We Asked Experts How States Can Be More Solar-Friendly. Here's What They Said

Going solar looks wildly different for people in different US states.

Some states offer robust state tax credits or prop up SREC markets that can nab residents thousands of dollars each year. Other states don't even offer a proper net metering policy, which is a very basic incentive that allows residents to plug the gaps in their solar panel system's effective uptime and save more money.

CNET took a look at the solar policies of every state plus the District of Columbia and Puerto Rico to see how they compared to each other. Just in time for the start of school, we gave each state a letter grade and noted some areas of improvement.

While we were developing the rubric for these scores, we also checked in with solar industry experts to get a sense of what's important. These experts aren't responsible for our scores and didn't necessarily offer feedback on our methodology for grading the states. Only CNET is responsible for those scores, but they do offer some insight on what works best in making solar panels affordable for people nationwide.

Here are some of those expert insights -- including one big incentive that every US resident can take advantage of right now.

The state of residential solar adoption nationwide

Are residential solar panel systems being adopted more rapidly across the United States? The short answer is "yes." The long answer is a little more complicated: Markets are expanding in many states, but contracting in others.

There's no one reason why. The shifts generally occur because of the dropping cost of solar panels, changes in state solar policy and rising electricity rates.

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"I would say net metering structure and electricity rates are the main contributors to the continued growth of residential solar," said Zoe Gaston, principal analyst for US distributed solar at the consulting firm Wood Mackenzie. "But where electricity rates are a lot lower, state incentives are more important and make a bigger difference."

This sentiment was echoed by Ben Delman, the communications director of Solar United Neighbors, a clean energy nonprofit.

"The cost of energy is a big factor when it comes to going solar in different places," he said. "How does going solar pencil out versus traditional electricity sources? What's the solar payback period? I think we're seeing solar becoming cost competitive in a lot of markets."

States with outsized financial investments in solar energy are the ones that have historically seen the most growth, Gaston said. "States like California, Hawaii or northeast states like Massachusetts that at one point had a strong SREC program have grown a lot more than other states that maybe haven't had as much support, like in the Southeast or Midwest," she said.

Another reason that solar markets are expanding in many US states is because of increased community solar capacity being added to the grid. The $7 billion in Solar for All grants authorized by the Inflation Reduction Act will allow low- to middle-income residents a chance to switch to solar nationwide in the coming years.

For homeowners who already have the upfront capital to buy their own solar panel systems, the Inflation Reduction Act has also made it easier than ever before to make the solar switch, expanding upon a federal tax credit that can provide a 30% rebate on the cost of solar panels.

Still, there are several key states where the solar market is struggling, largely due to the weakening of existing state solar incentives. Gaston pointed to California.

"It's an extreme example, but look at what we've seen with NEM 3.0. That's really drastically changed the number of installations there," she said.

There are also states that simply haven't been conducive to a flourishing solar market, due to pushback from state lawmakers. Gilbert Michaud, an assistant professor of environmental policy at the School of Environmental Sustainability at Loyola University Chicago, compared the state solar report card map to US voting results.

"There's a relationship between which states are more receptive to passing these types of policies and which states are red-voting states," he said. "You can overlay the [state solar report card] map with a voting map and a lot of the F states are in red."

When it comes down to it, projections are largely positive for solar adoption. A recent Wood Mackenzie report estimates that the solar industry will contract by 14% in 2024, but that's largely due to a floundering solar market in California. Otherwise, solar adoption is forecast to continue modest growth through at least 2029.

What makes a state "solar-friendly?"

It's easy to assume that solar friendliness is a matter of how much sunlight a state gets, but there's actually very little correlation between sunshine and how much a state promotes residential solar power.

The federal solar tax credit has made America more solar-friendly than it's ever been, but that doesn't mean every state has policies and incentives to make rooftop solar easier for their residents.

Retail rate net metering, where you earn credit for surplus energy equivalent to the same rate you pay your utility per kilowatt-hour, is seen by many as the bare minimum -- and the most important -- incentive necessary to support the solar industry within a state.

Residents purchase solar panel systems because of the promise of long-term savings. If they can't send their excess electricity to the grid for credits to pull energy from the grid when they really need it, the solar payback period is going to stretch out a lot longer.

"A really important metric is of course net metering, that is making sure that solar owners can earn fair credit for the electricity they generate," Delman said. "I think that in most markets, it's really the determining factor for a lot of folks."

Delman pointed out that other incentives that provided a high level of financial value to consumers drive solar installation. Solar installation costs most people tens of thousands of dollars, so incentives such as state tax credits and SRECs become important ways to help recoup some of that initial investment.

"States where consumers see a strong financial return, they're definitely incentivized to go solar," Delman said. "I think that bears out in the numbers of people going solar and the strength of the solar market and solar jobs that are created."

The final big component of solar friendliness is a policy that promotes solar equity. Solar panels might be getting cheaper, but that doesn't mean they're cheap. Even if you're able to afford a solar panel system, you might not necessarily own a home that can support its installation.

Community solar allows residents to pull energy from solar panels that are on the grid, usually part of utility-scale installations that belong to utility companies or other organizations. The rates are cheaper and consumers can tap into that green energy more easily.

"If we're talking about access to solar and solar equity, community solar has to be a strong part of that, because that's how we can get more families benefiting from solar energy," Delman said.

Community solar mandates are important parts of solar policy: allowing low- and middle-income households, renters and other interested parties to buy inexpensive green energy from the grid.

"Right now, community solar mandates are the most important factor for national community solar installation at large," said Caitlin Connelly, a senior analyst at Wood Mackenzie who leads the firm's community solar research team. "A lot of where you see community solar installed, the vast majority of it is in state markets with legislation in place and active third-party developer participation in those markets."

Some of the solar policy incentives we included in our solar report card methodology provide financial assistance to residents who are already capable of going solar. Other incentives provide a path to solar energy for people who wouldn't be able to take advantage of cheap, clean energy any other way.

As a package, these incentives -- net metering, tax credits, SRECs, community solar and more -- create the most solar-friendly market for consumers to take advantage of, making a long-term investment more affordable for everyone.

CNET's evaluation of state solar policy was based on a proprietary methodology with eight scoring categories. Final scores were converted to a corresponding letter grade. Here's how your state scored on CNET's solar policy test.

How states can continue to encourage residential rooftop solar

There are states that are winning when it comes to encouraging residents to go solar. New Jersey, New Mexico and Illinois are just a few examples of states with truly robust solar incentives. With that being said, no state is doing a perfect job, and there are key ways that both lower- and higher-scoring states can improve their solar friendliness.

A couple of incentives are borderline necessities for residents to take the leap and switch to solar.

Net metering might not bag consumers a lump sum, and it won't lower the upfront costs of going solar. Experts consistently pointed to the policy as a driver of residential solar adoption: If a state doesn't have a retail rate net metering program, solar payback periods significantly increase and it becomes much harder for a consumer to justify purchasing a solar panel system.

Michaud said net metering programs can always grow and evolve, even in states doing a good job right now.

"A lot of states have net metering program caps. Once they hit that cap, then they'll stop accepting people into the net metering program," he said. "What states can do, even states that are really good at this stuff already, is increase those caps, change percentages, do things to keep the policy alive and make it better."

Outside of net metering, residents generally derive the greatest value from a state solar tax credit or a lucrative SREC market. Sales and property tax exemptions on solar panels are a boon that could reduce solar payback periods as well.

The most solar-friendly states also have policies that boost equity: They make it easy for everyone, regardless of income, to access clean energy. Many states could mandate additional community solar capacity if they want to beef up their state solar policy. Without official policy in place, it's very rare that a state will build enough community solar to serve every resident who wants to get involved with solar energy.

"You could get one off projects here and there in states without community solar, where it's more community driven projects, but they're few and far between," said Connelly. "You really need that state-level support and funding to get a robust program in place."

A lack of community solar prevents many Americans from accessing solar energy, Michaud said. "There's a huge untapped market of people that are interested in clean energy and interested in saving money, but they just can't do it," he said. "By doing community solar, we're moving into the space of saying, 'Hey we're trying to touch on other populations besides the affluent suburban people.'"

States that truly want to make a commitment to creating a solar-friendly market could tackle these three pillars: net metering, steep financial incentives, and solar equity. 

"What can be a useful frame of mind is to make something like energy less of an ideological battle in states and just look at the data," Michaud said. "Some of the states that are on the edge, that could work their way up in your grading scheme, can basically look to the states that are already in the top five or 10: See what's doing well and what's working and adopt some of those policies."