In today's society, electrical power is an essential resource. Nearly all homes and businesses rely on electrical power for pretty much everything. Electricity runs lighting, heat, air conditioning, appliances, equipment, and computers; basically, everything humans have become a custom to in the modern era. However, we do not have an infinite source of this highly used resource and it, unfortunately, isn't free. Traditionally, electricity is sourced from fossil fuels such as coal and natural gas. When these fossil fuels are burned to produce electricity, they emit harmful gases that are the primary cause of air pollution and global warming. Fossil fuels are not only bad for the environment, they're a finite resource, meaning there is a limited availability which creates a volatile market in which energy prices can skyrocket in a short period of time. Luckily, we as a species have figured out a way to convert the sun's rays into electrical power.
Solar power systems act to derive clean, pure energy from the sun. Access to solar panels is becoming more and more available to the everyday citizen for their home. Installing solar panels on your home helps combat greenhouse gas emissions and reduces our collective dependence on fossil fuels. If you happen to live in Florida, here are the basics of everything you need to know in order to make an informed decision about installing solar panels on your home.
When it comes to solar power in Florida, there are three main categories of information that you should be familiar with. These are:
Solar Loans vs. Solar Purchases: These are basically the various financial options that you have in Florida such as Solar and Energy Loan Fund (SELF).
Solar Policy: These are the rules set by the state legislature and public utilities commission that determines how easy it is to go solar in Florida. They govern everything from renewable energy mandates to the rates you receive for the extra energy that your system produces.
Solar Incentives: These are the financial benefits one would receive for going solar, such as money-back rebates, grants, tax credits, and tax exemptions. This includes the Federal 30% tax credit.
You have two main options when considering installing solar panels on your home, and that is whether to straight up buy the whole solar system or take a solar loan, which is essentially like a car lease. It used to be that purchasing the whole system was the only way to get solar. If you were to purchase the whole system today, it would cost you about $16,250. A total purchase of a solar system will technically provide the biggest financial return and will pay itself off in 13 years. Also, a Federal tax break and energy savings will erase a bunch of the initial payment after just 1 year. Over 25 years, your system will have produced nearly $15,000 in income, after your system cost is paid back. The reason this works is that solar offsets your electricity cost. However, a majority of people do not have the $16,250 to buy a solar system upfront. Luckily, there are solar loan options available.
Solar loans are the best option when it comes to the percentage return on your investment. This is because you are using someone else's money for the purchase price, which is then paid back over time. If you have equity in your home or can get a large loan with an interest rate of 5% or less, a loan is the best option to go with. You will still receive the 30% federal tax credit and the energy bill savings that come along with it. However, your loan payments will initially be higher than the energy bill savings, but the difference will come down each year as electricity prices rise. Currently, the net present value of solar investments in Florida is +2,376 for solar loans and -737 for solar purchase.
|Local Rebates||City of Longwood: 10% of costs up to $500|
|Tax Credits||No state income tax|
|Performance Payouts||Orlando Utilities Commission: $0.05/kWh|
|Property Tax Exemptions||100%|
|Sales Tax Exemptions||100%|
When it comes to the availability of access to solar power, state legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Unfortunately when it comes to Florida, the rules and policies are lacking compared to some other states. There are four main categories of rules and policies to be aware of:
Renewables Portfolio Standard (RPS): This requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar. However, Florida currently does not have a RPS, meaning the utility companies aren't supportive of people producing their own power. It would cost them more if you used less of their power and they also would not want to pay you for potential energy you would be feeding back into the grid.
Electricity Price: Currently the average price of power in Florida is about $0.11 for a kilowatt-hour of electricity, which is about 2 cents cheaper than the national average. The reason that electricity is so cheap at the moment is fossil fuels. But like addressed in the beginning, they are a non-renewable, harmful source that will only dwindle in availability, meaning the price of electricity can only go up.
Net Metering: This requires your utility company to monitor how much energy your solar power system produces and how much energy you consume. They use this to make sure that you get the full retail rate for any surplus energy you produce. This credit is applied to your bills for up to 12 months. At the end of the 12 months billing period, they pay you for any remaining energy at an avoided-cost rate. Compared to other states, Florida has a pretty ideal net metering policy.
Interconnection Policies: Interconnection policies allow you to connect to the electrical grid with solar panels on your roof. If you are looking to have solar panels on your single home, you should have no problem connecting if your system is 10kw or less. However, if you have a larger system, Florida requires a redundant external disconnect switch and insurance requirements.
Solar Power Rebates: Some state legislatures provide rebates for solar panel purchases to branch on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which is generally a large payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex. Unfortunately, Florida does not have a statewide solar rebate program. However, there is an exception, if you happen to live in Longwood, you can receive 10% of the costs of installation back.
Solar Power Tax Credits: State tax credits are not technically free money. They are 'credits' and not 'deductions' which means that if you have the knowledge of taxes, you can take advantage of them. They could essentially be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. However, Florida does not have any income tax; therefore there are no solar tax credits to redeem.
Solar Power Performance Payments: These are essentially small payments for each kWh a solar system produces. In Florida, there is only one utility company that offers performance payments, The Orlando Utilities Commission. They will pay customers to produce solar power at the rate of $0.05/kWh. It should be known that these performance payments are on top of crediting you the retail rate for electricity your system generates. This program runs for 5 years, with automatic renewal for another 5 year term at whatever rate is available. This is unfortunately the only option available in Florida.
Property Tax Exemption: Property tax exemption status is a large factor when putting together your investment considerations. It is argued that solar power adds approximately 20 times your annual electricity bill savings if you happen to own the system. In Florida, it is known that homes with solar are worth more than homes without. For the average home owner, this means that the state is willing to exempt the value of solar from addition property taxes. A home's value can increase as much as $20 for every $1 of electricity you save a year.
Sales Tax Exemption: Most things that you purchase have a sales tax that is an extra small fee just for purchasing the product. However in Florida, there is no state sales tax on the purchase of home solar panels. This will essentially save you %6 or more on your purchase.
When it comes to deciding whether or not to invest in solar power for your home in Florida, there are many things to consider. Without a strong RPS or a statewide solar rebate program, Florida's utilities have little incentive to help you get into solar. However, they offer sales and property tax exemptions along with a solid net metering program, ensuring that you will be able to save some money with installation eventually make money back from excess power produced. The more people that invest in solar, the stronger it can grow and effect policies. Not only is solar power a great investment financially, it is also a great investment for the health of this planet.
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