With Passage of SB 90, the Forecast for Solar in Florida Gets Sunnier
The Sunshine State is finally living up to its nickname. In early May, both chambers of the Florida legislature passed SB 90, the implementing legislation for Amendment 4. With Florida state government currently tied up in budget deliberations, SB 90 has not yet been delivered to Gov. Rick Scott. Once it has been, he will have 15 days to sign the bill or let it become law without his signature. With the mechanics for implementation nailed down, the constitutional amendment will extend important property tax exemptions for renewable energy installations, including solar, on both commercial and residential properties. Florida has long been a sleeping giant for the solar industry. Although it ranks third nationally in solar potential, the state is currently 15th in installed capacity. With passage of SB 90, Amendment 4 will fulfill its promise – and open up the market for solar in Florida, which is poised for takeoff.
SB 90 provides the necessary statutory language to implement Amendment 4, a ballot initiative that went to the voters in 2016. Amendment 4 came out of the 2016 legislative session, where bills sponsored by Sen. Jeff Brandes (R-St. Petersburg) and Rep. Ray Rodrigues (R-Fort Myers) sought to allow Florida voters to decide whether to eliminate the ad valorem tax – property tax based on assessed value, exclusive of fixed assessments like fire and rescue or trash collection – on all new commercial solar energy equipment for 20 years. Rep. Lori Berman (D-Boynton Beach) later signed on as a House co-sponsor. This measure passed with broad bipartisan support, including a unanimous vote in the House. It was signed by Gov. Rick Scott in March 2016.
The measure then went on the primary ballot, in part to avoid confusion with a separate solar measure, Amendment 1, which was on the November general election ballot. On August 31, Amendment 4 passed with 73% of the vote, well over the 60% threshold needed for a constitutional amendment to be approved.
As it will now be implemented, SB 90 exempts tangible personal property tax on solar or other renewable energy source devices installed on commercial and industrial property. Ultimately, 80% of the assessed value of a renewable energy source device, which is considered tangible personal property, and is installed on real property on or after January 1, 2018, will be exempt from ad valorem taxation. SB 90 reflects an extension to commercial property owners of the existing tax abatement for solar and other renewable energy devices on residential property. Once implemented by the legislature, the tax incentives would begin in 2018 and extend for 20 years.
This new tax exemption should give the solar market in the state a big boost. Florida has traditionally been a difficult market for renewable energy. This is due, in large part, to the prohibition of third-party ownership of solar installations, with Florida being one of only four states in the country explicitly forbidding this arrangement, which is used by homeowners and businesses to avoid the upfront capital cost. Numerous past attempts to expand solar power in Florida through the legislature failed, including an effort by Sen. Brandes in 2015. There was also a recent campaign to legalize third party sales of solar through the Florida Constitution that failed to make the ballot.
One reason Amendment 4 succeeded was because it was backed by a diverse coalition of groups from across the political spectrum. These included both statewide and national business associations (including the Florida Restaurant & Lodging Association, the Florida Chamber of Commerce, and the U.S. Green Chamber of Commerce), environmental organizations (including The Nature Conservancy and Florida Wildlife Federation), faith-based organizations (including the Christian Coalition), and of course bipartisan support in the legislature. (Or, as Senator Brandes likes to say, the campaign put together “the Baptists and the bootleggers.”) Having a diverse group of supporters made solar issue a much easier sell to voters.
Another reason is that Amendment 4 was offered as a pro-business and pro-economic growth measure. The price of solar panels has dropped significantly in the past several years. Additionally, the market in Florida is ripe for commercial solar, as demonstrated by projects done for the military. AEE member First Solar supplied PV modules for use in three Gulf Power solar plants being constructed by AEE member Coronal Energy on military installations in the Florida Panhandle, with these plants having a total of 120 MW of capacity. Because solar was already exempt from the residential ad valorem tax, it made sense to extend the benefit to commercial property owners as well. By simply offering a tax break, Florida was able to incentivize job-creating investment, consistent with Gov. Rick Scott’s laser focus on jobs and economic growth.
Plus, the time was ripe, given solar power’s growing popularity in Florida. According to the Solar Foundation, Florida already ranks fifth nationally in solar jobs, despite the ban on third-party ownership. This number will only increase, given Florida’s growing population and almost year-round need for air conditioning. Solar growth in Florida is also good for the broader advanced energy market, which totaled $6.2 billion in revenue in 2014. In 2015, advanced energy jobs in Florida, including solar energy, reached 140,000 workers, more than twice as many as in agriculture and more than in real estate, with advanced energy jobs expected to grow 4% last year.
With the passage of SB 90, Amendment 4 is ready to be implemented, and the will of the voters fulfilled. There are now greater opportunities for both Florida businesses and consumers to expand energy choices and control costs. Florida is beginning to realize its potential as a powerhouse for advanced energy, with the future looking increasingly bright.
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