Solar energy has grown exponentially in the US over the past two decades. There were only about 100 MW of solar installations in the year 2000, but accumulated capacity surpassed 1,000 MW in 2011. Solar Energy Industries Association (SEIA) reported over 85,000 MW in mid-2020, and the 100,000 MW mark will be probably achieved in early 2021.
Several factors have contributed to the success of solar energy in the US. Technology becomes more affordable every year, while electricity prices continue to rise in many parts of the world. This means that the initial cost per kilowatt is constantly reduced, while the savings per solar panel increase. Depending on the location of the project, it may receive incentives from governments or public service companies.
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In the US, the Investment Tax Credit (ITC) has contributed greatly to the growth of solar energy and is available to homes and businesses. Until the end of 2019, the incentive consisted of a federal tax credit equivalent to 30% of the cost of solar installations. However, the benefit was reduced to 26% in 2020 and will be further reduced to 22% in 2021. The ITC will be just 10% from 2022, and only companies will be eligible.
This article will provide an overview of the 5 best states for solar on the East Coast, considering aspects such as incentive programs and electricity costs.
1) New York
STRENGTHS OF SOLAR ENERGY:
- Renewable Portfolio Standard: 100% renewable energy target by 2050, with 6,000 MW solar target by 2025
- High electricity prices.
- The NY-Sun Rebate Program that includes incentives for low-income housing
- 25% state tax credit up to $5,000, added to federal ITC
- Solar energy is exempt from property and sales taxes
- Solar panels or green roofs are mandatory for many properties
New York is not a very sunny state, but solid incentives and expensive electricity improve the commercial viability of solar energy. When you add the federal tax credit, state tax credit, and NY-Sun rebate, many solar installations are about 50% cheaper.
For a given solar capacity, the number of kilowatt-hours will likely be lower than in a sunny state like California or Colorado. However, because electricity is expensive in NY State, the dollar value of solar generation is high. For example, a home solar system that generates 600 kWh/month will save $120 if the rate is 20 cents/kWh. If that same system produces 800 kWh/month in a sunnier location, but the tariff is only 13 cents/kWh, the savings are reduced to $104.
2) New Jersey
STRENGTHS OF SOLAR ENERGY:
- Renewable Portfolio Standard: 50% renewable energy target for 2030, with 5.1% solar target for 2021
- Above-average electricity prices
- You earn one Solar Renewable Energy Credit (SREC) for every 1,000 kWh
- NJ Clean Energy Program Rebates for New Homes.
- Favorable net metering laws: Solar generation is credited at full retail price and balances in its favor are credited at wholesale price.
- Solar energy is exempt from property and sales taxes
Similar to New York, the state of New Jersey has a combination of favorable policies and state incentives for solar energy. Electricity is cheaper than in NY, but still above the national average, and this creates an excellent opportunity for savings.
Solar energy system owners can also earn additional income by selling accumulated SRECs. In 2020, each SREC sold for around US$230, which is equivalent to 23 cents/kWh. Since electricity prices in NJ are currently around 16 cents/kWh, SREC sales will be greater than the energy bill savings!
Electricity consumers who are purchasing a new home can take advantage of the NJ Clean Energy program if they meet ENERGY STAR requirements. The incentive can help cover the initial cost of a solar energy system.
3) Massachusetts
STRENGTHS OF SOLAR ENERGY:
- Renewable Portfolio Standard: 50% renewable energy target for 2045, with 3,200 MW target for solar
- High electricity prices
- SMART Incentive Program Pays Over 10 Cents/kWh Starting in 2020
- Discount programs available at various municipal dealerships
- Favorable Net Metering Laws
- 15% state tax credit up to $1,000, added to federal ITC
- Solar energy is exempt from property and sales taxes
Massachusetts is arguably the best state for solar in 2020. Electricity prices are above 20 cents/kWh and you get a SMART incentive of about 10 cents/kWh. This means that each kilowatt-hour of solar panels is worth more than 30 cents and you save $300 for every 1,000 generated.
The SMART program is only available to customers of the three investor-owned utilities in the state: National Grid, Eversource and Unitil. However, several municipal energy companies run incentive programs that offer upfront discounts for using solar energy.
4) Rhode Island
STRENGTHS OF SOLAR ENERGY:
- Renewable Portfolio Standard: 38.5% Renewable Energy Target for 2035
- High electricity prices
- Rhode Island Renewable Energy Fund : Discount of $0.85/watt on residential projects and up to $0.70/watt on commercial projects.
- Favorable Net Metering Laws
- Solar energy is exempt from property and sales taxes
The combination of expensive electricity and a solid rebate program improves the business landscape for solar panels in Rhode Island. Additionally, the residential program offers a discount of up to $7,000 per project, while the commercial program offers up to $75,000 per project. To obtain the maximum incentive available, the required solar capacity is 8,235 kW in a residential system and 175 kW in a commercial system.
5) Maryland
STRENGTHS OF SOLAR ENERGY:
- Renewable Portfolio Standard: 50% renewable energy target for 2030, with 14.5% solar target for 2028.
- Clean Energy Home Rebate Program offers $1,000 for solar panels up to 20 kW
- You earn one Solar Renewable Energy Credit (SREC) for every 1,000 kWh
- Large installations may qualify for a Production Tax Credit of $8.5 per 1,000 kWh
- Favorable Net Metering Laws
- Solar energy is exempt from property and sales taxes
Maryland is another state that offers a combination of incentives for solar energy , which shortens the payback period and increases the return on investment. When electricity is generated with solar panels in Maryland, there are three cash flows in your favor: electricity savings, SREC sales, and production tax credit in the case of large systems.
Maryland has electricity prices around 13 cents/kWh, while each SREC sells for about $80, equivalent to 8 cents/kWh. For every 1,000 kWh your solar panels produce, you get about $210 in SREC savings and sales.
Conclusion
There is a common misconception that solar energy is only viable in sunny locations. However, you can also get an attractive return on investment in locations with moderate sunlight and expensive electricity. Consider that the savings on your energy bill are the result of multiplying the kilowatt-hours produced and local electricity prices. Favorable government policies and incentive programs for solar energy also improve the return per dollar invested, and this is the case for several East Coast states, including New York.
