Solar Power Rocks logo

Solar Power Rocks - Clear info on home solar power rebates, tax credits, and other benefits

Find out how much you can save with solar!

Get quotes from trusted local installers

Privacy Assurance - We will not sell or otherwise transmit your personal information to others without your permission.

SPR Report Card 2010 – Part 1 – State by State Solar Energy ROI

Avatar for Dave Llorens
Published on 08/12/2010 in
Updated 01/18/2019

What is this graph all about?

This is the first installment in a series of reports covering the current state of residential solar energy in the United States. The above graph provides a visual reference to compare when an investment in an average size residential solar electric system will pay for itself across all 50 states. Icons for each state are placed on the year of most probable payback.

Why should I care about this?

#1: You like money and representative democracy and want more of both.

Is it fair that people in a state like Massachusetts can purchase an investment with a guaranteed return of over 300% and you can’t? Investing in solar energy can be a very profitable opportunity which every citizen should have.

#2: You’re someone who appreciates a growing economy, ample job opportunities, clean water, blue skies, and lush forests.

When return on investment for anything is significant, easily attainable, and fast, demand is strong. When demand for solar energy is strong, the local economy strengthens, new jobs develop, people have more savings and disposable income, lives flourish, and Mother Nature smiles a little more at us.

If you live in a particularly sunny state, like Mississippi, Texas, or Florida you might like to think an investment in solar energy would be sensible because there’s so much sun! However, demand for solar panels has been strongest in other parts of the country, particularly the Northeast. They are reaping massive economic benefits from investing in the future growth of a new clean industry.

Shouldn’t your state be doing similar? To understand what makes the states different and why demand is strong in some areas and not others, keep reading!

Why such a loooooooong graph?

We are not strangers to the lengthened graph format, and prefer to make the most of computer scrolling in information design.

What do the long arrows mean?

In some areas of states, solar pays for itself much faster. Certain cities offer their own juicy solar incentives which differ greatly from other areas in the state (e.g. – San Antonio, Texas, or Napa, California). To account for the wide difference, we’ve added an arrow for states with wide variation in expected payback year. Other factors which create varying payback within states include inclusion status in other state’s renewable energy certificate trading programs and/or utility company geography.

Why are some cloudy states like Pennsylvania, Washington, and Illinois killing others like Alabama and Florida when it comes to payback?

As you can see, there is considerable variation in return on investment timeframes for solar power across the country. Logically, you may have thought solar energy may pay for itself much faster in say, Missouri than Alaska. However, there’s a lot more than available hours of sunshine when it comes to calculating when your investment will start paying dividends for you.

Payback time largely depends on each state’s legislative efforts to move renewable energy forward. Your state legislators determine what requirements your electric utility must abide by to derive a certain percentage of their future energy mix from renewable sources. That’s called a renewable portfolio standard or RPS.

The states with the shortest payback periods, like New Jersey, New York, and Massachusetts not only have a strong RPS, but also have a certain amount of the required future electricity mix carved out specifically for solar energy. These requirements are coupled with stiff penalties to the utility companies if they do not meet their numbers.

Therefore, electric utilities buy up SRECs generated by homeowners. SRECs can be worth a big chunk of change over the life of the solar energy system. Here’s a great video on how SRECs work.

How did you calculate payback periods?

The calculations above assume a 5kW solar energy system installed on a south facing roof, tied to the grid, with no trenching or extensive solar racking required, installed at $7/watt, or $35,000 total. We used local utility rates, available utility rebates, state and federal tax credits, state rebates, state tax credits, solar performance based payments such as SRECs, and feed-in tariffs to inform our calculations.

Keep in mind, the above calculations also do not account for any increase in home property value, which in many states creates immediate return on investment. The estimated figure is 20 times annual utility savings, and in many states this value addition is tax exempt!

How do I know you’re not just making this up? Where did source your data?

Data for utility rates came from the Department of Energy, the rebates and tax credits were sourced through the Database of State Incentives for Renewables and Efficiency just last week. SREC payment information was derived from SRECtrade. Very small solar energy pilot programs such as the Gainesville feed-in tariff were omitted from the report.

In the next section, we provide a summary report card of each state’s incentives, utility policies, net-metering, and interconnection standards. Grading weights and criteria are provided too!

2010 SPR Solar Report Card Navigation:

Part 1, Residential Solar Energy ROI by State (you are here)
Part 2, Residential Solar Report Card Summary Grades
Part 3, Electric Utility Policies and Rates
Part 4, Solar Incentive Summary Grades
Part 5, Solar Yearly Performance Payments by State
Part 6, State Rebate Details
Part 7, Tax Credit Overview by State
Part 8, Property Tax Exemptions
Part 9, State Loans for Solar
Part 10, Sales Tax Exemptions

Last modified: January 18, 2019

How much can you save with a solar roof?

Profit from your roof space: find local deals on solar, eliminate your power bill, and join the solar revolution.

See my savings!

Leave a Reply

13 Comment threads
5 Thread replies
Most reacted comment
Hottest comment thread
9 Comment authors
ZASAvatar for Dave LlorensJJustin wGreggory Recent comment authors
newest oldest most voted
Notify of

WOW! Solar panel prices have gone down 60%-70%
. . . How can I find out the current payback period for NH?


For states like NJ, NY, PA, and MA do your payback period calcs account for the average number of days that the panels will likely be covered in snow?


You have many very helpful charts and graphs on this site. Particularly the one above. When will you have these made for 2011 and 2012??

Justin w
Justin w

Dan, I don’t know if you are familiar with the new legislature that just passed in Oregon cutting the BETC almost by 99 percent!!! Ouch! The available amount for funding all renewable electrical generation is now 1.5 million/with a 35 percent total state tax credit. This said, is there any possible way to make solar and the ROI under 10 years with out the state kicking in 35 percent. Chances are that 1.5 million is already gone! Please any advise would be great!


Dan-California has some municipalities like Sonoma/Coachella who continue to offer generous rebates, whereas others do not. That’s why you have such variation in payback there. I agree, but feel the arrow should extend down to 5 years. I don’t sell solar myself but I have access to software that produces quotes. I designed a sample quote for you, and the 4kW, 5kW, and 6kw systems all allowed for a 5 year payback in CA. Actually it’s in between 4&5 years, had I been in Sonoma it would have been quicker. Again I love the report and thank you guys for… Read more »


How are you calculating the payback period for California as 8-27 years? I’ve seen quotes from various different solar companies stating the payback period in CA is 5-7 years typically. How do NJ & PA have exact payback periods? I’ve seen quotes from NJ that have payback periods as short as 3 years. Are you calculating SRECs? I have only read this part of the report, so I may be missing something. I do like the idea, but I’m not positive about all the data. You give an F to California when we currently account for 61% of the PV… Read more »


I have several questions regarding Solar Electric panels & cannot find definitive answers. Can you point me to a source for reliable answers? 1) Are secondary homes elegible for 30% federal tax credit? Sources SEEM to say solar panels DO qualify for vacation homes, but not sure – info before solar panels says 2nd homes qualify, info after says, “no,” but seems to be addressing fuel cells ( 2) Where can I find clarification of elegibility? It was my understanding that homeowner installed projects did NOT qualify for any Federal Tax Credits, but I can’t find this in print. Also,… Read more »


Dan, tax liability isn’t a factor. Excess tax credit is refunded in Louisiana.
Also, there is no unnecessary expeditures when purchasing systems with micro-inverters.

Peter Ford
Peter Ford

What about providing an optional calculator? We then could provide our personal residence values for State, County, size of solar system, cost of system and electricity used per month. That would give us a realistic pay-back period for our unique situation.


Thanks for the reply Dan. However, I must point out one thing. Louisiana’s tax credit is capped at $12,500 per system. Home owners are allowed to install as many separate systems as necessary to offset their entire power consumption.


Louisiana has a 50% tax credit incentive. Why did it get an “F” in that category?


Solar Power Rocks is a Wave Solar company

Wave Solar Logo