New solar energy index reveals "roller coaster" effect

Connecticut, New York, and Massachusetts now outrank California, Arizona, and New Mexico in the amount of money each ray of sunlight can generate for homeowners, according to the Geostellar Solar Index.

August 01, 2013

Connecticut, New York, and Massachusetts now outrank California, Arizona, and New Mexico in the amount of money each ray of sunlight can generate for homeowners, according to the Geostellar Solar Index, a new scientific and economic analysis of Americans’ savings through rooftop solar.

The new quarterly index shows the Northeast and Mid-Atlantic states offer the highest internal rate of return on residential solar energy, an economic analysis that measures and compares the profitability of investments, with profits as high as 24 percent per year over the 25-year life of the solar array. By comparison, the S&P 500 has shown an 9.9-percent compounded annual growth rate over the last 50 years, 30-year U.S. Treasuries have a current yield of 3.7 percent, and five-year certificates of deposit (CDs) typically return just 0.75 percent annually.
 
Surprisingly, California, Arizona, and New Jersey, 2012’s top three solar states by installed capacity, are not among the top five states in the index. Tax credits and other incentives in New York and Connecticut have helped propel those states toward the top of the Geostellar Solar Index, which is calculated using sophisticated economics, energy, and environmental factors to rank all 50 states and the District of Columbia, plus more than 3,000 counties nationwide, in order of profitability for residential solar installments.
 
Conversely, only Mississippi residents would pay more for solar energy than they would for the conventional electricity provided by the power grid, according to the index.
 
The index criteria includes a detailed analysis of individual rooftops and their solar intensity, county-by-county tax credits, rebates, renewable energy credits and other incentives, local utility rates, installed costs of solar, and other variables.
 
The factors that determine the profitability of solar energy at a particular location include the cost to generate solar electricity—a function of the intensity of sunlight, the efficiency of the solar array, and its installed cost—and the available incentives and local rates for conventional electricity.
 
One of the key insights the Geostellar Solar Index provides is the fact that local, state, and federal tax credits and other incentives are the largest factors in determining the individual profitability of solar for the homeowner. Because incentives change rapidly, the profitability of solar energy across the country can fluctuate, Levine said.
 
According to the Geostellar Solar Index, which will be revised and released quarterly, here are the top 10 in annual yield, averaged over the 25-year life of a solar array:
 
Hawaii 24%
Washington, D.C. 20%
New York 17%
Connecticut 16%
Colorado 15%
Massachusetts 15%
New Mexico 13%
California 12%
South Carolina 12%
Delaware 12%


(Click here for the annual yield rankings of all 50 states and the District of Columbia)

Last year, more than 82,000 homeowners across the country installed solar panels on their homes, according to the Solar Energy Industry Association, which said it was a record year. The SEIA is projecting 2013 as another record year for residential solar deployments.

Comments on: "New solar energy index reveals "roller coaster" effect "