Solar energy has been among the fastest-growing sources of power generation in the U.S. in recent years, catapulting from 1.2 billion kilowatt-hours (kWh) of generation in 2010 to over 90.1 billion kWh in 2020. While that's still just a small slice of the overall energy mix (2% of all U.S. electricity in 2020, according to the U.S. Energy Information Administration), the rate of growth is accelerating. The EIA forecasts that by 2022, solar capacity installations will outpace wind capacity installations for the first time on record after wind turbines had a huge head start.
The COVID-19 pandemic and ensuing economic downturn of 2020 led to equipment shortages and other hardships for the solar industry. However, forecasts show the industry is primed for a resurgence in 2021 and beyond. In the first quarter of 2021 alone, solar installations are ramping up at a record pace and experienced a 46% year-over-year increase compared with the first quarter of 2020.
As 2021 continues to look like a prime year for solar power in the United States, which states are leading the charge? We can look to the recently released U.S. Solar Market Insight Report® from the Solar Energy Industries Association (SEIA) for some answers.
Top 10 States for Solar Energy
The Solar Market Insight Report included a ranking of the top states across the country based on the total amount of solar electric capacity installed and in operation as of the end of the first quarter of 2021. To put it into context, SEIA figures also include the equivalent number of homes that can be powered by that solar capacity in the individual state.
Here are the current leaders for solar power in the U.S.:
|State||Cumulative Solar Capacity (Megawatts)||Equivalent Number of Homes Supplied by Solar Energy|
On this leaderboard, some states show up that would be expected — California has long been the solar king, and they don't call Florida the Sunshine State for nothing — while other states represent surprising emerging solar hotbeds. For example, you may be surprised to see some smaller, northeastern states like Massachusetts and New Jersey beating out the field. But these results go to show it's not just about land space and the natural sunshine; the policies and economics driving these installations are just as impactful.
2021 Top States for New Solar Installation
With the solar market really exploding in recent years, traditional solar stalwarts like Arizona and Nevada are being actively challenged by some emerging contenders.
Specifically looking at where solar installations were most active during the first quarter of 2021, the SEIA report finds the following were the top states for solar installations from January through March:
On top, Texas added 1,525 megawatts (MW) of capacity, which is equivalent to 45% of the capacity installed in the state during all of 2020 and represents 16% of the state's cumulative capacity to date. California added 563 MW of capacity, equivalent to 14% of the capacity installed in 2020 and 2% of the state's cumulative capacity. Florida added 525 MW of capacity, which is 19% of the capacity installed during 2020 and 7% of the state's total capacity.
Compare the above list with the top 5 states for solar installations for all of 2020:
- North Carolina
A few compelling trends become evident when looking at the above numbers. First, it's never too late to become a solar leader. While Florida is in the top five of cumulative capacity today, and given its sunny reputation that result may not seem surprising, the truth is that 47% of that capacity has been added since the beginning of 2020. In just over a years' time, Florida nearly doubled its total solar capacity.
Another important trend to recognize is that geography alone doesn't decide whether a state will be a solar leader. Mid-Atlantic states like Virginia and North Carolina or Midwestern states like Indiana wouldn't necessarily be the first most would guess as being solar powerhouses, but thanks to policies like North Carolina's generous Solar Property Tax Exemption, Virginia's allowance for net metering and Indiana's solar easement laws, residents of these states are enjoying solar power on their homes in record numbers.
Where Does Your State Rank for New Solar Installation?
So, are you living in a state that's leading the way on solar or one that has some ground to make up? Factors to consider when looking at why some states are making more progress than others will include the types of policies in place, the availability of rooftops on which solar can be installed, the appetite for new energy generation and even the state's seasonal solar irradiance.
Taking all of those factors into account, here's where each state stands in SEIA's recently published rankings:
Here's how each state's Q1 2021 ranking compares to how it ranked for total solar installations in 2020:
for Q1 2021
for Total 2020
|Puerto Rico and other U.S. territories||25||33|
Seeing some states jump up or down the list from one year to the next may seem drastic, but keep in mind that certain tax incentives expire, new policies come into play and other market forces affect local solar industries. That reality underscores the point that being a solar-leading state takes continued commitment, and doing so can happen at any point state leaders decide to truly embrace the solar industry.
The Future of Residential Solar
As the Solar Market Insight Report indicates, solar energy is a hot and growing market. To date, though, solar still only provides a fraction of the total energy generated in the U.S. While some customers, buildings and regions see much higher penetration of solar into their power mix on a micro level, there's much improvement still on the way, especially as dirtier energy sources like coal continue to retire.
The recent SEIA report shows that it's a constant push and pull as well, as residential solar installations in the second quarter of 2021 were down 8% from the fourth quarter of 2020 but up 11% from the first quarter of 2020. The fact remains, though, that residential solar had its largest first quarter on record and its second-largest quarter of all at the beginning of 2021. These results signal a growing solar market, especially in states like Florida, Arizona and Texas.
Additionally, customer appetite for residential solar is as strong as ever: 19% year-over-year growth is expected to get the residential market to a total of 3.8 gigawatts (GW) of solar capacity by the end of 2021, a sum that would have been unthinkable just 10 years ago. Indeed, the future remains bright for residential solar.
While solar energy has plenty of benefits, there are also high upfront costs associated with installing a home renewable energy system. So, at the end of the day, are solar panels worth it?
If you want to minimize your ecological impact while reducing or even eliminating monthly utility bills, solar panels may be well worth the money. But they may not be the best solution for every home. In this article, we'll review solar panel costs, longevity and return on investment to help you decide whether they're right for you.
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How Much Do Solar Panels Cost?
The first thing to be aware of is that installing a residential solar system is always going to be expensive. Yes, saving money on your monthly utility bills can help balance that startup expense, and you can get some incentives to help undercut the cost of solar panels (more on that in a moment). But ultimately, there's no way around it: Investing in a residential solar system can be pricey.
How pricey, exactly? Your total solar energy system cost will depend on a myriad of factors, including the type of solar panels you choose, the number of panels required for your home, and the specific solar panel installation company you hire.
With that said, according to Sunrun, the average cost of installing solar panels in 2021 is between $16,200 to $21,400. And it's worth noting that this actually represents a significant drop in the price tag for solar panels. Solar installation is becoming more and more affordable, even if the startup price remains a little daunting.
Offsetting the Cost of Solar Panels
Something else to be aware of is that, over the past decade or so, both the federal government and many state governments have unveiled programs to provide financial incentives for solar installation. These programs include local and federal tax credits and other rebates. Top solar companies are usually able to help you identify and apply to any programs you are eligible for.
The current federal solar tax credit, called an Investment Tax Credit (ITC) provides a 26% credit for systems installed between 2020 and 2022. State incentives can be added on top for even more savings. However, even with numerous solar incentives, pricing and solar panel installation costs can still be steep.
How Long Do Solar Panels Last?
As you think about the initial startup investment in solar panels, another question to consider is system longevity. After you buy solar panels, how long do they last? Will they function long enough for you to get your money's worth?
Again, the answer can vary slightly depending on the specific type of solar panels you choose. As a rule of thumb, however, most residential solar systems last between 20 and 30 years and require only the most minimal maintenance and upkeep. Most of the best solar panels come backed with fairly rigorous warranties, ensuring your system holds up for at least two decades. Of course, when purchasing a solar panel system, you'll want to take a close look at the warranty information offered.
The longevity of your solar panel system can also add to the value of your home. According to the U.S. Department of Energy, buyers nationwide have been willing to pay an average premium of about $15,000 for a home with a solar array. In many cases, that alone can cover most of all of your solar investment.
How Much Money Will You Save With Solar Panels?
Related to the question of panel longevity is the question of a solar power system's return on investment, or ROI. How much power is a home solar system going to generate? How much money will it save you? Will month-to-month electric bill savings mean that your solar system "pays for itself" after a few years?
The amount of money you save on your monthly utility costs can vary depending on the efficiency and power of your solar panels, as well as your household energy consumption habits. Keep in mind that your savings will be greater if you live in an area where electricity rates are higher; by contrast, if you live somewhere with a lower cost of electricity, the money you save from going solar may be comparatively meager.
EnergySage notes that, over the lifespan of your solar system, you're likely to save anywhere from $10,000 to $30,000 on utility costs. This may or may not be enough for the unit to "pay for itself," though an upside of solar power ROI is that it's fairly instantaneous. Once your system is installed, you'll be able to start saving money right away.
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Are Solar Panels Worth It for Your House?
Ultimately, whether solar panels are worth it will need to be evaluated on a case-by-case and home-by-home basis. Simply put, solar power is a smarter option for some than for others. The question is, how can you tell whether you're a good candidate for solar panels?
Best Candidates for Solar Power
Solar panels tend to be a better investment for homeowners who meet the following criteria:
- Ample exposure to sun: If you live in a part of the country that gets lots of exposure to sunlight throughout the year, then you'll probably get more mileage out of your solar panels. It's little wonder that solar power is most popular in places like Arizona, Texas, California and even North Carolina.
- Accommodating roof space: A good solar system will require plenty of surface area on your roof, unobstructed by skylights, chimneys or other fixtures. With a smaller roof, you can still potentially install a system, but you'll need to find the most efficient solar panels (which are often more expensive) to maximize your limited space.
- High electricity bills: The amount of money you save by going solar will be directly proportional to the amount you spend each month on electrical costs. So, if you live in a community where the price of electricity is pretty high, you stand to achieve greater savings when you go solar.
Who's Not a Good Candidate for Solar Power?
By contrast, some homes may not be as well-positioned to reap a high solar power ROI.
- Homes without much sun exposure: If you know anything about how solar panels work, it won't be a surprise that darker areas benefit less from this renewable energy source. In a place where there tends to be a lot of cloud coverage or more limited solar exposure for good chunks of the year, the jump to solar may not be as advantageous.
- Homes with too much shade: Similarly, if your roof tends to be shaded for long stretches of the day (for example, if your home is in the shadow of a larger building or a lot of dense trees), then your solar panels may not get the sun exposure they need to generate a solid ROI.
- You pay lower costs for electricity: If your electrical bills are already fairly minimal, then installing a residential solar system will yield more modest and measured savings.
- You don't have the right kind of roof: Certain types of roofs just aren't as well-suited for solar power installation. For example, older or historic homes that have particular kinds of tiled roofs and homes that have larger skylights may not be good matches for solar energy.
How to Determine Your Solar Power ROI
Is solar worth it for you and your household? There are a few steps you can take to weigh solar energy pros and cons and make an informed decision.
One option is to consult with a solar panel installation company that can assess your roof and your positioning in relation to the sun, then supply you with a basic estimate of how much money you could save by installing solar panels. Reputable installers can also provide greater detail about the different types of solar panels that are available and recommend the technology you'll need to realize a significant solar power ROI for your home.
Even before you take the initial step and meet with a solar installer, a number of solar companies offer online calculators, which you can use to estimate your monthly utility savings. We'll stress that these calculators only give a very rough estimate and should be taken lightly, but they can still create a basic sense of whether solar panels are worth it for your home.
So, Are Solar Panels Worth It? It All Depends...
The bottom line for homeowners: Solar energy represents one of the best ways to reduce your dependence on traditional utility companies. And for many homeowners, solar power ROI will be well worth it. With that said, the startup cost can be prohibitive, and not every homeowner will achieve the same bang for their buck.
As you consider whether solar panels are a sound investment for your home, make sure you take into account cost, warranty, longevity and overall efficiency, all while seeking guidance from qualified solar experts.