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Getting the most out of your solar investment is not just about finding the sunniest places in the United States. Other equally important factors when deciding to go solar are the cost of electricity where you live, as well as the available financial incentives. As you can see from our map of residential electricity rates in the U.S., the cost of electricity varies across the country, making solar energy more attractive in locations with higher rates. And some states and municipalities are much more generous than others when it comes to helping homeowners put solar panels on their roof. All of these factors are important when trying to determine the return on your investment.
We take into consideration the level of solar radiation, the cost of electricity and the federal investment tax credit of 30% (which was recently extended) in our interactive grid parity map for the United States. You can use it to see where solar energy makes financial sense.
First, a Quick Look Across the Pond
Did you know that the country with the most solar panels on Earth is also one of the countries with the lowest levels of solar radiation? Despite receiving only about two-thirds the solar radiation of the United States, Germany has double the installed solar capacity (38 GW, compared to 19 GW according to the Global Market Outlook for Solar Power 2015-2019). So what makes Germany such a hot spot for solar? For one, the price of electricity in Germany is over 40 cents per KWh, compared to an average of 12 cents per kWh in the United States. Secondly, the cost per watt of installed solar panels in Germany is about half the price that it is in the U.S. (the average cost for a residential solar system in the U.S. is about $4/W, although it varies considerably from state to state, with California reporting a cost of about $5/W).
You can see how various countries stack up in terms of the solar value index with our global map for the best places to go solar in the world.
The Top U.S. States for Solar Energy
Let’s take a look at the United States now. The Solar Energy Industries Association (SEIA) reports that as of the second quarter of 2015, the top state with respect to the cumulative installed solar PV capacity is California, with over 11 GW. This does not come as a great surprise given the relatively high solar radiation this state receives, but its relatively high cost of electricity also plays a role (the average retail rate for residential electricity in California is nearly 17 cents per kWh). After California, we have Arizona with over 2 GW and New Jersey with around 1.5 GW. While there are many other states that receive more solar radiation than New Jersey, it is the combination of generous solar incentives and the relatively high electricity rate (nearly 16 cents per kWh) that makes New Jersey the third state for installed solar capacity.
North Carolina, Nevada, Massachusetts, New York, Hawaii, Colorado, and Texas complete the list of top ten states for cumulative installed capacity. Florida, which counts many sunny locations, is not even in the top ten.
Curious if Solar Energy Makes Sense for You?
Figuring out if solar energy makes financial sense for you is not as difficult as it might seem. Sunmetrix Discover is a simple to use, free online calculator that tells you how much solar energy you can produce (with a customizable solar home that you can play around with), shows you how much you can save based on your electricity rate, helps you figure out the best way to finance your solar system and gets you quotes from highly-rated installers in your area. All you have to do is enter a zip code or address to get started!
Simone Garneau is the co-founder of Sunmetrix, an online consumer education website for residential solar energy. The goal of Sunmetrix is to help homeowners go solar. In addition to the 200+ articles about solar energy, Sunmetrix offers homeowners two main tools: Discover, to preview solar energy for your home, and GO, the only solar energy test drive experience. Read all of Simone's MOTHER EARTH NEWS posts here.
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