewable Portfolio Standard (RPS). An RPS is essentially a decision by the government to mandate that a certain percentage of the power generated within the state comes from renewable sources.
Florida’s lack of RPS means that it is up to smaller companies and individuals to lead the charge for bringing solar energy to the forefront in the state. It’s still very possible to effect this change, but there is no officially mandated support yet.

Electricity Prices

On average, Floridians pay about 11 cents for a kilowatt-hour which is two cents cheaper than the national average. This means that for those interested in solar, you won’t be offsetting as high of a cost as you might in other states. One of the major highlights of solar, however, is that no matter how low your costs for power are you will eventually recoup your investment and start generating a profit from solar power.

The reason behind this is that your initial cost won’t increase, but utility companies tend to increase prices slightly on a year-to-year basis.

Net Metering

If you are not familiar with net metering, then you really should learn about how it can help you make money with solar power. See, net metering is a system that requires your utility company to monitor how much power you are actually consuming from the grid while also making sure that you get a credit for any surplus energy that you are feeding into it. This means that your power-conscious lifestyle can help your solar panels generate even more savings and even income in the long run.

Florida actually has a very generous set of standards for net metering that they set back in 2008. Basically, it will be easy to hook up to their grid because there is no maximum for the amount of people that can tie in. The energy surplus you generate will roll forward for up to 12 months at which point the utility will pay you for any leftover excess!
Making money by saving money is a win-win in my book!

More: Net Metering

Interconnection Rules

Florida’s interconnection policies are a bit of a mixed bag. In case you didn’t know, interconnection policies state how customers are allowed to “plug in” to the power grid and send power to the utility companies from their home system. The good news is that for small, single-home systems there shouldn’t be any issues at all with connecting to the grid.

Florida has a few requirements for larger systems such as external disconnect switches and mandatory insurance. For systems under 10kw, which would be almost everyone reading this interested in a single-home system, there are no such requirements!

#4 Financial Incentives, Rebates, and Other Tax Credits 

In yet another example of the mixed bag that Florida offers for its solar energy customers, there are huge pros and huge cons in the list of incentives that you can expect from the government. But remember that incentives are just that – incentives to encourage people that wouldn’t normally be interested in solar to try it. There are compelling financial reasons for going solar even without generous rebates or credits!

Solar Rebates

Unfortunately, there are no statewide rebate programs in Florida and nothing specific to Miami. The one program that was available in Florida, the Florida renewable energy tax incentive program, is no longer available. These types of programs offer rebates to help offset the costs incurred with setting up a new solar system.

Miami, FL Tax Credits

As mentioned before, Florida offers no official tax credits and Miami has shown no effort to create it’s own. There are no local rebates in this area.

Utility-Based Performance Payments

First of all, what is a performance payment and why is it important for you? Most places will, in some shape or form, pay their citizens to generate solar power. They do this because the state mandates that they do so through some type of incentive program or RPS. This allows companies and individuals to help offset some of the costs associated with installing a new solar setup.
Unfortunately, the Miami area does not offer any such performance payments. The OUC in Orlando does offer some payments for solar, but this is the extent of these programs in Florida.

Property Tax Exemption

Finally, an area that the Sunshine State begins to shine in! The state of Florida allows a 100% exemption for any value added to your home from installing solar for the purposes of assessing property taxes. This is a huge deal because your home’s value can increase up to $20 for every one dollar of electricity that you save each year from solar.

Basically, the value increases because the cost of maintaining the home actually decreases. It also means that any value captured from adding the solar panels could actually be assessed when selling your home. This is a win-win from a financial perspective in Miami!

Sales Tax Exemption

This is another category in which Florida gets a stellar rating. If you purchase a solar system in Miami, you will not have to pay any sales tax on your purchase because the state offers a 100% exemption. This is equal to an automatic 7% tax savings on your solar system in Miami-Dade County. If your system cost $18,000, you’ll be saving $1260 right off the bat!

What to Do Next?

If you are in the market to buy a new solar system in Miami, FL then you will definitely find lots of businesses willing to provide you service.  Although the state is not the most pro-solar in the US, it has not stopped producers and third-party installers from stepping up to the plate and offering packaged systems with set pricing.

For residents of Miami, you have tons of opportunities to save money by investing in solar technology. The state ranks 3rd in the nation for rooftop solar potential so you are almost guaranteed to have a great experience with your panels.

You’ll also be eligible for federal tax credits, state tax savings, and a strong net metering proposition.

If you are on the fence about going solar, my recommendation is to jump in and check out your options. You’re bound to find something that works for you!

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