What was once true has become a myth. In years past, it didn’t make much sense to install solar panels (solar electric/photovoltaic modules) from a financial standpoint without generous subsidies, rebates, and incentives. The payback period was too long for most investors (see my article on the folly of the payback metric here). Except for those lucky enough to access a rebate, the numbers just didn’t make sense.
In case you haven’t heard, solar panels have plummeted in price. We’re talking about a >75% drop in wholesale and retail prices in the last three years. Total installed costs have been cut in half. Meanwhile, electricity rates continue to rise. It’s the perfect storm for making solar panel installations feasible without most subsidies.
I say “most subsidies” because there is an incentive that exists today that is still important to make most installations financially attractive. The Federal Investment Tax Credit is essentially a 30% rebate on the total installed cost of a solar energy system. This incentive is in place until the end of 2016, and covers both individual and corporate taxpayers. If you have taxable income, you can access the tax credit! What’s interesting about this tax credit is that it pays for itself in terms of the government’s investment. In fact, a recent study concludes that the government gets a 10% return on its investment from the tax credit.
In Florida there is no state rebate available. Other states have eliminated subsidies or only offer very nominal incentives. Florida utilities have very limited rebate programs that are either inconsequential in the grand scheme of the price of a system or are so limited in funding that your chance of obtaining the rebate is slim-to-none. But that’s OK!
A big area of discussion at Solar Power International 2012 in Orlando this month was the disappearing subsidies, and how the solar industry needs to move away from requiring handouts. Indeed, the solar industry has grown substantially in the past few years despite disappearing subsidies. The plummeting price of the product we offer is an obvious key. As keynote speaker, former President Bill Clinton said, we in the industry need to tell our story. This is the story – solar is now financially attractive without [most] rebates, incentives, and subsidies!
Florida “suffers” from a lack of incentives that are still seen in other states. Those states, like California, New Jersey, Arizona, and New York, have seen a meteoric rise in solar panel installations. Florida has lagged the industry significantly. Admittedly, the local solar industry has done a poor job of getting the word out. It’s time to put forth an effort to tell the public our story and get the solar industry in Florida back on track. Let’s compete for our rightful title, The Sunshine State!
Image: Solar Panel Price Plummet. Source: Solarbuzz