Save money by going solar ($0 installations may be available) - Click Here to Apply

Solar Power Rocks logo

Solar Power Rocks

Clear info on home solar power rebates, tax credits, and other benefits

2018 State Solar Power Rankings Report

How to read the report:

The outermost ring (closest to each state label) shows the overall grades awarded the states. The inner rings represent factors contributing to the grades.

Instructions: Roll over or tap on any segment of the chart to populate the boxes below with the state's grades and 2018 solar outlook.

Factors:

Grading Scale

A
B
C
D
F

New Jersey

1st place

Trend: up 1

New Jersey begins 2018 on top of our rankings, reclaiming the number 1 spot from Massachusetts in their ongoing dance at the top. But all is not well here, with an urgent need for the legislature to pass a re-introduced bill to increase the state's solar carve-out and design a replacement for the SREC program.

Executive Summary

In many ways, 2017 was a year in which the solar industry remained in a holding pattern as legacy utilities continued to chip away at legislative achievements of the past. One way they did so was to use ratepayer money to finance lobbyists who fought to add charges to the bills of solar owners in states around the country.

Some victories for the enemies of home solar in 2017 included states like Arizona and Utah, where future solar owners will be subject to new fees and decreased compensation for energy sent to the grid.

But it wasn’t all bad news for solar. In the early part of the year, Nevada got its solar groove back, with the state legislature reversing some truly awful policymaking enacted by the Nevada Public Utilities Commission at the end of 2015. That move brought hundreds of solar jobs back to the state, and restored the home solar marketplace to close to its former glory.

And home solar is still going strong in California, thanks to Net Metering 2.0, New Jersey, Massachusetts, and New York, all of which have managed to avoid the worst of anti-solar practices from less solar-friendly states.

Looking Forward to 2018

The big solar news for the new year has been President Trump’s solar tariffs, which will add 30% to the cost of solar panels that come from most foreign suppliers. The final effects of the tariff remain to be seen, although in our opinion, the impact to the residential side of the solar industry won’t be very big.

We’re most excited to hear about Duke Energy’s proposed $.60/watt rebate for North Carolinians, which should take effect retroactively for everyone who installed solar in the utility’s service area after January 1st, 2018. Utility companies in other states should take note!

Factors and Methods

We analyzed 663 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 – 50%

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 50% 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.

back to factor table

Renewable Portfolio Standards (RPS)


Sadly, there hasn’t been much recent movement on RPS laws. Ohio ended its brief experiment with a voluntary RPS when Governor Kasich vetoed a bill that would’ve kicked the can down the road for another few years, but that’s about it. Perhaps the most surprising thing is the the RPS is becoming less important as a tool to encourage renewable growth. In states all over the country, solar is the number 1 new source of electric generation. That’s a huge change, and the states with early advocacy have led us to this brave new world.

back to factor table

RPS Solar Carve-Out


There was only 1 change to a state solar carve out in 2017. Maryland’s Senate overrode a veto from Governor Hogan to pass a new RPS law with a solar carve-out increased from 2% to 2.5% by 2020. That’ll keep Marylanders in good solar incentives for the next few years, for sure. As for other states, let’s hope we see a little more commitment to solar in 2018. The country could use some more robust SREC markets.

back to factor table

Electricity Prices

How can we guarantee that solar will be a success in a state? 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.

Electricity prices in most states rose about a penny this year. That’s about a 4.4% increase, and it puts us back on trend after last year’s 0.87% increase. We use an estimate of 3.5% increase per year for electricity prices, based on historical data.

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, 24 states had seen increases in their electricity prices averaging $0.01/kWh. Conversely, only 2 states saw their electricity prices decrease this year: Michigan and West Virginia.

back to factor table

Net Metering

Ah, net metering. One of the most important factors in determining how well solar will be supported by your state, but not, as it turns out, the end of all that is good and holy, as some solar advocates would have us believe.

That’s because even after Nevada did away with net metering, people who install appropriately sized systems can still do well there. As long as you’re not sending a ton of electricity to the grid, you’re still offsetting retail prices. The big problems in Nevada will come when the monthly fixed charges go up. Getting solar sooner is actually a benefit there, even without net metering.

Still , we wanted to accurately reflect the importance of net metering, so this year, we bumped up its weight to 10% of the total grade, and we examined Feed-in Tariff policies in non-net metering states to show where solar still does well despite bad policy. In layman’s terms, that means we look at whether utility companies in states without net metering will still pay you a good price for the solar energy you send to the grid.

In Arizona, another state that just did away with net metering, we’ll probably see a solar payment of $.09/kWh. That’s lower than retail to be sure, but not the end of the world. Again, as long as home solar systems are properly sized (i.e., designed to use power in the home, minimizing what gets sent to the grid), the owners will still cut their bills by the retail rate by replacing their usage.

A replacement for net metering has long been scheduled for Maine, but keeps getting kicked down the road. In good net metering news, Louisiana reinstated it, Michigan and Illinois managed to keep it, and Hawaiian electric prices are still so high, it almost doesn’t matter.

Finally, the way solar and battery prices are going, we think going off-grid will start to be more desirable. In 5 or 10 years, the end result of all these battles over what to pay homeowners for solar electricity could be a move to micro-grids n increasing energy self-reliance movement that sees companies like Tesla 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.

back to factor table

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.

back to factor table

Solar Incentive Factors – 40%

Incentives make up another 40% 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 2018:

back to factor table

Tax Credits


The big change to tax credits in 2017 was Oregon’s huge $6,000 credit disappearing. That change knocked the state down a bit in our rankings, but its rebates in highly populated areas kept the state from sinking very far.

Luckily, the federal solar tax credit will keep kicking at 30% through 2019, then step down after until it disappears for homeowners after 2022. Even President Trump’s solar tariffs won’t dim the brightness of that big tax credit.

back to factor table

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. There are just 8 states with grades of “B” or higher on rebates. Without increases to those RPS 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.

back to factor table

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!

back to factor table

Property Tax Exemptions


There were no appreciable changes to property tax exemptions in the country for 2017. 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.

back to factor table

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.

back to factor table

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 Georgia. The state does poorly on almost ever measure of solar-friendliness and earns a “D” overall, but Georgia Power’s uniquely great solar payments plan makes the payback and internal rate of return (IRR) for a solar investment better than some “B” states.

Similar effects happen from quirky policies 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.

back to factor table

System Payback Time


We made some changes in our calculations this year that increased the average system payback time. Specifically, we put in a 0.7% decrease in panel efficiency per year, which we hadn’t accounted for in past estimates. Because of the change, our estimated average system payback for a 5-kW solar array in the United States went up by almost exactly one year, from 11.8 to 12.8 years.

That increase might seem shocking, but it’s important to note that 0.7% is actually a conservative estimate for panel degradation. Most panels these days degrade by only about 0.5% per year, and last for at least 30 years before they’ve fallen below 80% efficiency. That’s pretty sweet, no?

back to factor table

Internal Rate of Return


There was a similar dip in rate of return across the board, with our estimates now showing an average of 9.4% IRR for solar investments. Last year, we estimated an average IRR of 10.9% for the country as a whole. Much of the decrease can be explained by the changes to the panel degradation number, and also huge changes in IRR for Louisiana (which ended net metering and its very large tax credit) and Hawaii (which ended net metering).

Let’s be clear here that an investment in solar still averages a return of 9.4%. That number 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, change net metering policies, and/or end incentive programs, but for now, solar is about as much of a sure thing as there is.

Check out our IRR infographic for more information about solar investment IRR in the USA, and click the image for the full article:

Solar Infographic: Investment Return in the United States

back to factor table

Solar Power Rocks is a Wave Solar company

Wave Solar Logo