Solar Panels in Florida: Cost and Savings

The average cost of a residential system is $3 to $5 per watt. For an average residential system, using 5 kW, your total costs can be between $15,000 and $25,000. While it makes for an expensive project upfront, there are some ways to defray the costs. Keep reading to find out more about solar tax breaks available to Floridians.

Solar panel setup

When setting up your system, you have the option to buy or lease your equipment. With buying, you gain access to the federal tax incentive of up to 26% of your system’s total cost. 

On the other hand, leasing affords you fewer upfront costs. However, you will not earn the tax credit — that will go to the company that is leasing the equipment to you instead. 

On the equipment front, you will need a variety of items. Here are some of the components your system needs:

• Solar panels: There are three kinds available, which include thin-film, monocrystalline, and polycrystalline. Of the three, monocrystalline is the most energy-efficient. 
• Solar panel inverter: This includes centralized, power optimizers and microinverters.
• Solar cell: The part of the solar panel that converts sunlight into electricity.
• Solar panel roof: The shingle-like panels that cover your roof.
• Batteries: To store solar energy for off-peak hours.
• Solar racking: For installations where the panel does not attach to the roof.

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Along with using the solar panel tax credit (ITC) to drive down costs, Florida has incentives to help homeowners choose solar power, such as the Solar System Property Tax Exemption. When you install a solar panel system, it can increase the value of your property by an average of 4%. However, the Solar System Property Tax Exemption allows you to avoid paying the difference in property taxes, giving you a tax-free way to boost the value of your home.

Another solar incentive in Florida is the Home Solar System Sales Tax Exemption. As its name implies, you will not have to pay sales tax (6%) on your new solar system. Given that the average costs of a solar system can easily exceed $15,000, this is a substantial incentive designed to save you money on upfront costs.

Electric rates in Florida have dropped slightly in the past year, dipping from 11.72 ¢/kWh to 11.65 ¢/kWh. Meanwhile, the average solar rate is $2.64/W per panel. Yet, even with the lower rates, you stand to save significantly on your monthly energy bill with solar panels. 

How much can you save? That amount will be influenced by the size of your solar panel system, your energy consumption, your renewable incentives, and even your utility. A general guideline for calculating savings is to compare electric bills for the first six months after installing solar panels. Take a six-month average of the savings you gain monthly, then multiply this by 12. 

You can also calculate your return on investment (ROI), which is how long it takes to make up your initial investment. To demonstrate how this works, say you spent $15,000 on your solar panel system. You were also able to take full advantage of the 26% federal tax credit, shaving $3,900 off your initial investment, leaving you with $11,100 in upfront costs.

After calculating your energy savings, you find you save about $1,200 annually. Next, divide the remaining investment ($11,100) by the annual savings ($1,200) to find how long it will take to fully recoup your initial investment. In this scenario, your ROI will be a little over nine years, as this table illustrates: 

Energy independence means your home produces enough electricity on its own to where you do not need an outside source to supply your power. Being energy independent is especially beneficial during severe weather conditions so that you can keep your electricity on without interruption.

Another aspect of energy independence you gain with solar power is the ability to more accurately predict your energy expenses. Florida does not have deregulated electricity service, so you do not have the power to choose your electric provider. Essentially, you are obligated to use the provider in your area. But with solar power, you gain more independence, meaning that even if there are swings in energy prices, it will not affect your finances as much because your home can produce more of its own electricity. 

That said, one area where Florida lags is power purchase agreements. Some states allow you to sell energy offsets produced by your home’s solar panel system back to local utilities. However, currently, this is not allowed in Florida.

When choosing solar panels, there are a few things to consider before signing on the dotted line. If you live in an area with a homeowner’s association (HOA), you will need to check their guidelines first about installing solar panels. That way, you do not run into any problems during installation.

You also want to study your home’s roof to see if it is suitable. The roof should have at least 500 square feet and be south-facing for optimum sunlight. And check to see if there are any trees that might obstruct your roof from absorbing sunlight. 

Finally, you’ll want to consider your home’s value. If you plan to sell your home down the road, having a solar panel system can increase your home’s value by as much as $15,000. 

Green energy is where power derives from natural sources like the wind or sunlight. Given Florida’s propensity for sunny days, the future for solar energy is bright in the state. The Sunshine State ranks third nationally in projected growth, with an estimated 12,042 MW generated in the next five years, which means now is a great time to join the solar community.

What percentage of Florida energy production is solar?

Florida is fourth nationally in solar energy, with three percent of its energy production coming from solar power.

How many people use solar energy in Florida?

As of the fourth quarter of 2020, 780,586 homes throughout the Sunshine state receive their power from solar energy. 

What is the life expectancy of solar panels in Florida?

Solar panels are durable, lasting 25 to 30 years on average. This is why you need to ensure your roof is in peak condition before installing them.

Should I buy or lease solar panels?

While costs average around $15,000 for a solar panel system, you also receive tax and state incentives to drive down the initial investment. Meanwhile, leasing solar panels work well if you do not want to pay much out of pocket upfront and do not mind forgoing tax incentives.