What are the pros and cons of buying solar panels for your home in Florida?
The advantages of installing solar panels in Florida include high solar production, the 30% solar tax credit, and a 1-for-1 net metering policy for all public utilities – making the Sunshine State a prime location for installing residential and commercial solar systems. With some of the best solar financing options available in the US, going solar in Florida is an excellent and affordable investment.
The disadvantage of installing solar panels in Florida is that the state does not accept third-party ownership power purchase agreements (PPAs) as a way to finance solar systems. In other states, this financing option is popular among third-party solar developers. They own the solar system as they build it on the customer’s property and then sell the power generated by the system back to the customer.
Florida law states that only public utilities are allowed to sell electricity in this way and that it must be available to the general public. The electricity sold to customers straight from the developer would not be considered to be available to the general public, therefore rendering PPAs illegal.
However, the local and federal incentives, paired with Florida’s steady stream of sunshine more than make up for this.
What is the solar tax credit?
The federal solar tax credit, formally known as the solar Investment Tax Credit (ITC), is a credit equal to 30% of the qualified system costs of installing a photovoltaic (PV) solar system. The ITC was established as a part of the Energy Policy Act of 2005 in an effort to boost the US renewable energy market.
How does it work?
The total value of the solar tax credit can easily be calculated by taking 30 percent of the solar system installation cost. There is no limit to the value of the credit.
If your residential solar energy system costs $20,000 and is installed in 2019, your tax credit would be $20,000 x 30% = $6,000.
It’s important to note that the federal solar tax credit is a nonrefundable tax credit. This means that you only get a refund up to the amount you owe in federal taxes.
If you owed $5,000 in federal taxes and had a $6,000 solar tax credit, you would take $5,000 of the credit in the first year, and then carry over the remaining $1,000 of the credit to the following taxable year.
The solar tax credit is only available for the owner of the system. Therefore, homeowners with a PV system through a Solar Lease or PPA (Power Purchase Agreement) are not personally eligible for the solar ITC.