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2016 United States Solar Power Rankings

Hey, this article is cool, but it’s old news.
Check out the 2017 State Solar Power Rankings report right here.

Well, we’ve done it again… we’ve scoured the country for the best solar incentives, rifled through reams of rate schedules, and pored over databases of arcane governmental documents. Not content to politely remind the world that clean energy technology is ready to go whenever, we’ve done some serious research and we’re ready to get all in-your-face about it.

And how do we plan to do that? Why, with the 2016 edition of our comprehensive state solar power rankings! Marvel at our moxie! Thrill to our truth-seeking! Become edified by our economic analysis! Um… let’s just get on with it!

This year, we analyzed 612 data points to judge the promise of solar in all of the 50 states and the District of Columbia. As in past years, we graded each state based on 12 criteria, then weighted the criteria individually, and multiplied the values of the grades by the weights to determine rankings. To be ultra-consistent, we applied the same weighting system as last year, which means we can pinpoint where states have succeeded and failed this year. So what are the results? Glad you asked!

Click a button below to be taken to that section of the report.

The Rankings


Let’s start with what everyone wants to know: which state is number 1?

The answer to that question is a bit complicated. You see, there’s a three-way tie for first place.

Massachusetts, New Jersey, and New York all take home top honors this year. Yes, we know Americans don’t like a game that ends in a tie, but we’ve really got to hand it to these three states. Though each offers a different mix of policy and incentives, they’ve all managed to ensure a future in which home solar power is a big part of the energy picture—where homeowners can count on taking part, rather than simply consuming. These three states are setting the standard for what it means to be solar-friendly.

As for the rest of the states, the buttons below are presented in ranked order. Click to see a state’s 2016 Solar Report Card and read a little about solar there. If you’d like to read more, click on the report card to see in-depth analysis of the state’s solar policy and incentives, and read about solar investment strategies.

2016 Massachusetts Solar Power Report Card

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Massachusetts, which had been number 1 back in 2014, has reclaimed part of the glory it lost to New York last year, and enters 2016 tied for top honors. The state’s policies for solar are nearly as good as they can be, and while we’d like to see an updated RPS with a new solar carve-out, the Bay State is still the easiest state in which to get into solar. And that payback time is nuts.

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2016 New Jersey Solar Power Report Card

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New Jersey gained some ground this year and found itself at the big kids’ table with The top two states from the past two years. Chalk that up to its solar carve out, which is 2nd-best in the nation, and which has led to a very robust SREC market. With New Jersey’s great solar policy and incentives, you Garden Staters can feel secure in a solar investment.

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2016 New York Solar Power Report Card

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Even

New York has to share a little bit of the limelight this year, but make no mistake: the state still sets the standard for solar policy, and solar is businesses from Buffalo to Montauk are thiving here. We’d like to see a new RPS sometime in the next few years, and a transition to an SREC market, but those are “nice-to-haves” in a state that everyone else has been following for the past few years.

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2016 Maryland Solar Power Report Card

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Maryland also gains some ground this year, on the strengths of its own great SREC market, rebate program, and solid policy footing. There are some places where we’d shore up what’s missing here, but overall, 4th place is a nice place to be. Good job, Old Line State!

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2016 Connecticut Solar Power Report Card

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Connecticut slips a few spots this year because of its anemic performance payment program and missing solar carve-out. The state still hangs near the top because of its amazing payback time and rate of return. No matter where you are in Connecticut, there are incentives to help you pay for solar and good policy to ensure it maintains its value for years to come.

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2016 Oregon Solar Power Report Card

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Oregon dropped one spot this year, and if they don’t get some legislation passed, we’re gonna see a bigger drop soon. The state’s excellent state solar tax credit is going away after 2017, and you have to choose between performance payments and the rebate program. Still, the potential returns for a solar investment in Oregon are unquestionably good. But the state shouldn’t rest on its laurels as an environmental powerhouse—we could see the Beaver State taking top honors in a future ranking if they enacted a big RPS like Vermont or Hawaii, with a solar carve-out to go with it.

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2016 Minnesota Solar Power Report Card

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Not much changed in Minnesota solar this year, but the state gained a spot just for holding tight. One thing we love about the North Star state is that it’s one of the few places in the country that has really committed to helping its citizens band together and build community solar installations—there’s been so much interest, in fact, that Xcel energy has a huge backlog of projects to approve.

Here’s hoping we see continued commitment from the state, and oh yeah, maybe some of that $1.9 billion budget surplus can go to the state’s energy future?

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2016 New Mexico Solar Power Report Card

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Here’s New Mexico, with the nation’s best solar carve-out! Yes, it’s a sunny place, but you can’t take advantage of that sun unless you do a few things right—which The Land of Enchantment has. They’ve called for 4% of all electricity to come from the sun by 2020, and they’ve backed up their commitment to solar with a big state tax credit. We’d still like to see an SREC market here, so all you New Mexico homeowners should call your legislators and get that carve-out increased!

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2016 Vermont Solar Power Report Card

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Even

Vermont turned up the volume on the renewable energy boom box this year, enacting a mandatory RPS with a goal of 75% renewable energy by 2032. That’s the second-highest in the nation, and we think that deserves a big hand! Unfortunately, the state’s successful solar rebate program also ended this year, meaning the best financial incentive in the state no longer exists! So Vermont stays put at 9th place. Not a bad place to be, but not nearly where we’d like to see them.

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2016 Colorado Solar Power Report Card

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Colorado has a mature solar industry, which came about in large part thanks to the state’s excellent incentives of the past. Unfortunately, those incentives are mostly gone for the big utility companies, and the state is treading water in our rankings against a flood of states that have very active incentive programs. The policy base here is strong, but without a further commitment to renewable energy, we’re likely to see little growth in the solar industry for the foreseeable future.

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2016 Washington DC Solar Power Report Card

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Washington D.C. gets the first “B” grade, yet continues to rise in our rankings thanks to a great rebate program and a screamin’ SREC market. With a sales tax exemption, the state would get a solid “A” grade, but an investment in solar in the District is already a great bet. However, in just two short years the value of SRECs will drop by 30%, increasing payback time and reducing IRR. Still, the solar industry here should keep going strong, considering how quickly prices are dropping, but be warned: the best time to go solar in D.C. is T.O.D.A.Y.

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2016 Delaware Solar Power Report Card

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Delaware falls a tiny bit in our rankings, a victim of its own solar success. You see, the state used to have excellent rebates, but they disappeared really quickly because the limits were reached. So many people wanted to go solar in The Small Wonder that there are two-year waitlists for rebates. The policy here is very strong, so we’d like to see Delaware commit some more funds to renewable energy incentives. Maybe take away some of those tax shelters for corporations…

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2016 New Hampshire Solar Power Report Card

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New Hampshire got into solar early, and its incentives are still going strong! It’s holding steady in our rankings, dropping only 1 slot because of a re-jiggering of how we grade states with no income tax. Solar is a tremendous investment in The Granite State, and you can count on that for years to come.

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2016 California Solar Power Report Card

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California slips two spots for 2016 after basically coasting for the past three years. What can we say, though? The state is basically where the solar revolution took off in these here United States, and the state’s mature solar leasing industry is proof enough that Cali loves the sun!

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2016 Rhode Island Solar Power Report Card

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Rhode Island jumps FIVE big spots in the ranking this year, based on the strength of its new performance payments program. The state is aiming to encourage 12 MW of solar development by paying system owners a boatload of money for the power their panels kick out. If those 12 MW came from average-sized home solar installations (5-kW systems), 2,400 homeowners could be raking in the renewable cash for the next 20 years.

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2016 Hawaii Solar Power Report Card

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Back in June, Hawaii became the first state to set a 100% renewable energy goal. That’s a huge deal! And the Aloha State needs it, too—most of their electricity now comes from burning imported fossil fuels. Unfortunately, the state still hasn’t added big incentives for going solar, which keeps it in the high-mid numbers in our ranking. Still, the electricity prices here are super high and the state has a good tax credit, so a solar investment in Hawaii is just about the best in the nation.

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2016 Arizona Solar Power Report Card

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Arizona’s solar marketplace is mature, because the state got started on solar early. Many of the incentives here have fallen off over the years, but prices are low, so the industry keeps churning. Unfortunately, Arizona is also one of the places in our great nation where utility companies have been fighting to impose fees on solar owners. Time will tell whether they’ll be successful, but expect battles between them and leasing companies to continue for years. We’re not looking ofrard to it, but we’ll be ready to tell you about any important changes to solar policies as they happen.

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2016 Illinois Solar Power Report Card

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This year, Illinois jumps 4 spots just for being its above-average self. Its above-average RPS with an above-average solar carve-out have lead to solid rebates and a nice SREC market. Combine that with above-average electricity prices and… well you see where we’re going here. Kudos, Land of Lincoln!

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2016 Nevada Solar Power Report Card

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Nevada slips a bit this year, because the state’s successful SolarGenerations rebate program is paying out a bit less than in years past, but ending up tied for 18th isn’t too bad—unless you consider that Nevada is home to some of the sunniest places on earth, and the state government should really be doing more to help the little guy go solar. If you think about it, the whole state could power itself with solar, geothermal steam, and hydro power. That’s a future we want to see.

Edit – Jan. 2016: In late December, 2015, Nevada’s Public Utility Commission passed sweeping changes to the state’s net metering rules, which have led to a steep decline in the financial returns for a home solar installation. Considering the changes, the state should rank more like 26th instead of 18th.

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2016 Wisconsin Solar Power Report Card

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Wisconsin drops 4 spots and ends up just behind Nevada this year. When you think about it, it’s amazing the Badger State was ever this high in the rankings. Well, we can tell you it isn’t likely you’ll ever see it here again. Wisconsin is quickly becoming the Kansas of the north, with formerly level-headed governance taking a back seat to extremist Koch-toadying. This past year, Wisconsin’s largest utility was barely beaten in a fight over imposing new fees on solar owners, and the government here continues to fight sound environmental policies, even as its citizens approve of caps on fossil fuel generation and expanded renewables.

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2016 North Carolina Solar Power Report Card

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North Carolina is going to look a whole lot different in late 2016, but the state gets a boost from its still-excellent solar tax credit, which will expire at the end of 2015, but carry over for people whose projects started before that date. That tax credit and good utility policy has led to a bustling solar industry in the Tar Heel State, putting it in 2nd place for total installed solar capacity. Here’s hoping lawmakers in Raleigh can come up with some legislative way to keep the good times rolling for clean, reliable solar power. If they fail, we’ll see a big solar industry slowdown next year. Come on, NC!

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2016 Montana Solar Power Report Card

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Montana drops 4 spots this year because it isn’t doing anything new to help expand home solar. Add to that the fact that state is one of many which are now considering changes to net metering law, and the optimism shown by some in The Treasure State should be tempered with a healthy dose of “if you love something, support it.” We’d like to see some action from Helena in the form of an actual RPS law with a solar carve-out, to facilitate a shift to renewable energy and make it easier for ordinary Montana homeowners to go solar.

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2016 Iowa Solar Power Report Card

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Even

Iowa hasn’t moved in our rankings this year, and they haven’t really done anything new to help expand solar this year, either. Hanging tough at just above average might be OK for some states, but not for you, Iowa! You get up and get things done! We know you love you wind, but all that corn and soy needs sun, too, and you get plenty of it. We think a good portion of the parts of the Hawkeye State that aren’t covered in growing things should have solar panels on top, and we hope you’ll help your people do it soon.

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2016 Pennsylvania Solar Power Report Card

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Pennsylvania gains back some of the ground it lost last year with its fine High Performance Building grant program and increasing electricity prices. The state still has a lot to do to get back into the top 10 of our ranking, and we know just where to start: set new, higher targets for your RPS and solar carve-out, and reinvigorate your SREC market!

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2016 Florida Solar Power Report Card

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Florida is the most baffling of all the states when it comes to solar. It’s literally called “The Sunshine State,” yet it bans third-party solar (PPAs), and is the locus of a confusing debate between solar advocates and utility-backed lobbysists. Each group is sponsoring its own ballot initiative this year, one to open the solar marketplace to PPA agreements, and one to add fees for solar net metering, making solar much less financially-viable for homeowners while ensuring utility companies maintain monopoly on generation. We really hope you figure this one out, Florida.

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2016 Washington Solar Power Report Card

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It’s telling that Washington and Florida are so close in our rankings. One is trying pretty hard to help homeowners go solar, despite having the nation’s lowest energy prices and least sun, and one gets a ton of sun but seems run mainly by utility company heads. Washington could take a few steps to get out of this dubious company, and we’d start with a property tax exemption and expanded rebates.

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2016 Ohio Solar Power Report Card

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Ohio drops six slots this year to just on the wrong side of the middle of our rankings. The lousiest of the best, and the best of the lousiest, as Paul Harvey might say. Ohio spent this year not getting things done, freezing its RPS and turning off potential investors. So much for forward-thinking leadership of the past, in this ALEC-dominated legislative epoch. Boo, Ohio. Boo.

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2016 Indiana Solar Power Report Card

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Here’s what we wrote last year about Indiana:

“Oh, Indiana. With your voluntary RPS and your lack of rebates and tax credits, you look like a D state. Oh wait, are those property and sales tax exemptions? And good net metering and accessibility rules, too? Well, that’s a decent start, so we’ll give you a C for trying, but we need to see some progress toward more aggressive standards, or we’ll have to hold you back a year, and we know you don’t want to be in the same class as your little cousin West Virginia.”

It’s pretty much still true, so Indiana only gains a spot because other states got worse.

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2016 Maine Solar Power Report Card

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Even

Check out the Policy column in the image above. Lots of green there. Unfortunately, that hasn’t led to lots of green in the incentives column. Still, if you can afford a system in Maine, you’ll see good returns over time because of the state’s high electricity prices. Maybe put some panels up on one of those lighthouses.

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2016 Missouri Solar Power Report Card

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Missouri hops up two spots on our ranking this year, because rebates from a few utility companies (including KCP&L) are actually pretty nice, and serve a good number of people. Wed like to see a more solid foundation of good policy to ensure that solar is supported for years to come, but we’ll take what we can get, while the getting’s good.

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2016 Alaska Solar Power Report Card

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No state in the union gets less sun than Alaska, so it’s refreshing to see it coming in ahead of such sun-rich states as Georgia and Alabama. Or no, wait… that’s depressing as hell. We will say that Alaska’s position is largely due to its super-high electricity prices, as solar saves you more here than most places, even if you hardly see the sun for months at a time.

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2016 Utah Solar Power Report Card

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Utah’s below-average policy and incentives are better than some states’, but not by much. Still, with falling solar prices and a fine tax credit, the state offers good payback time and investment return for solar. There’s plenty of sun here, and with a little more governmental action, we could see Utah in the top 20 states for solar. It just takes good people agreeing to do something to improve the future.

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2016 Tennessee Solar Power Report Card

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Tennessee manages to come up with a decent showing, despite its dismal policy history. That’s largely due to the voluntary program put forth by the Tennessee Valley Authority, a federally-owned corporation that acts in the best interests of the people it serves. Huh, what a concept! TVA offers a small rebate and a decent performance-payment to all people who install solar panels, but that payment has grown 50% smaller this year, and we anticipate it will continue to diminish as more folks sign up. Come and get it now, people!

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2016 Texas Solar Power Report Card

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Texas has a deregulated energy marketplace, meaning its citizens can buy electricity from a great number of providers. It’s also a gigantic plain with vast wind generation ability, so renewable energy is pretty easy to come by cheap. Still, cities like Austin and San Antonio, which have municipal electric companies that residents are required to buy from, are supporting solar in a big way, with rebates and easements and all sorts of good stuff. If you live in Texas, be sure to click on the image above to read more about solar near you.

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2016 Virginia Solar Power Report Card

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“Solar in Virginia: not as bad as you might think!” It’s not quite a sterling endorsement, but it’ll have to do, for now. The state’s big utility company, Dominion Power, offers an anemic performance payments program, which will help homeowners now but isn’t guaranteed to be there in a few years, and the Tennessee Valley Authority offers its rebate here, but serves only a tiny fraction of the state. All in all, the “D” grade is earned, but if you’re environmentally-minded, you can get solar and see decent returns over 25 years.

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2016 Louisiana Solar Power Report Card

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Louisiana still offers its best-in-the-nation solar tax credit, which will get you a solar panel installation and a big check next April, but its lack of any other good policy to back that up is disheartening. Still, half-priced solar is nothing to shake a crawdad at.

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2016 Michigan Solar Power Report Card

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Michigan earns nearly the exact same grades as last year, but its interconnection policies look a little worse compared to the average, and payback time and IRR are both a little worse. The state is on of the few above the Mason-Dixon line to languish like this, and we’d like to see lawmakers in Lansing follow Ford Motor Company’s lead, but help homeowners install solar, instead of big corporations. So many people in your state are hurting from the lack of good jobs, when they could be part of a new generation of well-paid manufacturing workers.

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2016 Kansas Solar Power Report Card

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What’s the matter with Kansas? Well, this year, it’s that they REPEALED THEIR RPS. The funny/sad part is, the state already gets more electricity than its prior RPS goals from wind alone, meaning the repeal is little more than a symbolic victory for backwards-thinking morons who care more about fighting progress (on the taxpayer dime) than they do about making things better for their constituents.

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2016 South Carolina Solar Power Report Card

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South Carolina earns the final “D” grade in our rankings, despite its excellent solar tax credit. Heck, homeowners served by Duke Energy Progress are also eligible for decent rebates, and the combination of incentives is enough to make a solar investment in 2016 a great decision. So here’s yet another place with little to no good policy, but which still offers a small window in which to take advantage of incentives and get a good deal. So don’t delay!

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2016 South Dakota Solar Power Report Card

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The first “F” in our rankings goes to South Dakota, which just can’t seem to get anything going in the way of renewable energy. The state gets plenty of sun, but without action to at least put solar on a level playing field with fossil fuels, the outlook isn’t too rosy. Still, look at the rate of return above. 6% isn’t bad at all, considering you’re lucky if your bank offers you 1.5% on a CD these days. It’s a sign that solar is better than ever before, when an investment in solar outperforms most alternatives, even without any support from the government at all. If South Dakota had good net metering and interconnection standards, we’d recommend solar heartily. As it is, be cautious.

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2016 Mississippi Solar Power Report Card

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Here’s Mississippi jumping up two spots, even with very little good happening at all. Even with an “F” grade, though, solar is a really decent investment. With all the sun that Mississippi gets, the potential returns are almost as good as a smart investment in the stock market. We’d like to see some good policy to at least protect homeowners from greedy utility companies, but as it is, going solar in the Magnolia state can be a very good deal, indeed.

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2016 Alabama Solar Power Report Card

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Alabama comes in a little worse than Mississippi, but only just barely. Mostly, that because we based our Mississippi example for a homeowner served by the Tennessee Valley Authority. If you happen to be a TVA customer in Alabama, use the payback and IRR numbers for Mississippi. Otherwise, you’ll still see a lot of sun, but barely any support or protection from the gubbamint.

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2016 Georgia Solar Power Report Card

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Georgia is basically a carbon-copy of Alabama. Very little good solar policy and incentives, and average returns. Here’s another place where it pays to be a Tennessee Valley Authority customer. If you happen to get your electricity from a TVA supplier, take advantage of their Green Power Providers program. If not, take your chances.

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2016 Kentucky Solar Power Report Card

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The Tennessee Valley Authority serves some customers in Kentucky, and can help reduce the costs of solar ownership up front and over the short term. Sadly, few other incentives exist, and the tax credit that earns the state a “C” in that category will disappear for installations begun after 12/31/15.

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2016 North Dakota Solar Power Report Card

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The story of North Dakota’s rank goes “6 steps forward, 3 steps back,” with the nly bright spots being decent interconnection standards and a not-terrible 5-year property tax exemption for the value solar adds to your home. Not good enough to bring the state out of “F” territory, but not the worst, either.

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2016 Idaho Solar Power Report Card

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Last year, Idaho placed 51st in our 50 state rankings, which must have been so shameful they got to work right away to avoid the same fate. Well, probably not. Anyway, the state saw a modest increase in electricity prices, which added a few points to its grade, and its small tax credit actually seems bigger this year because so many others have gone away. Those two changes helped bring the state up from the sub-basement and into “middle-fail” territory. We need to see some actual improvement here to award it anything other than that.

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2016 Nebraska Solar Power Report Card

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Nebraska did nothing this year to remedy its problems—the state still has no RPS and that tax credit is still laughably small (we’re talking $3.41/year for a 5-kW installation). Still, if you’re in the Lincoln Area, check out the city’s decent rebate and find an installer to walk you through taking advantage of it. You’ll see decent returns, and the state’s good net metering rules will help keep it that way.

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2016 West Virginia Solar Power Report Card

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West Virginia seems like it really wants to help its residents out, given that its net metering and interconnection rules have been good for some time, but the state became first in the nation to every repeal an RPS, which is the saddest solar thing we can think of this year. If those net metering standards suffer in 2016 after an upcoming review (sponsored in part by ALEC and the coal lobby), you can be sure the state will end up at the bottom of our 2107 rankings. WTF, WV?

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2016 Wyoming Solar Power Report Card

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Wyoming just can’t seem to get it together. The state basically avoids taking any action that would help its citizens become more energy-independent, which is a sad state of affairs. You can still make money investing in solar in Wyoming, and with good net metering rules, you probably won’t have too difficuly a time doing it, but no guarantees.

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2016 Oklahoma Solar Power Report Card

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It’s telling that homeowners in Oklahoma, the second-to-worst state in our list, can still see decent returns with an investment in solar panels. You see, that strength is indicative of the fact that solar can survive without big state government intervention. All you need is some cash and the ability to take the federal government’s 30% tax credit. But once that goes away after 2016, we’ll really see the impact of good state policy. The states at the top of our list will see ongoing investment and development, along with good, high-paying jobs in the solar industry. States like Oklahoma, on the other hand, will suffer with the fuels of the past, and economies tied to old business models, which will inevitably put them behind for the future.

Sad.

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2016 Arkansas Solar Power Report Card

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Arkansas to #51 with a bullet! The state has certainly earned it, with the nation’s worst solar IRR and payback time. We really need to see places like this move to make a better future for their citizens, or risk letting electric monopolies sell you power they generate from their solar panels, and take advantage of sky-high profit margins to line their pockets with your money.

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Executive Summary


Future energy historians (trust us, that’s gonna be a thing) will look back on 2015 as the year when the first state (Hawaii) passed a 100% Renewable Portfolio Standard (RPS), and another state (Vermont) set its sights on 75%. Those two states couldn’t be more different in terms of climate and current energy mix, but they share a commitment to a better future for their citizens, and we’re anticipating other states to follow in their footsteps over the next 5-10 years.

There have also been some less-welcome changes this year, with West Virginia and Kansas repealing their RPS laws, and other state legislatures considering doing the same. And there are more, possibly dramatic changes on the way, with more than half of states studying or changing net metering policies, often at the behest of big electricity companies and utility industry lobbyists.

Other big changes this year have been a mixed bag. The prices Americans pay to install solar are the lowest they’ve ever been, but state incentive programs are expiring. Community solar is seeing more support than ever in some states, while struggling to find a foothold in others, and solar incentives for landlords are still nowhere to be seen. Electricity prices in some states have stayed high, while others (those mainly served by petroleum and natural gas generation) have seen sizable decreases in price.

Through it all, though, a few good things are true:

  • Installed costs for solar are falling as manufacturing volume and competition increase—this year, we reduced our price estimates by about 13%
  • Solar leasing is expanding to more states as the economics become more favorable
  • Taking a loan is becoming the best way to finance the purchase of solar panels
  • Solar is at least a moderately good investment in every state, with returns no lower than 3.9%, and as high as 35.1%

So… where does that leave us? Well, kind of at a crossroads. We know incentives work. The proof is that expanding adoption of home solar is leading to decreases in price, which in turn makes the incentives less necessary. People are paying the same today without incentives as they did 4 years ago with huge rebates and tax credits. That’s an unalloyed good. Because of the incentives and subsidies of the past, U.S. home solar power is in a good position to flourish without additional financial support.

BUT, as the solar industry is poised to explode, it’s also about to face its greatest challenge. On December 31st, 2016, the Federal Investment Tax Credit (ITC), which gives solar owners 30% of their costs back as a tax credit, will expire, and the result will likely be a quick slow-down that will affect every solar company in the country. To be sure, many of the best and biggest solar companies will survive just fine, albeit with somewhat diminished income that will lead to layoffs and belt-tightening, but some smaller players won’t be so lucky.

UPDATE: On December 18th, 2015, congress extended the solar ITC at full strength—30% of costs—until 2019, with steps down in that percentage through 2022. The extension means we might not see such a huge expansion of solar this year, as some investors might hold off until the future. Conversely, it means solar growth is likely to continue at an accelerated rate through the end of 2019 and beyond. Kudos, congress!

If the ITC is allowed to expire, the best we can hope for is a big ramping-up of production and system purchases this year. If economies of scale kick in to reduce the costs to install solar enough, prices in 2017 could be low enough that the tax credit won’t be missed. If, on the other hand, the industry slows down during 2016 in anticipation of the ITC’s demise, there could be a large drop-off in the number of U.S. solar installations in 2017.

Still, though, the world at large is increasingly interested in solar and other renewables, and China’s commitment to greenhouse gas reductions could continue to drive production increases, with many of the biggest solar equipment manufacturers focusing on the Asian market and keeping prices relatively low.

And who knows? With a presidential election coming up in November 2016, we’ve already seen candidates Clinton and Sanders propose future subsidies to drive renewable energy development. Whatever happens, you can be sure we’ll write about it throughout the year.

Looking Forward to 2016


Let’s take a look at that chart again:

Pretty cool, huh? We analyzed each of the ten factors represented above, plus two other “outcome factors”—the time it takes for solar to pay back the cost of the investment and the internal rate of return of that investment—to determine the final rankings. All told, we looked at 612 separate data points (51 x 12), covering all aspects of solar policy and incentives across the country.

As for the rest of the states, you can see from the chart, the states that did well tend to have more solid bases of solar policy (rings 2-6), and to offer more solar incentives (rings 7-11).

Here are some other interesting facts from the chart:

  • All states that earned an overall “A” grade offer both sales and property tax exemptions for solar (rings 10 and 11)
  • Similarly, all “A” and “B” states, and even the first 2 “C” states have good net metering policies (ring 5), which help ensure that solar remains competitive
  • All but one of the bottom 25% of states (lower left quadrant) have no RPS (ring 2), and the one that does has only a voluntary goal
  • Conversely, all but two states that earn an “A” or “B” have above-average RPS laws
  • Only three states with above-average RPS laws earn lower than a “B” overall
  • Having high electricity prices helps—13 of the top 20 states do—but high prices are less important for solar success than a good RPS

Factors and Methods

We analyzed 612 different data points to produce our final rankings. It wasn’t easy, but it was worth it. Take a look at the factors we rated and the weights we assigned to each:

Click on the buttons below to see more information about the three different categories (policy, incentives, and outcomes), or the the twelve different factors. Each factor has its own ranking so you can see, for example, which state has the best solar carve-out, or which has the highest energy prices.

Solar Policy Factors – 45%


Policy is one of the major categories that we use to determine how solar will fare in a state. All told, the 5 policy factors make up 45% of our weighting system. Good solar policy is like the bedrock of the future energy landscape—with a strong bunch of laws and regulations in place, you can be sure a state will be favorable for solar long into the future.

The danger here is that state laws can be repealed as control of the legislature changes from one party to another, but we’re not quite ready to analyze the political climate of every state. Instead, we judge states by what the leaders of the past and present have done to encourage renewable development, and leave it at that.

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Renewable Portfolio Standards (RPS)

As we mentioned above, 2015 was a landmark year for state RPS laws. In June, Hawaii became the first state in the nation to commit to a 100% renewable energy future, and they’re aiming to do it by 2045. Vermont, too, went nearly all-in on renewables—the Green Mountain State has committed to be 55% renewable by 2017, with a further goal of 75% by 2032. Good job, Vermont!

But there was some bad news, too. Kansas and West Virginia became the first two states ever to repeal an RPS, meaning there are now 17 states without goals for future renewable use. The folks over at ALEC and all the utility industry lobbyists are surely feeling pretty good about those nefarious victories, but hopefully the point will be moot in a couple years, and we’ll have a federal standard for the first time ever. We can dream, can’t we?

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RPS Solar Carve-Out


There weren’t any changes to state solar carve-outs this year, which is a sad state of affairs, because solar carve-outs are the ideal way to ensure that good incentives are in place. In fact, no state with a decent solar carve-out placed lower than 19th in our overall rankings, and only 7 states without carve-outs made it into the top 20 overall. Let’s hope we see a little more commitment to solar in 2016. The country could use some more robust SREC markets.

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Electricity Prices

How can we guarantee that solar will be a success? Electricity prices are the number 1 factor. In states like New York and Massachusetts, electricity prices are so high that solar is a no-brainer, just because it starts saving you money on day 1.

As we mentioned above, electricity prices in most states costs the same this year as it did last year. That’s a bit of an anomaly, but it has to do with an insidious trend. The U.S. is producing more natural gas than ever before through fracking, which is a huge environmental risk. Once the costs to our health and well being are added up, those electricity prices won’t seem so cheap.

We draw data for our estimates from the U.S. Energy Information Administration, which publishes monthly recaps of the total energy picture in the country. At the time we pulled the data for this report, 8 states had seen decreases in their electricity prices averaging $0.02/kWh, or about 13%, but Hawaii accounted for half of the total drop, because its petroleum-based fuel costs went down in a year that saw oil prices drop precipitously.

Conversely, 14 states saw their electricity prices increase by an average of $0.02, again about 13%, but the increases were spread more evenly among them. We use an estimate of 3.5% annual energy price increase, so this year’s overall increase of .87% came in quite a bit below that, though if you remove Hawaii from the picture, the increase for all other states averages 2.2%.

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Net Metering

Ah, net metering. One of the most important factors in determining how well solar will be supported by your state. In fact, next year we’ll probably have to weight it higher than 5% in our ranking system.

That’s because most of the country’s legislatures and public utilities commissions are reviewing or altering their net metering rules. UGH. That could mean utility companies won’t have to credit solar panel owners at full retail rates for electricity that their systems send to the grid. Instead, they’ll be paying what’s called an “avoided-cost” rate, which basically means wholesale prices. When that happens, solar becomes much less economical, unless you can get cheap batteries to keep all those solar kilowatt-hours for yourself.

Watch this site closely over the next year to see what we have to say about shifts in net metering around the country. There have already been numerous conflicting studies about the value of solar to the grid and whether it outweighs the costs associated, and we’ve already seen states like Arizona and Louisiana, where net metering has been curtailed or customers have been assessed monthly fees for hooking their panels up to the grid.

In 10 or 15 years, the end result of all this back-and-forth could be an increasing energy self-reliance movement that sees companies like SolarCity offering solar-plus-battery solutions that remove homes from the grid entirely. Technological solutions to the problem of greedy electric utilities are coming soon to a neighborhood near you, and we might not all be the better for it.

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Interconnection Standards


This is one place where, thankfully, not much has happened this year on the solar scene. Even Hawaiian electric companies have been forced to back down and get moving on allowing customers to connect to the grid. Hallelujah! Here’s hoping states can keep good policies in place and continue to improve long into the future.

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Solar Incentive Factors – 45%


Incentives make up another 45% of our overall weighting system. Generally, good incentives follow from good policy, but that’s not always the case. A couple of the largest utility companies in Missouri, for example, offer good rebates without much of a state RPS to go on, while there are virtually no incentives in Maine, which has one of the most aggressive RPS laws in the country.

Incentives are generally temporary monetary tools that help defray the cost of going solar and encourage people to consider solar power over other investments. Incentives are sometimes immediate, as is the case with most rebate programs. Other times, incentives are ongoing, and take the form of SREC markets tied to RPS goals, or tax credits that carry over for a number of years.

In any case, many of the most aggressive incentive programs have come and gone. And they’ve done a good job, too. Incentives are responsible for the health of the solar industry in places like California, New Jersey, and Arizona, because they’ve served to increase competition in the marketplace and drive costs down. But there are still some fine incentive programs to be found, in states as different as Louisiana, North Carolina, and Washington. Here’s what you’ve got to look forward to for incentives in 2016:

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Tax Credits


There were a few changes in state tax credit availability in 2015. Of note, Kentucky’s $500 and Maryland’s $1,000 credits expired on 12/31/15. But the big one is North Carolina, which had a 35% tax credit that is now kaput. Looking ahead, a few more states have tax credits that are set to expire at the end of 2016 and 2017. By January 1, 2018, Iowa, Louisiana, New Mexico, and Oregon will all see their tax credit programs disappear.

That’s a pretty big deal, given that the federal tax credit for solar is also set to expire at the end of 2016. And as we discussed in the Results section above, that means either a major slow-down of the solar industry in 2017, or continued reductions in solar installed prices, making solar even more competitive around the country. Either way, we’re likely to see the demise of smaller solar companies that aren’t equipped to handle to vagaries of such a heated marketplace.

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Rebates


If expiring tax credits aren’t fun enough for ya, how about expiring rebates? Most of the juicy solar rebate programs of the past have all but dried up, as utility companies approach the RPS goals set by the states earlier in the century. Without increases to those goals, expect the trend to continue.

Again, we’ve seen big decreases in prices for solar installations that have basically brought prices down to where they had been while rebates were still big. Incentives have worked wonders to kickstart the solar industry, so why stop here? We’d like to see states re-commit to more aggressive RPS goals, complete with new rounds of rebates, or better yet, SREC markets.

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Performance Payments


SREC markets are pretty much the gold standard for incentives, because they’re a market-based financial tool that incentivizes solar production by making utilities prove they’re meeting the goals set forth under an RPS solar carve-out. SREC markets work great to get homeowners into solar as an investment strategy, because, believe it or not, it’s cheaper for a utility to pay people for their SRECs every year than it is for them to buy land and build their own solar farms.

In that way, solar becomes a win-win-win-win. Homeowners win by reducing their electric bills and getting paid for their SRECs, utility companies win by having a perfect, on-demand source of local electricity and by saving money on expensive capital investments, solar companies win by getting paid to do the installing, and everyone in the community wins because solar power reduces our carbon footprint, saving the planet for future generations. We call that a good system.

Now, in order to see more SREC markets, we need to get more states enact aggressive RPS laws with robust solar carve-outs. Call your local legislators, people!

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Property Tax Exemptions


There were no appreciable changes to property tax exemptions in the country for 2015. That’s good, but not good enough. You see, there are 29 states up there with property tax exemptions that earn less than an “A” grade. Ideally, we’d like to see everyone earn the highest possible grade, but we’ll start with wishing those 18 states without any property tax exemption get their acts together and pass something, stat.

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Sales Tax Exemptions


Ditto the lack of change in the sales tax exemption outlook. In this case, there are 18 states without any sales tax exemption for solar purchases, which we’d love to see fixed as quickly as possible. Notice again how every one of the states that earned an “A” overall have sales and property tax exemptions for solar panels? That’s the kind of leadership all states can look to.

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Outcome Measurement Factors – 10%


The final two factors are described as “outcome measurements,” because that’s exactly what they are. If a state has a good RPS, high electricity costs, and decent rebates, you’d expect these outcomes to follow. But that doesn’t always happen, like in the case of Louisiana. The state does poorly on almost ever measure of solar-friendliness and earns a “D” overall, but its uniquely humongous tax credit makes the payback and internal rate of return (IRR) for a solar investment better than some “A” states.

Similar changes happen in Utah, South Carolina, and Texas, and we couldn’t just ignore the fact that, despite predictive measures looking bad in those states, a solar investment performs well, for any number of reasons our other analysis didn’t capture. So we added some weight to these outcomes to reward states that go against the odds. 10% of weight, to be exact, distributed evenly to the 2 factors.

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System Payback Time


Average system payback for a 5-kW solar array in the United States went up this year by exactly half of one year, from 11.3 to 11.8 years. That increase might seem shocking, considering how we’ve touted big decreases in solar installed prices and the expanded solar marketplace, but don’t forget that incentives are going away this year, bigtime. A small increase in payback time is actually not too bad considering the end of tax credits and rebate programs across the map.

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Internal Rate of Return


There was a similar dip in rate of return across the board, with our estimates now showing an average of 10.9% IRR for solar investments. Last year, we estimate an average IRR of 11.4% for the country as a whole. Much of the decrease can be explained by the dip in IRR in Hawaii, which saw a huge dip in electricity prices this year, and Washington D.C., which has an SREC market one year closer to ending. Remove those two, and IRR for a solar investment is basically flat since 2015.

Let’s be clear here that we mean flat at 10.2%. A number that is higher than the historical performance of the stock market. Meaning solar is a better-than-average-investment, right now, right here (well, most places). Those kinds of returns are in jeopardy as states start to hit those RPS numbers and incentive prgrams go away, but for now, solar is about as much of a sure thing as there is.

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6 thoughts on “2016 United States Solar Power Rankings

  1. James says:

    Solar has been around for a long time, but hasn’t been economical until reletively recently. What triggered people to install solar arrays? Was it the payback? If so, is there data showing at what IRR people considered acceptable to make the investment?

  2. Nina says:

    The first visualization is really interesting! I would love to take a look at the 612 raw data points used to make it? Is that information able to be shared in excel or csv format?

  3. Angela says:

    Amazing grids! May I borrow one to post on my blog about solar in Hawaii? I am a Realtor and will cite my source. Please let me know. Mahalo!

    1. Ben Zientara says:

      Absolutely, Angela! Feel free to borrow and attribute. They were meant for sharing!

  4. Sascha says:

    Must have taken a lot of work to compile all this information. With recent political events in Neveda should it be pushed into the lower half of Solar Power Rankings?

    1. Ben Zientara says:

      Thanks for the accolades, Sascha! We agree that Nevada should be lower, but re-doing the whole report would probably not be a good idea. We’ve published a blog about the Nevada changes, and I’m going to also add something in the report to point out what’s happened.

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