Regardless of whether you purchase or lease your system, or sign up for a PPA (power purchase agreement), there are incentives that vary from state to state on top of the ITC (30% federal tax credit). Each state government has their own set of tax credits, rebates, and other incentives to help encourage renewable energy and support energy efficiency. Ultimately, the end goal is to help environmental conservation and reduce pollution. Whether or not solar is a good financial option for you is determined by your state’s solar “friendliness”.
There are many outlets to help you outline and rank the top solar states for PV installed, as well as your state’s “grade” for solar. SolarPowerRocks.com has built report cards for each state, and just released one for 2016 based on a variety of factors including net metering, the renewable portfolio standard (RPS), electricity cost, interconnection, solar renewable energy credits (SRECs) and other performance-based payments, tax credits, rebates, property and sales tax exemptions.
With this collected data, the following states are “in the green” meaning they’ve received A+ or A:
- Massachusetts, A+
- New Jersey, A+
- New York, A+
- Maryland, A
- Connecticut, A
- Oregon, A
- Minnesota, A
- New Mexico, A
- Vermont, A
- Colorado, A
Surprisingly, the #1 solar state, California, was given a B rating this year, but this was after several years of "coasting" — California truly is where the solar revolution began, so it’s becoming more and more competitive as time goes by.
According to the SEIA, the top 10 solar states based off total PV installed are listed below:
- North Carolina
- New Jersey
- New York
What is an SREC?
An "SREC" is a "solar renewable energy credit" that homeowners and commercial businesses earn for kilowatt-hours (kWhs) generated by their solar PV system. The systems must be purchased in order for SRECs to be earned and sold, and the value of the SREC varies on a state by state basis. The SREC is also sold separatey from the actual electricity it produces, but is meant to represent the percentage of your electricity that it produced.
How much is an SREC worth?
The rule of thumb for SRECs is that for every 1000 kilowatt-hours (kWhs) generated, 1 SREC is earned. If you generated 5000 kWhs, you'll earn 5 SRECs that you can sell. Again, SREC values vary state to state.
What's the value of an SREC?
Like any commodity marketplace, the SREC value is based on supply and demand. It can fluctuate due to many factors including but not limited to market volatility. It also varies from state and state and the date of which the SREC was actually generated (for instance, your SREC generated 3 years ago may not hold the same value today). It’s usually recommended to hold onto SRECS instead of selling them right away, in case they increase in value. Sometimes there aren’t enough SRECs available in the market place, and if your utility doesn’t have enough SREC’s to fill its quota, then it could go up in price.
If your utility can’t collect enough SRECs to meet its quota, then they have to pay a penalty to the state. The price of an SREC can never go higher than the penalty (ceiling) price. The SREC certificate is held by the owner of the solar system. If you buy the system then you will earn the SRECs. If you lease the system, then most likely the finance company will hold the SRECs on their books and records.