Solar by State
Where you live is the single biggest variable in whether solar makes financial sense for your home. Two identical 6 kW systems installed on identical roofs — one in Phoenix, one in Seattle — can have payback periods that differ by eight years or more. Two factors drive almost everything: how much sunlight your roof receives and how much you pay for electricity. The combination determines your annual savings, and annual savings divided into your net system cost gives you your payback period.
This guide breaks down the solar economics for the most populous U.S. states, explains what makes some markets excellent and others difficult, and highlights the state-level incentive programs that can meaningfully change the math.
A "peak sun hour" is one hour of sunlight at 1,000 watts per square meter — the standard used to rate solar panel output. A location that receives 5.5 peak sun hours per day will generate roughly 85% more electricity from the same system than a location that receives 3.0. The Southwest dominates here: Phoenix averages 6.5 peak sun hours per day, while Seattle averages about 3.8 and Boston gets around 4.2. But sun hours alone don't determine whether solar pencils out.
Every kilowatt-hour your panels produce replaces a kilowatt-hour you would otherwise buy from your utility. The higher your rate, the more each kWh of solar is worth. Hawaii pays over $0.40/kWh — the highest in the nation — making solar extremely valuable even though it's not the sunniest state. Washington state has some of the cheapest hydroelectric power in the country at around $0.10/kWh, which makes it hard for solar to compete economically despite decent sun hours in the eastern part of the state.
| State | Avg Rate (¢/kWh) | Avg Peak Sun Hrs | Est. Payback (6 kW system) | Net Metering |
|---|---|---|---|---|
| Hawaii | 42 | 5.7 | 5–6 yrs | Limited (NEM 3) |
| California | 29 | 5.8 | 6–8 yrs | NEM 3.0 (reduced) |
| Massachusetts | 27 | 4.2 | 7–9 yrs | Strong + SMART |
| Connecticut | 26 | 4.2 | 7–9 yrs | Retail rate |
| New York | 22 | 4.5 | 8–10 yrs | Retail rate + NY-Sun |
| New Jersey | 19 | 4.6 | 8–10 yrs | Retail rate + SREC |
| Arizona | 14 | 6.5 | 8–10 yrs | Retail rate |
| Colorado | 14 | 5.5 | 9–11 yrs | Retail rate |
| Florida | 13 | 5.6 | 9–11 yrs | Retail rate |
| Texas | 13 | 5.4 | 10–12 yrs | No statewide mandate |
| North Carolina | 12 | 5.0 | 10–12 yrs | Retail rate |
| Illinois | 14 | 4.3 | 10–12 yrs | Retail rate + Illinois Shines |
| Ohio | 13 | 4.0 | 11–14 yrs | Retail rate |
| Washington | 10 | 3.8 | 13–17 yrs | Retail rate |
| Louisiana | 11 | 5.1 | 12–15 yrs | Weak |
Estimates assume a 6 kW system at $3.50/W installed cost, 30% federal ITC applied, and average local electricity rate. Actual results vary by roof orientation, installer pricing, and usage.
Hawaii has the most compelling solar economics in the nation, driven almost entirely by its extraordinary electricity rates — the highest in the U.S. at over $0.40/kWh. That means every kWh of solar production is worth roughly three times what it would be in a low-rate state. Even after the shift away from traditional net metering, most Hawaiian homeowners see payback periods of 5–6 years on a standard system. The downside: installation costs tend to be 15–25% higher than the mainland due to shipping and contractor supply constraints.
California has consistently been the largest solar market in the U.S., fueled by high electricity rates (PG&E, SCE, and SDG&E customers often pay $0.25–$0.35/kWh at higher usage tiers), abundant sunshine, and a history of supportive policy. The biggest recent change is NEM 3.0, which took effect in April 2023 and substantially reduced the export credit rate for new solar customers — from near retail rates to roughly $0.05–$0.08/kWh for daytime export. This has shifted the economics strongly toward self-consumption and battery storage, adding 1–3 years to payback periods compared to the prior NEM 2.0 regime. California also offers the Self-Generation Incentive Program (SGIP) for battery storage in certain areas.
Massachusetts is a counterintuitive solar success story. It gets less sun than almost any other high-adoption state — roughly the same as Germany — yet consistently ranks in the top five for installed solar capacity per capita. The reason is a combination of high electricity rates (typically $0.24–$0.30/kWh) and generous state programs. The SMART (Solar Massachusetts Renewable Target) program pays a fixed per-kWh incentive on top of net metering credits for qualifying systems, and the state offers a 15% income tax credit (capped at $1,000) on top of the federal 30% ITC. Together these can reduce effective payback periods to 7–9 years despite limited sunshine.
New York's NY-Sun Megawatt Block program provides upfront incentives that vary by utility territory and system size, typically ranging from $0.20 to $0.40/W for residential systems. Combined with retail-rate net metering and electricity rates averaging $0.21/kWh, payback periods of 8–10 years are common in most of the state. Con Edison customers in New York City face some of the highest rates in the country ($0.26–$0.32/kWh) and benefit most.
New Jersey operates an active Solar Renewable Energy Certificate (SREC) market, which allows solar system owners to sell certificates representing each megawatt-hour of production to utilities that need them to meet renewable portfolio standards. SREC prices have been volatile — ranging from under $100 to over $250 per MWh — but even at modest prices they add meaningful revenue on top of net metering savings. New Jersey also has strong net metering at retail rates, making it one of the more financially attractive states despite being relatively far north.
Texas is a complicated case. It has excellent solar resources in the western and central regions, but electricity rates average only $0.13/kWh — modest enough to extend payback periods. More significantly, Texas has no statewide net metering requirement. Some utilities in the deregulated market offer buyback programs, but the rates vary widely, and some customers receive only $0.03–$0.05/kWh for export. Solar still makes sense for many Texas homeowners, especially those with high usage and good south-facing roofs, but the economics require careful evaluation against your specific utility's buyback terms.
Washington's cheap hydroelectric power — electricity rates averaging around $0.10/kWh — makes it one of the hardest states to achieve a quick solar payback. A system that might pay off in 8 years in California could take 15–17 years in Seattle. Western Washington also has more overcast days than the state average, further reducing production. Solar can still make sense for Washington homeowners who value energy independence or plan to be in their home for 20+ years, but purely financial return here is modest.
Both states combine moderate electricity rates ($0.11–$0.12/kWh) with relatively weak net metering policies and limited state-level incentives. While they have solid sun resources — particularly Louisiana — the financial case for solar is weaker than in comparable-sun states with higher rates or better incentives. Louisiana's net metering rules have historically been among the least favorable in the South.
The sun-calc.com calculator pulls real solar irradiance data for your specific address from the Google Solar API and models production through NREL PVWatts, so you don't need to look up average sun hours — it calculates them for your actual location. What you do need to input accurately is your electricity rate. Find this on your utility bill (look for the line labeled "Energy Charge," "Supply Rate," or "kWh Rate"). For states with tiered pricing — particularly California — use the rate for your highest-usage tier to get the most accurate payback estimate, since solar offsets your highest-priced electricity first.
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