Solar Power in the United States

Renewable energy, and solar power in particular, has seen phenomenal growth in recent years. While the technology has been around for decades, adoption of solar power started to steadily grow in 2008 and accelerated in 2014.

The Growth of Solar Power in America

There are a number of reasons for the tremendous growth in US solar installations. However, the key driving factor has been the improved economics of solar power due to government incentives and decreasing solar panel costs. Generous government incentives helped attract investment in the solar industry, and as the industry grew and matured, the cost of installing a solar electric system declined. Solar is now economically competitive with traditional energy sources in many states.

Solar power adoption now makes perfect sense for home and business owners. Numerous national and state policies, plans, and incentives have helped to drive the growth of solar power for both commercial as well as residential use. The costs of solar panels, system components, and installation have dropped considerably and this trend is expected to continue. Solar power is more accessible and affordable than ever before, which has led to the rapid growth in installation.

There are a number of additional benefits to solar power beyond the economic factors. Solar power supports domestic economic growth and local job creation that cannot be outsourced to other countries. Transitioning to solar power will reduce American dependence on foreign energy sources, providing significant national security benefits. As the cleanest domestic source of energy available, solar power offers home and business owners a green alternative to traditional fossil fuels sources.

That being said, there are still significant barriers to further solar adoption in the US. Many states have implemented renewable fuel standards that may no longer be mandated under the Clean Power Plan. Another challenge impeding the growth of solar power is integration with the current electric grid, which is driven by state-level net metering regulations. And although hardware costs have dropped dramatically, the “soft costs” or non-hardware expenses are still high. Costs such as permitting, customer acquisition, and financing now account for over half of the cost of a residential solar system. 

US Utility Rates

Utility rates and the way they are calculated vary from state to state. There are numerous factors that can affect the price of electricity in the US. The two major costs are fuel costs and distribution costs. The fuel cost relates to the expense of transporting that fuel (like coal or natural gas) to a local power plant, burning that fuel to produce electricity, and operating the power plant. The distribution costs relates to the cost of maintaining and expanding the electrical grid in your area.

There are also seasonal fluctuations in the cost of electricity as well as demand-based price changes. The price also depends on the type of customer. For example, a residential consumer pays a higher rate than an industrial user that consumes more electricity.

Electricity rates paid by residential consumers have steadily increased for more than 10 years. This trend is expected to continue, with possibly even steeper increases in the future. The increases have been seen across the United States but some states have experienced more extreme increases than others.

There has never been a better time to invest in solar power

With the increase in electricity rates expected to continue, now is the time to look at solar power as a cost-effective alternative. The solar Investment Tax Credit (ITC) allows solar panel system owners to deduct 30% of the total cost of installing a new solar system from their federal taxes. Only owners of a solar energy system qualify for the solar investment tax credit, but both home and business owners are eligible. If your tax liability in the year you install the solar system is insufficient to deduct the full amount, you can carry the deduction over to future tax years. First enacted in 2008, and extended in 2015, the ITC is set to expire in 2022, with a significant step down in both 2020 and 2021.

Additionally, state and municipal governments have adopted a number of policies to support investment in and adoption of renewable energy technologies.These policies include renewable portfolio standards, net metering policies, rebates, tax credits, and production-based incentives. Combined with the national ITC, favorable state and local policies make solar an attractive prospect in states with only average sunlight. With the ITC expiration looming and state incentives approaching their quotas, there has never been a better time to invest in solar power for your home or business.

State Directory