By: Brooke Nally, Solar Power Authority
Solar power is a booming industry, but some states are more friendly to solar energy businesses than others. Many factors influence the business climate for solar energy, including state regulations, incentives, the number of sunny days and the rate at which residents are installing solar panels. While there are federal regulations and incentives for adopting solar energy, each state also has its own regulations as well, which may be more or less supportive of solar than the national standard.
The federal investment tax credit for solar power was recently extended through 2022, but that supportive move doesn’t necessarily reflect what’s happening on the state level. Some states have started to repeal their renewable energy mandates or drastically scale back their goals for renewable energy adoption. At the same time, other states are working to up their commitment — Hawaii, for instance, just adopted a goal to have the state’s utilities derive 100% of their power from renewable sources by 2045.
When you’re in the business of solar energy, it’s important to stay informed about these laws and regulations, as well as consumer trends related to solar power. To help solar contractors navigate the ever-changing landscape of solar energy, here’s a look at which states are currently the most welcoming and those that are still struggling to catch up.
State sunshine levels
Solar power relies on sunshine, so it makes sense that the states with the most sunny days would be optimal places to set up or expand your solar business. Not surprisingly, Arizona, California and Nevada rank high in many areas for solar energy. However, strong solar markets aren’t limited to the sunniest states — Massachusetts is a highly solar-friendly state, and it only reports an average of 98 clear days per year.
Most Sunny Days: Arizona, New Mexico, Nevada, California
Least Sunny Days: Vermont, Washington, West Virginia, Alaska
State solar capacity
Some states are leading the pack when it comes to the number of megawatts installed statewide and the number of houses that wattage can power. Of the leading states, California tops the list with enough megawatts to power more than 3.3 million homes. Arizona is next with 2,303 MW installed, which means the Grand Canyon state can power as many as 327,000 houses with solar energy. Rounding out the top 10, Texas currently has enough solar power capacity to provide power to more than 57,000 homes.
Most Solar Capacity Installed: California, Arizona, North Carolina, New Jersey
Least Solar Capacity Installed: North Dakota, South Dakota, Alaska, Nebraska
State solar jobs
Another indicator of a state’s solar-friendliness is the number of solar jobs throughout the state. With California’s solar capacity so large, it’s no surprise that the Golden State also leads the nation in solar jobs. California accounts for 36% of the country’s solar jobs, reporting over 75,000 in 2015. On the opposite end of the spectrum is Alaska, where there were only 33 solar jobs last year.
Most Solar Jobs: California, Massachusetts, Nevada, New York
Least Solar Jobs: Alaska, Wyoming, Montana, North Dakota
State solar energy incentives
Adoption of residential solar energy has been buoyed by incentives and tax credits that ease the cost of installing solar panels and reward those who make renewable energy a priority. Every state has policies and incentives related to solar energy, but some are more progressive than others. In Arizona, rebates vary based on the utility company, but most customers earn about $100 per kWh. The state also uses tax credits to help residents with up to 25% of the cost to install a system. At the other end of the spectrum, Washington doesn’t offer any tax credits or property tax exemptions for solar panel installation.
Most policies and incentives for renewable energy: California, Minnesota, Texas, Oregon
Least policies and incentives for renewable energy: West Virginia, Kansas, North Dakota, Nebraska
State solar energy regulations
There are many regulations that impact the climate of solar power adoption. In the best states, solar adopters receive a big break on their power bill and can take advantage of net metering programs that allow them to sell back their unused energy to area utility companies. However, a few states — including Nevada and Hawaii — have recently changed their net metering policies for the worse, which has dampened the solar market and caused companies like SolarCity to halt some operations.
One organization, Freeing the Grid, give states grades based on their net metering and interconnectivity practices. In 2015, 15 states received an “F” for interconnectivity, while only nine received an “F” for net metering. On the flip side, 20 states earned an “A” for net metering, and there were 10 “A” grades given for interconnectivity.
Best solar policies: California, Massachusetts, Ohio, Oregon, Utah
Worst solar policies: Alabama, Georgia, Oklahoma, Tennessee
Overall state solar-friendliness
Even though certain states shine in one area of solar-friendliness, they may falter in another. Only when you put all factors together will you get a truly reliable picture of which states are best for solar power.
Most solar-friendly overall: Massachusetts, New Jersey, New York, Maryland
Least solar-friendly overall: Arkansas, Oklahoma, Wyoming, West Virginia
Those states that are most solar-friendly have a lot of opportunity for solar business, but even in states where solar is still up-and-coming, there’s room for companies and contractors who want to break into expanding markets. To keep your solar business booming, stay on top of these differences and trends in industry regulations.