Solar energy adoption across the United States varies widely, depending on factors like sunlight availability, government incentives, and installation costs. States like California and Arizona are often hailed as solar leaders due to their sunny climates and supportive policies. On the other hand, states with limited sunlight or weaker incentives may struggle to achieve widespread solar adoption. For example, California frequently ranks as the top state for solar development, while Alaska, with its shorter daylight hours, is far less ideal.
The Top 11 States for Solar Energy Development
Solar energy development hinges on several key factors: solar resource potential (sunny days), government incentives, electricity generation from solar, solar jobs, installation costs, and return on investment (ROI). Using data from the SEIA, NREL, and government reports, here’s a breakdown of the top 11 states for solar energy:
1. California
California remains the frontrunner in solar energy, producing over 37,086 MW of solar energy as of 2023, according to the SEIA. This accounts for approximately 32% of the state’s total electricity generation. California has long been a pioneer in solar energy, thanks to its forward-thinking policies such as the California Solar Initiative, net metering, and ambitious renewable energy mandates. The state boasts over 1.5 million solar installations, including both residential and large-scale systems. With nearly 284 sunny days annually in regions like Los Angeles, combined with robust incentive programs and significant federal tax credits, California’s solar industry continues to thrive. The state also leads the nation in solar employment, with over 68,000 solar jobs, according to NREL data.
2. Arizona
Arizona ranks second in the U.S. for solar energy potential, with a solar capacity of 5,659 MW, according to SEIA data. The state enjoys more than 300 sunny days annually, which significantly boosts the efficiency of solar panels. Utility companies in Arizona have embraced solar power, with more than 537,000 homes powered by solar as of 2023. Although the state saw reductions in net metering benefits in recent years, the combination of its natural solar resources and falling installation costs still make Arizona a top contender. According to NREL, Arizona’s average installation cost is 15% lower than the national average, increasing the ROI for homeowners.
3. Florida
Florida, also known as the "Sunshine State," is making huge strides in solar energy. In 2023, Florida’s solar capacity reached 10,499 MW, powering over 1.3 million homes. Utility-scale solar projects are driving most of the growth, particularly those developed by Florida Power & Light. The state ranks third in the nation for solar jobs, with nearly 12,000 people employed in the industry, according to the SEIA. However, despite the high potential, Florida has fewer state-level incentives compared to California, which limits the impact of residential solar installations. Still, with over 230 sunny days annually, solar panels in Florida perform exceptionally well.
4. Texas
Texas, traditionally known for oil and gas, is now a leader in renewable energy, particularly solar. The state boasts over 22,000 MW of solar capacity as of 2023, ranking it second only to California. This is a result of Texas’ abundant sunshine—averaging around 220 sunny days per year—and large tracts of land ideal for solar farms. Texas benefits from competitive installation costs, and while it doesn’t have a statewide incentive program, local utility companies often provide rebates. NREL data indicates that Texas has seen a sharp drop in solar costs, making it one of the most cost-effective states for solar energy.
5. North Carolina
North Carolina ranks fourth in the U.S. for installed solar capacity, with 8,154 MW as of 2023, according to SEIA. This significant solar adoption is largely due to the state’s Renewable Energy and Energy Efficiency Portfolio Standard (REPS), which requires utilities to generate a certain percentage of their energy from renewable sources. North Carolina’s utility-scale solar projects are among the most cost-effective in the country, and its solar capacity powers over 960,000 homes. The state is also known for having relatively low installation costs, further encouraging solar growth.
6. Nevada
Nevada is one of the sunniest states in the U.S., making it an ideal location for solar energy. With over 300 sunny days annually and a solar capacity of 5,215 MW, Nevada ranks among the top five states for solar power, according to SEIA data. Solar energy in Nevada accounts for 20% of the state’s total electricity production, making it a critical player in the renewable energy sector. The state has strong incentives, including the Nevada Solar Access Law, which protects homeowners’ rights to install solar panels. The cost of solar installation in Nevada is also below the national average, contributing to a quick ROI for residents and businesses alike.
7. Colorado
Colorado has emerged as a leader in solar energy in the mountain states, with over 2,441 MW of installed capacity, enough to power more than 460,000 homes, as reported by SEIA in 2023. The state benefits from around 300 sunny days per year, and its high elevation further increases the efficiency of solar panels. Colorado offers several incentives, such as the Renewable Energy Standard (RES) and various rebate programs through utility companies. The state also supports community solar initiatives, which allows residents to benefit from solar energy without installing panels on their property. Colorado is a growing hub for solar jobs, with nearly 7,000 people employed in the sector.
8. Utah
Utah is quickly climbing the ranks in solar energy adoption, with 3,982 MW of installed solar capacity as of 2023, according to SEIA. This has led to over 740,000 homes being powered by solar energy. The state enjoys a high number of sunny days, averaging over 250 per year, which makes solar panels highly effective. Utah has some of the lowest solar installation costs in the country, which boosts ROI for homeowners. The state’s Solar Renewable Energy Credits (SRECs) program also allows solar owners to sell credits for the energy they produce, further incentivizing solar adoption.
9. South Carolina
South Carolina has seen rapid growth in solar energy, with over 2,397 MW of installed capacity in 2023, according to the SEIA. This growth is driven by several factors, including a state tax credit that covers up to 25% of installation costs, making solar more affordable for homeowners. The state receives plenty of sunlight—around 220 sunny days per year—and this, coupled with declining installation costs, has made solar a compelling option. Solar panels power more than 255,000 homes, and South Carolina is continuing to expand its solar infrastructure.
10. New Jersey
Despite its northern location, New Jersey ranks as one of the top states for solar power, with 4,661 MW of installed capacity in 2023. The state’s success is largely due to its aggressive Renewable Portfolio Standard (RPS) and Solar Renewable Energy Certificates (SRECs), which have encouraged widespread adoption of solar. Over 660,000 homes in New Jersey are powered by solar, and the state’s solar industry employs more than 6,000 people. Although installation costs are higher than the national average, New Jersey’s solar incentives make the investment worthwhile.
11. Georgia
Georgia has become a surprising leader in solar energy, with over 4,583 MW of installed capacity. Solar powers more than 538,000 homes, and the state continues to see significant growth in utility-scale solar farms. Georgia does not have a statewide incentive program, but the low installation costs and high sunlight availability—approximately 220 sunny days annually—make it an attractive market for solar. Utility companies, such as Georgia Power, have also made solar adoption easier through their solar purchase programs.
The 6 Worst States for Solar Energy Development
Not all states are equally suited for solar energy. Factors such as limited sunlight, higher installation costs, weaker state-level incentives, and lower return on investment can make solar adoption challenging. Here are six states where solar energy development faces significant obstacles, based on data from the U.S. Department of Energy (DOE), SEIA, and NREL.
1. Alaska
Alaska ranks as the least favorable state for solar energy due to its geographic location. With long, dark winters and short summer days, Alaska’s solar potential is extremely limited. According to NREL, Alaska averages fewer than 100 sunny days per year, making solar panels far less efficient. Furthermore, solar installation costs in Alaska are significantly higher than the national average, with fewer than 1,000 homes powered by solar as of 2023. While some small-scale projects exist, the state’s solar capacity is only about 4 MW, according to SEIA data, which is the lowest in the nation.
2. West Virginia
West Virginia, with its strong reliance on coal, has been slow to adopt solar energy. The state has less than 40 MW of installed solar capacity as of 2023, powering just over 6,000 homes. West Virginia’s mountainous terrain limits the effectiveness of solar panels, and the state averages only about 170 sunny days per year. Additionally, West Virginia lacks substantial state-level incentives for solar adoption, further hindering growth. According to DOE reports, the state’s solar ROI is one of the lowest in the U.S., making it less attractive for homeowners and businesses alike.
3. North Dakota
North Dakota is another state where solar energy development lags behind. With fewer than 70 MW of installed solar capacity in 2023, the state generates minimal solar electricity compared to national leaders. North Dakota has fewer than 180 sunny days per year on average, and the state offers limited incentives for solar adoption. While installation costs are comparable to the national average, the low ROI due to poor sunlight availability and weak state policies make solar energy less viable in North Dakota. The DOE reports that wind energy is far more developed in the state, leaving solar energy largely untapped.
4. South Dakota
Like its northern neighbor, South Dakota faces challenges in developing solar energy. With just 64 MW of installed capacity and fewer than 7,500 homes powered by solar as of 2023, the state ranks near the bottom for solar energy adoption. South Dakota averages around 200 sunny days per year, but the high cost of installation and lack of substantial state-level incentives hinder growth. According to SEIA, solar energy accounts for less than 1% of the state’s total electricity generation, making it one of the least solar-friendly states in the country.
5. Kentucky
Kentucky, a state traditionally reliant on coal, has been slow to embrace solar energy. The state’s installed solar capacity is only 132 MW, with fewer than 24,000 homes powered by solar as of 2023, according to SEIA data. Kentucky averages around 190 sunny days per year, but the lack of strong state-level incentives makes it difficult for solar to compete with cheaper, conventional energy sources. Solar installation costs in Kentucky are also higher than the national average, further decreasing the appeal of solar investments in the state.
6. Wyoming
Wyoming has vast open spaces and abundant wind energy potential, but solar development has been minimal. The state’s installed solar capacity is only 149 MW as of 2023, powering fewer than 25,000 homes. Wyoming averages around 230 sunny days per year, which is relatively high, but the state’s energy infrastructure is largely focused on fossil fuels and wind. Wyoming also lacks significant state-level incentives for solar energy, making it less attractive for homeowners and businesses. The state’s rural nature and low population density further limit the economic feasibility of solar projects.
Solar Incentives Across the U.S.
One of the key factors driving the adoption of solar energy is the availability of state and federal incentives. These incentives can significantly reduce the upfront costs of solar installation, improve return on investment, and make solar more accessible to homeowners and businesses. Below are some of the most impactful solar incentives available across various states, supported by data from the U.S. Department of Energy (DOE), the Database of State Incentives for Renewables & Efficiency (DSIRE), and the Solar Energy Industries Association (SEIA).
Federal Solar Investment Tax Credit (ITC)
The Federal Solar Investment Tax Credit (ITC) is one of the most well-known and impactful incentives available nationwide. As of 2023, the ITC allows homeowners and businesses to claim a tax credit of 30% of the cost of installing a solar system. This credit applies to both residential and commercial installations, and there is no cap on its value. According to SEIA, the ITC has been responsible for driving a 10,000% growth in the solar industry since its inception in 2006, making it a crucial factor in reducing solar installation costs and promoting widespread adoption.
Net Metering Programs
Net metering is another essential incentive offered in many states, allowing solar owners to sell excess electricity back to the grid and receive credits on their utility bills. States like California, New York, and New Jersey have some of the strongest net metering programs, where homeowners can offset their electricity costs with solar energy credits. According to the DOE, states with robust net metering programs often see faster solar adoption because this system improves the financial viability of solar investments by providing ongoing savings beyond the initial installation.
State-Specific Tax Credits
In addition to the federal ITC, many states offer their own tax credits or rebates to further reduce the cost of solar installations. For example:
- South Carolina offers a state tax credit covering up to 25% of solar installation costs, on top of the federal ITC, which makes solar significantly more affordable for residents.
- New York provides a tax credit of up to $5,000 for residential solar systems, which, combined with other state and federal incentives, leads to a quick return on investment.
- Louisiana offers a state solar tax credit that reimburses homeowners for up to 50% of installation costs, capped at $10,000, further driving solar adoption in the state.
According to DSIRE, these state tax credits, when combined with federal incentives, can reduce the overall cost of solar by 40% to 60%, depending on the location.
Solar Renewable Energy Certificates (SRECs)
In states with a Renewable Portfolio Standard (RPS), like New Jersey, Massachusetts, and Maryland, solar owners can generate Solar Renewable Energy Certificates (SRECs) for the energy their system produces. Utilities are required to purchase SRECs to meet state-mandated renewable energy goals, providing solar owners with an additional revenue stream. According to SEIA, SRECs can provide significant financial benefits, allowing homeowners to earn hundreds or even thousands of dollars annually, depending on the state and the size of the solar system.
Property and Sales Tax Exemptions
Many states offer property and sales tax exemptions for solar installations, further reducing the financial burden of going solar. For example:
- Florida and Texas both offer property tax exemptions that prevent homeowners from being taxed on the increased property value that solar installations add to their homes.
- Arizona and Minnesota offer sales tax exemptions on the purchase of solar equipment, which can save homeowners up to 8% on installation costs. According to DSIRE, these tax exemptions are a crucial factor in making solar more affordable and ensuring that the long-term savings are passed on to consumers.
Utility Rebate Programs
Several states have utility companies that offer direct rebates for solar installations. For instance:
- California’s Self-Generation Incentive Program (SGIP) provides rebates for homeowners installing battery storage systems with their solar panels, making solar-plus-storage an attractive option for energy resilience.
- New York’s NY-Sun Program offers significant upfront rebates for solar installations, which vary by region and utility company but can reduce the cost by as much as 25%.
According to the DOE, utility rebate programs can play a vital role in accelerating solar adoption by offering immediate financial relief for those investing in solar energy.
Conclusion
Understanding which states are best and worst for solar energy development can greatly impact your decision to invest in solar power. The data presented in this article is derived from reputable sources such as the U.S. Department of Energy (DOE), the Solar Energy Industries Association (SEIA), the National Renewable Energy Laboratory (NREL), and the Database of State Incentives for Renewables & Efficiency (DSIRE). These organizations provide up-to-date and reliable information on solar capacity, state incentives, and financial returns, ensuring that the insights shared here are both accurate and practical.
By leveraging the federal and state programs mentioned, you can make an informed decision on whether solar energy is right for you. Solar energy continues to evolve, and staying informed through reliable data sources will help maximize the benefits for both homeowners and businesses.
