In recent news, it is claimed that twenty U.S. states are now at grid parity for residential solar with another 22 states expected to reach this milestone by 2020, under a “business-as-usual” scenario.
As installation costs continue to decline and retail electricity rates climb, residential solar economics have become increasingly attractive across the U.S.
According to GTM Research, the grid parity of Residential Solar is reached when the level cost of solar energy falls below gross electricity bill savings in the first year of a photovoltaic solar energy installations life.
The research is based on utility and state-specific rate design, system production and installation costs to gauge solar energy’s attractiveness versus traditional grid parity analyses that rely on average retail electricity rates to calculate customer savings.
When accounting for current Net Energy Metering rules, rate design, and incentives, California, Massachusetts and Hawaii are leading the residential solar energy attractiveness list, as in all of these states, solar energy can reduce an average customer’s electricity bill by 20% to 40% during the first year of system life.
Similarly, the research found that North Dakota, Oklahoma, and Washington are currently the least attractive states for solar energy.
The report also explores how rate design and reforms to net metering complicate the residential solar economic outlook in ways that can both strengthen and weaken rooftop solar savings.
The report argues that with more utilities reevaluating net energy metering rules and rate design, the economic outlook of residential solar energy can no longer depend on a static policy landscape that fueled the nearly one million homeowners now with rooftop solar.
In other words, solar continues to benefit from the favorable rate structures and Net Energy Metering rules of a few states, which has offered installers, customers and financiers greater economic predictability, and implicitly supports the continuation and extension of such policies to more states.