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.
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!
Last modified: August 12, 2010