The Best States for Residential Solar Energy

home solar panels

With the horizon for solar energy looking brighter and brighter, how do you know if switching to solar is right for your home?

The cost of manufacturing photovoltaic (PV) panels continues to decrease. In addition, many states offer generous tax incentives, grants, and subsidies for homeowners combined with a 30% federal tax credit. Solar energy is increasingly accessible for American households especially with the expansion of solar leasing now into 15 states and net metering policies in 43 states.

What do these changes and incentives mean for the average homeowner thinking about solar? We sought to combine the most recent and accurate data available to give homeowners a comprehensive look at key factors to consider when pondering the switch. We then compiled and quantified this key information as a guide for gauging solar advantages in your state.

How did we rank the states?

To compile our ranking of states, we analyzed four important factors that every homeowner should weigh when considering solar:

  • Are your electricity bills expensive? Solar is most advantageous for consumers who already face increasingly expensive electricity bills. Whereas, if your electricity costs are already pretty low solar may not save you money (especially leasing). To gauge this factor, we analyzed the average monthly electric bill for households in every state.
  • Does your state offer economic incentives that make the switch worth it? Many states, notably Massachusetts, Maryland, New Jersey and New York, have made commitments to helping residents’ transition to solar and offer excellent incentives, tax rebates, grants, and subsidies for solar installation. The team at Solar Power Rocks has measured the quality of each state’s incentives to provide a comprehensive score for all 50 states. We included these scores to measure state economic support for residential solar.
  • Is your state sunny enough to obtain energy through solar? The more sun your area gets, the more power your panels can generate. Thus, we accounted for average insolation, which is a calculation of the number of hours the sun is shining and how powerful its rays are when beaming down on each states’ particular latitude.
  • Is there existing state capacity for solar? We also took into account how many Megawatts of solar energy the states’ electric grids are currently producing to gauge current commitment to transitioning to renewable energy sources.

The Top 5 States in Focus

1. California

California’s electricity costs are among the most expensive in the country. The state has set the loftiest goal of deriving 33% of electricity from renewable sources by 2020. This high goal encourages generous rebates from utilities to help cover the cost of installation in addition to cash back incentives once the system is in use given support from the California Solar Initiative. After installation, residents also are exempt from paying state property taxes on their system. Cities and municipalities provide even more incentives: in San Francisco cash back incentives range from $2,000 to up to $10,000 depending on household income. As for weather, the state gets great sun which means you’ll be able to rely on your system to generate power all year-round (and get paid for selling surplus energy back to the grid). Californians also pioneered solar leasing.

2. Hawaii

Hawaii almost has it all. As one would expect, the sun shines brightly over the islands given their proximity to the equator. It also has the most expensive electricity costs (36 cents per kilowatt hour). The combination of these factors suggests Hawaiians could save a great deal by switching to solar. Currently, Hawaiians installing PV solar panels can receive a 35% state tax credit (35% of the installation costs or a $5,000 credit) in addition to the national 30% personal tax credit, but no rebates or grants are in place to offset immediate installation costs. Solar leasing is available in Hawaii.

3. Arizona

Right behind Hawaii, Arizona has the second best insolation rating in the country, and combined with relatively high consumption, Arizonians can easily save by switching to solar. The state offers generous rebates based on residents’ local utility, with many providing up to 50% of installation costs.  These rebates are combined with a 25% tax credit (capped at $1,000) that is applied to residents’ income taxes. On top of these incentives are state property and sales tax exemptions. Solar leasing is available in Arizona.

4. Maryland

Maryland aims for 20% of all the energy generated by 2022 to come from renewable sources. Because of this standard, utilities and the state government are offering great incentives. For almost all smaller residential installations, homeowners qualify for a $1,000 grant. Additionally, they receive cash back from the local utility for every kilowatt they produce with their panels on top of state property and sales tax exemptions. Great state regulation means, despite Maryland’s mid-range electricity costs and below-average insolation, homeowners here can typically pay off the cost of installation in 8 years, the same time frame projected for Arizona residents. Solar leasing is available in Maryland.

5. Delaware

Similar to its neighbor, Delaware has the goal of generating 25% of energy using renewable sources by 2025-2026. Also like Maryland, the local utility will pay homeowners for the electricity generated from residential PV panels. The state offers installation rebates that are tiered by the size of your system: for the first 5 kilowatts homeowners can receive $1,250 per kilowatt and $750 for the next 5. On average, the system should pay for itself in 5 years. Solar leasing is also available.

Check out how your state ranked:

State Sun’s Strength Score (out of 100) Average Monthly Bill ($) State Incentives Score (out of 5) Solar Grid Capacity  (Megawatts) Total Score (out of 100)
1. California 79.1 83.7 3.4 1563.6 56.0
2. Hawaii 100.0 202.7 2.9 85.2 55.3
3. Arizona 85.0 118.6 3.6 397.6 48.7
4. Maryland 48.8 137.2 4.3 37.1 44.4
5. Delaware 45.2 132.8 4.1 26.5 41.2
6. New Jersey 39.8 115.0 3.5 565.9 40.7
7. New York 37.2 111.6 4.3 123.8 39.4
8. Florida 81.9 130.1 2.6 95 39.2
9. Nevada 82.9 104.1 2.8 124.1 37.3
10. Massachusetts 38.5 92.9 4.5 74.6 37.2
11. Colorado 63.6 80.1 3.7 196.7 36.9
12. North Carolina 54.5 118.1 3.3 85.5 36.8
13. New Mexico 74.4 73.6 3.6 165.5 36.7
14. Texas 69.5 139.8 2.3 85.6 36.0
15. Connecticut 38.8 134.1 3.4 31.1 35.4
16. Louisiana 69.0 120.8 2.3 13.4 31.9
17. Oregon 44.7 94.5 3.5 35.8 31.5
18. Pennsylvania 41.3 115.3 2.9 133.1 31.4
19. Ohio 45.0 104.9 3.2 31.6 31.0
20. Illinois 42.1 90.8 3.5 16.2 30.2
21. South Carolina 53.2 135.0 2.2 4.1 30.0
22. Missouri 51.7 108.4 2.6 2 28.4
23. Vermont 34.6 93.2 3.3 11.7 27.7
24. Virginia 46.8 125.9 2.1 4.5 27.1
25. New Hampshire 38.5 102.3 2.7 3.1 26.0
26. Indiana 46.0 103.5 2.4 3.5 25.2
27. Montana 46.3 85.0 2.7 0.7 25.1
28. Utah 63.0 70.6 2.5 4.4 25.0
29. Tennessee 50.4 132.3 1.5 22 24.5
30. Minnesota 41.1 89.1 2.7 4.8 24.2
31. Alabama 58.1 142.4 1.0 0.5 23.9
32. Georgia 58.9 131.2 1.0 6.9 22.5
33. Wisconsin 41.3 92.4 2.3 12.9 22.4
34. Iowa 43.4 93.9 2.2 0.1 22.3
35. Maine 44.7 80.1 2.4 1.1 21.5
36. Kansas 52.2 104.7 1.5 0.2 20.9
37. Kentucky 46.8 108.2 1.5 3.3 20.4
38. West Virginia 42.4 105.9 1.6 0.6 19.4
39. Washington 37.2 88.4 2.0 12.3 19.0
40. Michigan 38.5 90.6 1.9 8.8 18.9
41. Oklahoma 58.7 115.6 0.8 0.2 18.7
42. Rhode Island 40.1 86.4 1.9 1.2 18.5
43. Arkansas 61.2 106.3 0.7 1.1 17.5
44. South Dakota 46.0 96.8 1.4 0.1 17.5
45. Mississippi 38.8 130.9 0.8 0.6 17.0
46. Nebraska 48.8 95.9 1.2 0.3 16.6
47. Alaska 0.0 114.4 1.9 0.1 14.6
48. Wyoming 55.8 82.3 1.0 0.2 14.6
49. Idaho 55.6 82.5 0.9 0.4 14.2
50. North Dakota 41.1 98.5 0.8 0.1 13.1

Solar States

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<a href="http://www.nerdwallet.com/blog/finance/2013/solar/"><img src="http://cdn.nerdwallet.com/infographics/Solar2.jpg" alt="Solar States" /></a>

Methodology:

  1. Average household electricity costs in dollars and cents compiled by Energy Information Association 2011 (Weighted 30%)
  2. Rating of the quality and quantity of economic incentives available for each state compiled by Solar Power Rocks 2013 (Weighted 30%)
  3. Insolation rating, or how much sun the area gets that can translate to solar energy from NASA (Weighted 20%)
  4. State Solar Grid Capacity for metered residential, industrial, and commercial panels, 2011 from the Interstate Renewable Energy Council 2011 (Weighted 20%)

More Information on Solar Leasing: http://www.forbes.com/sites/uciliawang/2013/02/11/solar-leases-will-propel-solar-home-growth-to-5-7b/