If you aren’t going solar in Connecticut, you might want to rethink that. New research from the National Renewable Energy Laboratory puts Connecticut a lofty and surprising third – behind only Hawaii and California – among the 50 states in a measure of the unsubsidized economic potential of a residential solar system.
The state of Washington, meanwhile, is dead last, with a solar power system’s 25-year “lifetime revenue potential from net metering” pegged at 85 cents per watt, less than a quarter of Connecticut’s $3.49/watt.
These valuations are a bit of a theoretical exercise, undertaken specifically to assess the business case for third-party ownership of residential solar by state. To do an “apples-to-apples” comparison, the researchers assumed net metering policies everywhere that paid 100 percent of the residential electrical rate.
In reality, net metering polices are highly variable, so how much an owner might “earn” from a system wouldn’t necessarily be reflected in the NREL figures. Plus, states have (or don’t have) other incentives that will impact solar system economics.
Even in the rainy parts of Washington, for instance, solar can make financial sense for many homeowners, thanks to generous production incentives from the state and other programs from utilities. And solar has been growing in Washington State.
Still, the computation points us toward where solar makes sense by focusing on and capturing the relationship between the power-producing potential of a system given its location, and the value of the watts it produces there.
It turns out that the cost of electricity is the bigger influencer. Connecticut’s third-highest-in-the-nation electricity rates make solar a potential winner even though the solar resource there is relatively poor, 35th in the nation by capacity factor (actual electricity produced as a percentage of what a system would produce operating at full power around the clock).
The NREL researchers pointed to the cases of Hawaii and California to make the point about cost:
“The cost of electricity is the primary driver for the revenue from net metering as can be seen in the difference between the revenue potential from net metering in Hawaii ($7.93/W) and California ($3.67/W), which have similar solar capacity factors (0.170 and 0.176, respectively, but significantly different electricity costs (0.33 $/kWh and 0.15 $/kWh, in 2011 respectively).”
Washington does poorly by this particular measure because most of its population lives on the gray side of the state, where solar power systems aren’t terribly productive. Also, electricity rates in the state are very low, thanks to the subsidized – and environmentally impactful – hydroelectric projects of yesteryear.
Beyond Connecticut, another state where solar makes a lot of sense is Vermont, which is fourth on the list despite having the worst solar resource, a median capacity factor around 13 percent. Again, high electricity rates – fifth in the nation – are a key factor.
And here’s something Connecticut and Vermont residents will want to take note of: Your states do in fact have generous net metering policies, crediting net excess generation at the retail rate. That makes the high economic value of solar in your states more than a theoretical proposition.
Connecticut, too, does well when it comes to another factor that impacts the go-solar-or-not equation: the price of a system. According to the Berkeley Lab’s recent “Tracking the Sun” report, the median installed price for systems less than 10 kilowatts in size in 2013 was $4 per watt in Connecticut, well below the national median of $4.70/w.
For the full list of states and their lifetime revenue potential from net metering see page 32 of the NREL report, “The Effect of State Policy Suites on the Development of Solar Markets” [PDF].
Editor’s note: Prompted by thoughtful reader feedback, this story has been revised since its original publication to better reflect the economic reality of residential solar power in the state of Washington.
