For 2020, we analyzed 714 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 – 65%

Solar policy is the mix of laws and rules that govern whether and how you can get your home solar system hooked into the grid. It includes goals set at the state level for adoption of renewable energy, as well as rules that tell the utility company how much they have to pay you for the electricity produced by your panels. Some of these laws and rules make incentives available to solar owners to reward them for helping meet statewide goals.

All told, the 5 policy factors make up 65% 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. Without good policy, a state can still have a favorable climate (no pun intended) for owners of solar systems to make money, but without laws protecting that climate, there is sometimes no way to tell how long the good times will last, and it’s easy for nefarious actors to make changes.

Of course, there’s also a danger that state laws can be repealed as control of the legislature changes from one party to another, but changing a law is much more difficult than ending a program that’s not mandated by the government to continue. To be fair to all states, we judge solar policy 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)

2019 was a good year for state Renewable Portfolio Standards, with significant new 100% renewable requirements coming out of California, Colorado, and Maine. We’re awaiting a 2020 RPS decision in Arizona, where contentious solar vs. utility industry disputes have spilled over from net metering into enacting a new RPS law.

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RPS Solar Carve-Out & SRECs or Performance Payments

Solar carve-outs and performance payment programs are two sides of the same coin, representing a policy/incentive hyrbid. Essentially, they say “some percentage of energy generated in the state must come from solar by a certain date, and there’s a penalty for not meeting that goal.” The penalty part means utilities are looking to either build their own solar generation facilities or prove that some of the energy they’ve bought and sold comes from solar.

That’s where Solar Renewable Energy Credits (SRECs) come in. As proof of generation, SRECs can be purchased by utilities to meet the carve-out goal, and their value is tied to (and always less than) the penalty for noncompliance.

You can have a solar carve out without performance payments (and states like North Carolina and New Hampshire do), but mostly people have realized the need for both. There’s also one case of a performance payment in a state without a solar-specific carve-out, too: Rhode Island.

Current carve-out highlights

Massachusetts’ Renewable Target (SMART) Program continues to be the progressive standard for all states looking to expand solar to honor. That program provides payments which increase as solar system sizes decrease to less than 25 kW. This ensures more participation in our clean energy future from small scale sources, like rooftop solar. The incentive is available now, so Massachusetts homeowners: walk don’t run to the nearest solar quote request form and get the ball rolling on your savings today!

Down below we say rebates are the best solar incentives, but darn if SRECs and other kinds of Solar Performance Payments aren’t trying their hardest to win this battle! SREC programs in places like New Jersey and Washington D.C. have been WILDLY successful in building the kind of solar landscape necessary for projects both huge and tiny to thrive.

For 2020, look for performance payment programs in New Jersey, Rhode Island and Massachusetts to keep going strong.

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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.

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Net Metering & Feed-in tariff

Net metering ensures you get credited the same amount you pay for electricity for the amount of power you send back into the grid when you aren’t using all the power your panels produce, say in the middle of the day when your home may be empty. With utility companies in multiple states seeking to weaken standards and the clear linkage between retail rate credits and strong solar markets, it was time to boost this criteria score.

The net metering crisis that could’ve happened over the past few years has been relatively muted, thanks to the tireless work of certain committed solar advocacy groups. That said, states like Michigan, Kentucky, and Kansas have demolished their net metering rules and opened the door to all kinds of shenanigans from utility companies—demand charges, avoided cost feed-in tariffs, and “buy-all, sell-all” billing arrangements that eliminate almost all the financial benefit from solar panels.

For 2021 and beyond, we’re hopeful for a future with nationwide net metering standards straight from FERC or some other regulatory body. For now, we keep fighting the good fight on a state-by-state basis.

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Interconnection Standards

Interconnection policies and the streamlining thereof have been targeted by many in the solar industry as a major focus for future cost reductions. One step along that path was taken in 2019 by Minnesota, which adopted the IEEE Standard 1547™-2018 into its statewide interconnection regulations. It’s a step along the path of having clear, easy standards nationwide.

Thankfully, nobody’s taking steps backward on interconnection. As solar becomes bigger business around the country, utility companies have ample reason to continue to make it easier to hook your panels to the grid.

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Solar Incentive Factors – 25%

Incentives make up another 25% of our overall weighting system, reduced from 40% in the years before the recent criteria changes. Incentives are important, but because of overall low prices, they’re not as vital to the financial success of home solar as they once were.

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.

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.

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 Massachusetts, 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 North Carolina, Wisconsin, and Texas. Here’s what you’ve got to look forward to for incentives in 2020:

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Tax Credits

State solar tax credits didn’t change much in 2019, and it doesn’t seem likely that they will in 2020, either. That said, the federal solar tax credit still exists, though is now reduced to 26% for anyone who installs solar before the end of 2020. After that, the tax credit will be reduced to 22% in 2021 until disappearing completely for residential installations as of January 1st, 2022.

There’s an apt metaphor for this kind of slow decline of a wonderful, bright shiny thing, but we just can’t quite come up with it.

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Rebates

As incentives go, there aren’t many better for solar owners than state solar rebates. Saving more money as soon as possible is always preferable to deferred payments or small credits over time. After all, a bird in the hand gets the early worm, right? Because of the fact that rebates apply to everyone who installs solar and not just those with enough income to nab a tax credit, we increased their importance in our 2020 rankings to 10% of the grade, from 5% in 2019.

The big rebate news for 2020 is that Duke’s North Carolina solar rebates are still strong at $.60 per watt (though they’ve probably all been reserved by the time you read this), and Illinois is still offering pre-payment for SRECs which becomes a de facto rebate. Oregon has also got a new, small rebate program that should help out some low-income folks and offer cash to people outside the Portland metro who haven’t been getting a lot of love in the past few years.

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Property Tax Exemptions

Outside of Michigan successfully reinstating its property tax exemption, there have been no other changes in the country as we head into the next decade. There are 28 states with property tax exemptions earning less than an “A” grade. Ideally, we’d like to see everyone earn the highest possible grade, but we’ll start by wishing those 17 states without any property tax exemption get their acts together and pass something, stat. It’s the lowest hanging, easiest to pass pro-solar legislation.

May we suggest everyone adopts rules that ensure 100% of all newly-built homes come with solar, and also exempt those homes from additional property taxes as well?

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Sales Tax Exemptions

In 2019, Washington reinstated its sales tax exemption. However, there are still 18 other states without any sales tax exemption for solar purchases, which we’d love to see fixed as quickly as possible.

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Low-Income Solar Programs

This is sort of a hybrid category, because it can’t exist without good policy, but the incentives in low-income solar programs are what make them work. After all, you can’t convince an entire industry to act to benefit the poor and middle class out of the goodness of its heart.

Ideally, solar programs should open up access to a clean energy future to groups that may not otherwise have access to capital to install solar. They can include community solar installations, where each participant in the program owns a part of a larger solar installation miles away from where they live, yet they still receive credits for their power on their residential power bill through programs like virtual net metering.

In relation to other low income programs, solar loans can provide a more significant and longer term return on investment compared to grants. They also allow greater flexibility in household decision making and help low income households avoid third party ownership and other leasing agreements which can interfere with solar ownership.

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Insolation – 10%

That’s an “o,” not a “u.” We’re not talking about pink fluffy stuff in your attic here, people. Insolation is a pretty straightforward measurement of how much solar energy strikes the surface of the earth at any given place.

The National Renewable Energy Laboratory maintains several datasets that track average daily and annual insolation for every 4-kilometer² chunk of the country. We use an average for a state as a whole, but in realilty, how much sun you get depends on a lot of factors. Thankfully, there are home solar calculators out there that take into account your exact location and can even model the effects of roof pitch, direction, and shade from trees and other obstructions to give you a highly-accurate picture of how much energy you can generate with solar on your roof. It’s pretty cool!

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