Solar paradise: Why Floridians are the luckiest solar power system owners
- 24 Dec 2020
- 6 min
It's not by accident that A1 SolarStore is headquartered in the sunniest state of Florida. It seems to be an all around ideal spot for solar power installations: 5.6 peak sun hours a day, the average solar power system cost of less than a dollar per watt, and a 2-year payback period leave Floridians with no choice but to go solar. In this article, we're going to put across our closing argument – the Florida solar sales tax exemption.
More than 20 years of solar sales tax freedom
Florida first introduced this incentive in July 1997. Since then, solar energy systems and their components have been exempt from the sales and use tax. In May 2005, an amendment to the law made the exemption permanent, which means an everlasting advantage for Floridians who decide to go solar.
The exemption applies to solar space heaters, solar photovoltaic systems, solar pool heaters and others. The Florida Solar Energy Center periodically revises the list of equipment which is to be considered a solar energy system.
There's some room below the plates to accommodate the debris.
Pocket the 6% Florida sales tax when buying a solar system
For our clients from Florida this incentive essentially means a lower cost of a solar power system. In other words, all the components constituting a solar PV system, including solar panels, inverters, charge controllers, and even batteries, will be free from the 6% sales and use tax
Let's clarify on the term 'solar power system'. According to the Florida Department of Revenue, a solar power system encompases:
• .solar collectors, which collect light energy from the sun and convert it into electricity (i.e. photovoltaic modules)
• photovoltaic power conditioning equipment that receives the current from the photovoltaic array and converts it into alternating current for consumption or transfers it to the electric utility grid (i.e. inverters, transformers, meters, junction boxes, charge controllers, etc.)
• solar storage units (i.e. solar batteries)
• accessories (i.e. insulation, bolts, screws, mounting brackets, etc.
Note that all the components, especially accessories, cannot be standalone or function outside of the solar power system. Solar equipment is exempt-eligible if and only if it plays an integral and vital role in the system as a whole.
If you aren't sure the components of your solar system are exempt-eligible, don't worry. The full Florida TIP documentation includes an exhaustive list of all materials that the state considers a solar energy system.
Going solar in Florida doesn't mean higher property tax bill
Non-residential exemptions expire on December 31, 2037
Solar sales and use tax exemptions aren't the only perks Floridians can enjoy. The Sunshine State also provides a property tax exemption for residential photovoltaic systems installed on or after January 1, 2013.
One of the strongest solar energy advantages is that a solar PV system installed in a home can increase its value by up to 4.1%. This, however, has its flip side – a higher home value means higher property taxes, but not in Florida. According to the Florida Constitution, 100% of the real property value increase that occurs as a result of a solar PV system installation should be ignored.
As for non-residential real property and tangible personal property, only 80% of the property value increase related to a solar PV system installation is exempt from additional property tax. Why not 100%? Well, the main argument is that local governments should receive some kind of monetary gain from solar projects to seek new ones for their communities. This non-residential exemption applies to projects that started after January 1, 2018.
Other solar incentives in Florida
Federal Solar Tax Credit
This federal mandate allows homeowners to claim 26% of the cost of their solar power system installed in 2020 as a valuable income tax deduction. In other words, you'll get 26% back on the price you pay for the system. You can find more information on this incentive as well as step-by-step instructions on filing tax forms in our article Federal Solar Tax Credit in 2020.
Florida PACE Program
In 2010 Florida passed Property Assessed Clean Energy (PACE) legislation, according to which some localities can offer loans to homeowners to help them finance their solar power systems and other energy-efficient upgrades. Currently, the following programs are in force: AllianceNRG program, Leon County Commercial PACE program, RenewPACE, and Ygrene Works which offer both commercial and residential PACE financing. There is also Solar Energy Loan Fund (SELF) nonprofit organization, which provides unsecured personal loans for energy-efficient upgrades throughout Florida with 7.0-7.5% interest rates and terms up to 10 years.
FL Net Metering is one of the most important incentives for residential solar owners because it allows you to put this excess electricity onto the utility grid instead of storing it with batteries. Selling your solar power to the grid, you receive electricity bill reduction according to the rate you currently pay for power. So, every kWh you contribute to the grid, you get one kWh off of your next utility bill. The following are the top utility net metering programs in Florida:
• Duke Energy
• Florida Power & Light (FPL)
Learn about the latest arrivals and discounts first!