The Most Solar-Friendly States in 2024
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Solar panels offer a renewable energy source that can increase your home’s value, offer you energy independence, and save you money on your energy bills. However, solar panels are an expensive up-front investment, and they aren’t the best choice for every home. The federal solar tax credit that allows you to reduce your federal taxes by up to 30% of your solar panel installation costs helps make solar worth it for many homeowners.
Our team researched available solar programs, installation costs, and other key factors in all 50 states to determine the top 10 states for solar panel installation. Learn more about our research process in our methodology, and find out which states ranked as the most friendly for solar in our guide below.
Key Findings
The 10 Best States for Solar
Our team analyzed all 50 states based on solar incentives, system costs, and current and future clean-energy goals to determine the best locations for solar savings. These states offer residential customers the best savings on solar energy installations.
10. New Jersey
Despite dedicating only 7.55% of its electricity generation to solar energy, New Jersey has nearly 40 programs to support solar energy growth. New Jersey may not have the shortest payback period of our top solar-friendly states, but with a 14.2% rate of return and average installation cost of $9,202.05, it’s a great place to go solar.
The state offers a mix of tax exemptions and mandated net-metering programs that can help New Jersey homeowners break even on a solar panel system in roughly seven years. The state offers a Successor Solar Incentive (SuSI) program with guaranteed payouts of $90 for every 1,000 kilowatt-hours (kWh) of generated energy, helping homeowners boost their savings potential.
- Number of solar programs: 39
- Installation cost (after savings): $9,202.05
- Payback period: 7.04 years
- Rate of return: 14.2%
Learn more: Solar Incentives in New Jersey
9. Rhode Island
Despite being the smallest U.S. state, Rhode Island’s ambitious renewable energy goals exceed plans in higher-populated states. State officials hope to achieve 100% clean energy generation by 2033 and offer 34 solar-focused programs to support these goals.
Rhode Island programs include tax exemptions, low-interest loans, and grant programs that may reduce the cost of a 6 kW solar system to roughly $10,200. Rhode Island homeowners can expect to pay off their systems within five to six years, which is much shorter than the average payback period of up to 12 years.
- Number of solar programs: 34
- Installation cost (after savings): $10,206
- Payback period: 5.61 years
- Rate of return: 17.83%
Learn more: Solar Incentives in Rhode Island
8. Maryland
Maryland makes our list of the top ten most solar-friendly states thanks to its 47 solar incentive programs and affordable installation costs, averaging $8,945.60 once solar incentives are applied. A little more than 6% of the state’s electricity comes from solar energy. Net-metering programs, tax exemptions, and an abundance of local rebates help make solar panels more affordable for the average Maryland resident.
- Number of solar programs: 47
- Installation cost (after savings): $8,945.60
- Payback period: 7.46 years
- Rate of return: 13.4%
Learn more: Solar Incentives in Maryland
7. Florida
The Sunshine State offers ample sunlight and robust solar savings—and most of the state takes advantage of it. Florida ranks third in the United States for solar installations, with roughly 24 mW of solar installed per 100 square miles and $18.4 billion invested in solar.
Florida doesn’t allow homeowners to lease their solar systems with a power purchase agreement (PPA), but it offers low-interest loans through its Property-Assessed Clean Energy (PACE) financing program. Florida has 57 solar-friendly programs that make installation more affordable. These incentives include tax exemptions and a net-metering program that mandates full retail pricing for bill credits. These programs and other local credits and rebates reduce the expected payback period to roughly six years.
- Number of solar programs: 57
- Installation cost (after savings): $8,908.80
- Payback period: 6.1 years
- Rate of return: 16.4%
Learn more: Solar Incentives in Florida
6. Hawaii
Solar power is beneficial in Hawaii because the state has the country’s highest electricity rates. In December 2023, electricity cost $0.42 per kWh in Hawaii compared to the U.S. average of $0.16 per kWh. With an average of 240 days of sunshine, your solar panels won’t need to work overtime to offset your energy costs. This state has the fastest return rate and shortest payback period of all 50 states.
Hawaii’s 39 solar programs offer generous savings on solar loans, community solar programs, and a state solar credit for up to 35% of your system’s equipment (maxed at $5,000). The typical Hawaii homeowner can expect to pay less than $11,500 on up-front installation costs.
- Number of solar programs: 39
- Installation cost (after savings): $11,442
- Payback period: 2.38 years
- Rate of return: 41.97%
5. Connecticut
Connecticut has one of the highest electricity rates in New England at $0.28 per kWh, so going solar is an excellent money-saving alternative. Plus, the cost of solar installation is among the lowest in all 50 states at an average of $7,335.21 after cost savings.
Solar energy currently accounts for less than 4% of the state’s electricity, but it offers advantages to homeowners in hopes of increasing this percentage. With 43 programs, such as low-interest, no-money-down loans and tax exemptions, residents could break even on their solar investment in less than five years, the third-lowest payback period across all 50 states.
- Number of solar programs: 43
- Installation cost (after savings): $7,335.21
- Payback period: 4.19 years
- Rate of return: 23.89%
Learn more: Solar Incentives in Connecticut
4. Arizona
Arizona is rated fifth in the nation for solar energy but takes the fourth spot on our list because of its affordable installation costs and short payback period. It has 5.92 mW of installed solar per 100 square miles, according to our analysis of data from the SEIA. The state’s 47 solar energy programs rely on tax exemptions, credits, and rebates to provide savings to homeowners. The cost of solar has fallen 42% in the past 10 years in Arizona, and the average 6 kW system now costs $7,809.92. Coupled with Arizona’s daily six-and-a-half hours of peak sunshine (the second highest in the country), its residents could break even on system costs in a little more than five years.
- Number of solar programs: 47
- Installation cost (after savings): $7,809.92
- Payback period: 4.92 years
- Rate of return: 20.31%
Learn more: Solar Incentives in Arizona
3. New York
With more than 40 cost-saving solar programs, New York residents have access to among the most affordable solar systems in the United States. On top of a low average installation cost of $6,519, New York offers statewide net-metering, tax exemptions, and rebates with low-interest solar loan programs.
New York’s solar credit is worth 25% of your system value or $5,000, whichever is lower. By leveraging available solar incentives, you could pay back your solar investment in New York in less than five years.
- Number of solar programs: 44
- Installation cost (after savings): $6,519
- Payback period: 4.2 years
- Rate of return: 23.8%
Learn more: Solar Incentives in New York
2. California
Thanks to its progressive solar adoption policies and high solar installation rates, California ranked as the second most solar-friendly state. The state offers 73 programs, the highest in this ranking, to support its goal of 100% carbon-free energy generation by 2045. Programs include property tax exemption, solar battery rebates, and low-income programs.
Despite California’s recent net-metering payout rate decrease, the average 6 kW system costs $10,668 after solar incentives. California is one of the sunniest states, with more than 260 days of sunlight each year. These sun-packed days combined with its excellent solar incentives programs make the average payback period less than five years.
- Number of solar programs: 73
- Installation cost (after savings): $10,668
- Payback period: 4.14 years
- Rate of return: 24.16%
Learn more: Solar Incentives in California
1. Massachusetts
Although it’s one of the country’s smallest states, Massachusetts is our most solar-friendly state. With a faster-than-average payback period of 5.13 years and affordable solar pricing, it’s no wonder the state hosts more than 55 mW of solar power per 100 square miles.
The state’s 55 available solar programs help support its clean energy generation goal of 40% by 2030 and make solar more affordable for homeowners. Offering a net-metering program and an active Solar Renewable Energy Certificate (SREC) market, the average cost of a new 6 kW solar system in Massachusetts is roughly average at $9,480.50 after rebates and incentives have been applied.
- Number of solar programs: 55
- Installation cost (after savings): $9,480.50
- Payback period: 5.13 years
- Rate of return: 19.5%
Learn more: Solar Incentives in Massachusetts
What Makes a State Ideal for Solar?
The best states for solar incentives were determined based on numerous factors, as outlined in our methodology. We’ve also highlighted three underlying factors that make converting to solar more valuable for homeowners.
Quality of Solar Incentives
Not all solar incentives are created equal. While we considered the number of solar incentives available in each state, we also quantified how beneficial those incentives are to homeowners in terms of availability within the state, dollars saved, and return on investment.
- Highest quality solar incentives: Massachusetts
- Lowest quality solar incentives: Alabama and Oklahoma
To determine the quality ranking of solar incentives, we examined solar programs (such as rebates, tax credits, SRECs, and net-metering) and solar easement or access laws enacted in each state, if any. The programs were ranked based on how much money they would save people and how much of the state they covered.
Peak Sun Hours
Solar panels work rain or shine and even during thunderstorms. The stronger the sunshine, the more energy the panels produce. That means homeowners living in states with longer peak sun hours will get more value from their solar panel system.
- Longest average peak sun hours: New Mexico
- Shortest average peak sun hours: Illinois
Electricity Costs
If you live in a state with high electricity costs, you’ll likely see greater savings by switching to solar. The following are the states with the highest and lowest monthly electricity bills, according to U.S. Energy Information Administration (EIA) data.
- Highest monthly electricity bills: Hawaii
- Lowest monthly electricity bills: North Dakota
What Solar Incentives Are Available in 2024?
Solar incentives, credits, and rebates help lower solar installation costs and boost your return on investment. Below is an overview of the most common incentives available to residents.
Federal Solar Tax Credit
Qualified homeowners can use the federal solar tax credit to claim up to 30% of installation costs on their federal tax return. This incentive applies to residential photovoltaic installations and includes installation and additional equipment costs. As of 2023, you can also apply this incentive to stand-alone energy storage, allowing homeowners to supplement their systems with backup power options.
Since this is a tiered incentive program, the credit percentage will decrease over the next 10 years. We’ve outlined the current timetable for the federal credit below:
- Up to 30% of your total installation costs for systems installed between 2022 and 2032
- Up to 26% of your total installation costs for systems installed in 2033
- Up to 22% of your total installation costs for systems installed in 2034
The federal solar tax credit ends after 2034 unless the U.S. Congress extends it.
State Solar Tax Credits
Like the federal tax credit, state solar tax credits provide additional tax relief for new solar customers. Credits apply to state tax liability, helping reduce or eliminate your owed taxes. You can combine state and federal credits for increased savings. Only 14 states have active state solar credit programs for residents, and total savings vary by area.
Net-Metering
Net-metering (or net-energy metering) allows homeowners to earn utility bill credits for their generated energy. When your solar system generates more energy than you need, you can sell that excess energy to the power grid. Your utility company issues bill credits as compensation.
While some states mandate net-metering for their utility companies, some areas allow electric providers to decide availability on a case-by-case basis. In addition, credit payout rates vary by program, with some payout rates ranging between retail rates and “avoided cost” payouts. Even with lower payout rates, homeowners still benefit from the program since these added credits contribute to lowering their energy costs.
Our Conclusion
Solar energy is becoming more affordable and available for the average homeowner, and several states—such as Massachusetts and California—stand out as the most solar-friendly states in the nation. These states have focused on renewable energy goals to provide better financial savings for their residents, and the continued development of solar programs has increased the amount of energy we can attribute to solar power. These programs allow you to invest in high-quality residential panels at more affordable prices. Consider this investment if you live in any of our top 10 solar-friendly states.
We recommend checking the Database of State Incentives for Renewables & Efficiency for up-to-date available solar incentives in your area.
Methodology
To rank the best states for solar incentives, we compared all 50 states across seven metrics:
- Average installation cost: This is the average installation cost for a 6 kilowatt (kW) solar panel system after credits or rebates are applied. Data comes from Energy Sage.
- Annual savings as a percentage of installation cost: This is how much a homeowner may save on electricity costs divided by the up-front installation cost. Data on electricity costs and usage comes from the Energy Information Administration and is as of 2024.
- Payback period: This is how long it takes to make back the up-front solar installation cost through your savings on electricity. We measured this in years.
- Quality of solar incentives: This is based on different types of solar incentives, such as net-metering programs, tax credits, sales and property tax exemptions, solar renewable energy credits, and solar easement and access laws. We scored states based on how comprehensive their programs are.
- Number of solar programs: This is based on the number of solar technology programs available in every state. Data comes from the Database of State Incentives for Renewables & Efficiency and is as of 2023.
- Percentage of state’s electricity generated from solar: Data comes from the Solar Energy Industry Association and is as of 2022.
- Total solar installed per 100 square miles: Data comes from the Solar Energy Industry Association and is as of 2022.
We ranked every state in each metric. From there, we found the average ranking for each state, giving an equal weight to all metrics. We ranked states accordingly, with the best state receiving a score of 100.
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