The Best States for Affordable Residential Solar Power

Sustainable home energy solutions, such as residential solar power, can be a promising avenue toward cost savings and energy independence for many consumers. However, installing these types of renewable energy systems is not without their challenges.

We conducted and analyzed a survey to determine the complexities and opportunities that homeowners encounter when considering clean energy alternatives for their homes.

We then look at some of the U.S. states that, through various financial incentives, allow homeowners to overcome these obstacles to installing affordable solar power. These fourteen states lead the way in incentivizing affordable residential and commercial solar power.

Consumer Interest in Solar Power

Many respondents to our survey indicated at least some interest in solar power, and in some cases, they stated that they were extremely interested.

Their interest is part of a worldwide trend. Research conducted by the International Renewable Energy Agency (IRENA) revealed that the global transition toward renewable energy sources is accelerating rapidly, with $1.3 trillion USD invested in this industry as of 2022.

Respondents listed cost savings, sustainability, energy independence, and property value benefits as the top reasons to install residential solar power systems. Let's look at this data in more detail below.

Cost Savings

Cost savings play a pivotal role in driving the adoption of solar energy. A remarkable 80% of the respondents state that saving money on energy bills is a primary advantage of transitioning to solar power, with the potential for long-term savings being a key motivator for many individuals to switch to renewables.

However, approximately 75% of our survey respondents identified the initial installation cost of solar cells as the biggest factor that could prevent them from considering solar power for their homes. Despite this concern, it’s noteworthy that a substantial number of individuals still see the value in solar energy adoption.

Sustainability

Sustainability emerges as a significant factor driving the adoption of solar energy. Over half of the respondents, 64%, indicated a commitment to sustainability as a key motivator for choosing solar energy solutions.

Moreover, an impressive 81% of participants expressed that reducing their carbon footprint was a crucial consideration in their decision to transition to solar power.

Energy Independence

Autonomy and self-sufficiency associated with generating clean energy on-site are motivational factors for many consumers, with 30% of respondents noting energy independence as a reason for switching to solar. When energy storage is integrated into a solar-dominant system, it can lead to an overall reliability rate of approximately 87% for homes, according to a study conducted in the New England states.

Property Value Benefits

58% of respondents said adopting solar power can lead to an increase in property value, which is true. Zillow's study notes that solar may increase the appraised value of a home by an average of 4.1%.

As a final note, our survey data highlights varying perceptions between male and female participants regarding solar power benefits, with each group preferring specific advantages. For instance, women, with 62% of respondents, predominantly associate solar power with property value enhancement, while men, at 53%, show slightly less inclination towards this view.

How Much Do Consumers Know about Solar as an Option?

While solar energy has existed for decades, a 2020 Consumer Perceptions of the Solar Industry Report indicated that only 71% of consumers claimed to be somewhat familiar with it.

This is in line with our own survey data. When asked, "How familiar are you with the availability of solar power in your area?:"

• 34% of respondents rated themselves as Somewhat Familiar
• 25% rated themselves as Not Very Familiar
• 14% rated themselves as Not Familiar at All

When asked to rate their knowledge about solar technology:

• 71% of our respondents rated themselves as Somewhat Knowledgeable, Not Very Knowledgeable, or Not Knowledgeable

These responses indicate that many consumers lack knowledge about whether solar is available in their area. They may also lack knowledge on how to install it, highlighting the need for increased educational efforts to bridge this awareness gap.

What's Stopping Consumers From Adopting Residential Solar Power?

Our survey respondents demonstrated a lack of knowledge about solar technology and expressed concerns about the cost of installing and maintaining residential solar systems. Both of these are likely reasons why consumers may be hesitant about switching to solar.

Lack of Robust Knowledge About the Technology

Our survey results reveal diverse levels of familiarity with solar technology among participants. Specifically, 58% demonstrate a moderate understanding, while 28% exhibit a high level of knowledge about solar power systems.

It's possible that consumers may have reservations regarding solar power adoption due to insufficient knowledge about the technical aspects and benefits of the technology.

Concerns About Initial Installation and Maintenance Costs

When it comes to concerns around initial expenses, 58% of respondents pointed to high installation costs as a primary reason for not adopting solar power.
45% of our survey respondents expressed concerns about the cost of maintaining residential solar energy systems. It's clear that these expenses are heavily influencing the decision to adopt solar energy.

Other Factors

In addition to cost-related barriers, it's essential to consider other factors that influence individuals' decisions about installing solar panels on their property.

35% of respondents indicated that the challenge of setting up solar panels would make them less open to solar power if they owned a home. In comparison, 14% expressed concerns that solar panels might compromise the visual appeal of their homes. While less prominent than concerns about cost, these factors could deter homeowners from installing solar panels on their property.

Because so many consumers are concerned about the financial impact of installing solar panels, providing them with resources to offset these costs could result in more consumers adopting solar. However, many states have robust financial incentives for residential solar systems.

State Programs Can Help Consumers Manage the Cost Of Solar Power

State-sponsored initiatives effectively lighten the financial load for transitioning to solar power. Some of these incentives include:

• Tax credits
• Rebates
• Low-interest loans
• Solar Renewable Energy Certificates (SRECs)
• Performance-based incentives
• Property and sales tax exemptions
• Net metering

By making solar energy more financially feasible and attractive, these programs actively encourage broader adoption of sustainable energy practices, paving the way for a greener and more sustainable future.

Which States Do the Most to Encourage Residential Solar?

Through a combination of robust programs, such as financial incentives, net metering regulations, renewable energy standards, and streamlined permitting processes, we have identified these 14 states as the best states for affordable residential solar power due to the incentives below.

Arizona

• Credit for Solar Energy Devices - allows individuals to claim a tax credit for a percentage of the cost of installing a solar system.
• Tax Exemption - for any renewable energy equipment installed on homes.
• Retail Sales Tax Exemption - when purchasing solar equipment from approved contractors.
• Net Billing Policy - credits homeowners for the unused energy generated by their solar panels.

California

• Solar Rights Act - protects residents' ability to install solar energy on their property.
• California Solar Initiative - offers rebates to residential customers who install solar electric systems.
• Disadvantaged Communities - Single-family Solar Homes - specifically designed to provide solar incentives to low-income households. The incentive is $3 per watt, which may significantly offset the upfront solar installation costs.
• Self-Generation Incentive Program (SGIP) - gives rebates for renewable energy storage systems, which encompasses solar battery and storage systems. Beyond this, SGIP has increased incentive rates for lower-income individuals, as well as those who are medically vulnerable or who live in communities at risk of wildfire-induced power outages. There are two categories "Equity" and "Equity Resiliency" - and either one can reduce if not eliminate, the cost of installing a solar system.
• Tax Exemptions for the added value of installing a solar energy system on one's property.
• Net Metering Program allows residents to sell their extra solar energy for credits on their power bills.

Colorado

• Colorado Residential Energy Upgrade (RENU) Loan - RENU loans can be used for a variety of home energy efficiency upgrades, including solar panels, making it easier to cover upfront expenses. Further, the interest rate on these loans is fixed at only 2.75%, so it doesn't cost quite as much in the long run.
• Renewable Energy Standard - Colorado has passed legislation to support the state's goal of becoming entirely powered by renewable energy by 2035. The legislation will require all electricity providers in the state to be powered by renewable energy sources.
• Tax Exemptions - including a sales tax exemption for purchasing renewable energy systems and a property tax exemption for installation.
• Net Metering - this is also available for Colorado residents, although it is left up to individual electricity providers to determine eligibility requirements and rates.

Connecticut

• Residential Renewable Energy Solutions Program - Offers net metering. You can opt for either the Buy-All Tariff wherein the utility company purchases all of the solar energy produced or the Netting Tariff wherein only excess energy is purchased.
• Smart-E Loans - A dedicated loan program to help more residents pay for installing solar systems on their property. These loans don't require any down payment and can be obtained with interest rates as low as 5.99%.
• Connecticut is among the nation's leaders in solar power, and it provides sales tax exemptions for purchasing solar equipment and property tax exemptions for installing solar energy systems.

Florida

• The Solar Sales Tax Exemption - All solar energy systems are exempt from sales tax at the time of purchase.
• Property Tax Abatement for Renewable Energy - If installing solar panels on your home increases its value, you're exempt from paying taxes on that increased value.
• Property Assessed Clean Financing (PACE) - PACE is a loan option that helps homeowners overcome the initial cost of purchasing solar energy systems. Instead of paying the lender back, you pay off your loan with your property taxes.
• Solar and Energy Loan Fund (SELF) - SELF is another financing option for homeowners seeking home improvement projects. Solar panels are among the eligible upgrades.
• In addition, net metering is available through Florida's electric companies. The Florida Public Service Commission maintains a list of the state's utility companies with a net metering program.

Illinois

• Adjustable Block Program - Provides upfront incentives based on the capacity of solar energy systems installed by Illinois residents. This initiative aims to accelerate the adoption of solar power by offering financial benefits that offset the initial investment costs associated with going solar.
• Illinois Shines - Thriving community solar program enhancing solar access.
• Illinois Power Agency - Solar renewable energy credit (SREC) market incentivizing solar adoption.

Maryland

• Clean Energy Grant Program - Offers grants to Maryland homeowners investing in solar systems.
• Maryland Solar Renewable Energy Credits (SREC) Program - This solar grant program supports residential solar projects.
• Maryland Solar System Sales Tax Exemption - Net metering policies ensuring fair compensation for surplus solar energy.

Massachusetts

• SMART Program - Offers declining block incentives for solar projects, providing financial rewards for Massachusetts residents embracing solar energy.
• Massachusetts Department of Energy Resources - Nationally recognized Solar Massachusetts Renewable Target (SMART) program.
• Massachusetts Solar Incentive - Solar loan programs with low interest rates facilitate affordable financing.

Minnesota

• Made in Minnesota Solar Incentive - Offers cash rebates for locally manufactured solar installations.
• Xcel Energy - Minnesota - Solar Rewards rebate program incentivizing residential solar installations.

New Jersey

• Federal Solar Tax Credit Program - Allows solar electric system owners in New Jersey to earn certificates for the clean electricity they generate, which can be sold for additional revenue.
• Federal Solar Tax Credit - Incentivizes solar energy production by offering tradable credits for every megawatt-hour of solar electricity generated, providing additional financial benefits for solar system owners.

New York

• New York's NY-Sun Initiative - Provides various incentives, financing options, and resources for solar projects statewide.
• New York State Energy Research and Development Authority - Has the ambitious goal of achieving 70% renewable electricity by 2030.
• NY-Sun - Initiative offering comprehensive solar incentives.

Ohio

• Alternative Energy Portfolio Standard (AEPS) - mandates a percentage of electricity in Ohio to come from solar power, driving solar energy growth in the state.
• Residential Clean Energy Tax Credit, formerly the federal investment tax credit (ITC) - Aims to promote the adoption of clean energy solutions like solar power by reducing the financial burden on residential solar projects.
• Energy Conservation for Ohioans (ECO-Link) Program - Supports various solar advocacy and education programs aimed at raising awareness about the benefits of solar energy and providing resources for individuals and businesses interested in transitioning to solar power.

Texas

• Federal Solar Tax Credit - Supports residential solar initiatives in Texas by offering programs or services aimed at promoting solar adoption, enhancing energy efficiency, or providing resources for homeowners interested in renewable energy solutions.

Virginia

• Solar Freedom Legislation - Creates a supportive environment for solar power, encouraging homeowners to invest in solar installations and participate in Virginia's growing renewable energy sector.
• Federal Solar Investment Tax Credit (ITC) - Aims to offset a significant portion of the upfront costs associated with implementing solar energy solutions.

How Aware Are Consumers Of These Programs?

45% of the participants expressed a strong interest level of 5, indicating a high inclination towards adopting solar energy solutions. Responses varied when asked about the factors that might prevent them from considering solar power for their homes. The initial installation cost was cited as a significant barrier by 58% of participants.

Most Consumers Are Not Aware of Any Local Solar Incentive Programs but Express Interest in Community Solar Initiatives

• 73% of consumers expressed a keen interest in community solar initiatives.
• 39% were "not familiar at all" or "not very familiar" with their local solar incentive programs.
• 71% of respondents were also unaware of any local incentives or policies promoting the use of solar power.
• A significant 71% of respondents expressed that they believe their local politicians need to do more to encourage the adoption of solar power within their community.

Methodology

Survey data from a diverse consumer sample was collected and meticulously reviewed. The number of respondents was significant, comprising different demographics and age groups. The analysis encompassed consumer responses pertaining to their awareness of local solar incentive programs, perceptions of political support for solar initiatives, and interest in community solar projects. The demographic and residential details can be reviewed in the snapshot below.

Respondent Demographics

Gender - Predominantly female.
Age Range - The majority falls in the 45 to 60 and 60+ age groups.
Major U.S. Regions - Texas, Maryland, North Carolina, Colorado, Illinois, New Jersey, Louisiana, Wyoming and Oregon.
Household Income - Varied, ranging from $25,000 to $124,999.

Residential Details

Ownership Status - Mixed between owning and renting. A significant 56% of respondents identified as homeowners, indicating a strong presence of individuals who own their residences.
Household Size - Ranges from single-person households to nuclear families of up to seven members.
Type of Household - Various, including single-person households, nuclear families, etc.

Conclusion

By identifying barriers to solar power installation, such as lack of awareness about local incentives and perceived political support, we can better understand how to overcome these obstacles and increase interest in community solar projects.

States such as California, Illinois, New Jersey, and New York emerge as prime candidates for flourishing community solar endeavors due to their robust incentives and policy reinforcement for renewable energy. The substantial support these states provide, including programs like net metering and tax credits, plays a pivotal role in addressing the primary obstacle impeding solar adoption the financial constraints customers encounter.

With continued efforts to educate consumers about the benefits of solar energy and improve accessibility through policies and incentives, we can see a significant increase in the adoption of solar power across the country. Identifying and addressing barriers related to knowledge of and access to these programs will help pave the way for more widespread use of renewable energy sources.