With the increased popularity of green energy, either for environmental or money-saving reasons, more people are looking to solar power for residential use — but it’s easier to install a system in some states than others. What makes a solar friendly state? Whether you’re planning to move to a new state, invest in a solar power system or just want to see where your state ranks and why, here is a look at what goes into consideration when evaluating a state’s solar friendliness.
Solar Friendly States & Solar Incentives
Solar incentives are designed by federal and state governments to motivate and encourage homeowners to adopt solar energy through the offering of rebates, tax credits, grants and more. While federal solar incentives apply to everyone equally, each state decides for itself how it will implement these perks and whether they will provide further benefits to spur solar adoption among its residents. Below are five crucial incentives solar friendly states offer.
5kW system payback: This is a calculation of how long it takes the savings to make up for the initial investment in a 5-kilowatt solar power system. The states that are the most solar friendly take about five to nine years for system payback.
Performance payments: A state is solar friendly if it ties residential solar incentives to system performance by opening the state markets to Solar Renewable Energy Certificate (SREC) trading. Doing so assists with the financing of solar technology, as system owners can recoup their investment by selling their SRECs.
State rebates: The strength of state rebates, if there are any at all, factor into a state’s overall solar-power friendliness. Some of the states with the best rebates include Connecticut with $2,450 per kW (up to 5kW) and Florida with $2,000 per kW (up to $20,000).
Tax credits: In the category of personal tax credits, most states don’t offer anything. But North Carolina, for example, gets high marks for offering a tax credit of 35 percent of the cost of renewable energy property that a taxpayer constructs, purchases or leases, up to $10,500.
Property tax and sales tax exemption: These are offered in many states — sometimes for a limited period, but in some places not at all — and together factor into whether or not your state is solar friendly.
Utility Policies for Solar Friendly States
States with robust utility policies contain a specific solar care-out in its renewable energy portfolio. These policies further encourage energy customers to adopt solar.
Renewable portfolio standard: A renewable portfolio standard (RPS) is a regulation that requires a certain amount of increased usage of energy from renewable sources (e.g., Hawaii’s utility companies must establish 40 percent of electricity sales from renewable energy sources by 2020). The strength of the state’s overall RPS considers the state’s commitment to these energy sources, and whether the state subsidizes non-renewable, polluting energy sources. Some states have no RPS.
Solar carve-out: What is the strength of the solar-specific directive within the state’s RPS, if there is one at all?
Average electricity cost: The higher the existing electric rates in your state, the more solar-friendly it can be. Expensive utilities encourage consumers to install solar systems, which reduces the amount of electricity they have to pay for.
Under this practice, homes that generate more solar power than needed can sell the excess energy back to the utility company, so that other customers on the grid can use it. The easier it is for customers to enroll in net metering, the more solar-friendly the state is.
Interconnection Within Solar Friendly States
How involved is the process for solar customers to connect with the electric grid in your state? If the technical rules are overly complicated or outdated, then the state probably isn’t doing much to encourage consumers to use solar energy.
After knowing what aspects of policy make a state solar-friendly (or unfriendly), you may be able to evaluate why your state excels in one area but seems to be slacking in another.
Ryan McNeill is the president of Renewable Energy Corporation, one of the Mid-Atlantic’s largest residential solar energy companies – committed to installing quality, American-made solar panels and energy products for homeowners.