In the United States, about 5% of households have rooftop solar panels, which may seem like a substantial number. However, it’s considerably lower compared to countries like Germany (20%) and Australia (30%). One of the primary reasons for this gap is the relatively low cost of electricity in the U.S., which makes financial sense for households.
But the landscape is changing. Many utilities across the country have been significantly increasing electricity rates, with the approval of state regulators. These rate hikes are a response to rising operational costs and the utilities’ desire to demonstrate earnings growth. Interestingly, this is driving greater demand for rooftop solar, which many utilities perceive as a competitive threat.
So, when does it become financially justifiable for a household to invest in rooftop solar?
It’s a complex question that depends on various factors, including state policies and local sunlight availability. However, as a simplified benchmark, some experts point to a rate of 15 cents per kilowatt-hour. This translates to a monthly bill of around $130 for an average electricity-consuming household.
In 2022, 16 U.S. states had residential electricity rates exceeding 15 cents per kilowatt-hour. Hawaii had the highest rate at 43 cents, a legacy of relying on imported oil for power generation. California followed with 26.2 cents due to the state’s higher power costs, attributed to factors like rugged terrain and wildfire-related expenses. The next eight states with rates of 20 cents or more are in the Northeast, along with Alaska, and have historically had rates above the national average. As electricity rates continue to rise, more households are considering rooftop solar as a solution to mitigate these increasing costs.
A promising group for the expansion of rooftop solar in the United States includes states where electricity rates have recently risen above 15 cents per kilowatt-hour. This group encompasses states like New Jersey and Pennsylvania, which have a history with rooftop solar due to favorable state policies. Additionally, Midwestern states such as Michigan, Illinois, Wisconsin, and Indiana are part of this cohort.
Illinois, in particular, is experiencing rooftop solar growth, supported by the state Climate and Equitable Jobs Act, which offers subsidies to bolster the solar market. Conversely, Indiana regulators have made changes to utility policies related to “net metering” in the past two years, reducing the financial incentives for solar by altering rules governing how much utilities reimburse solar owners for surplus electricity fed back into the grid.
It’s essential to note that while the “15 cent rule” serves as a useful proxy to understand the market, it doesn’t encompass all variables. State-specific laws and policies, like those making Illinois more solar-friendly than Indiana, play a significant role in shaping the solar landscape.
Overall, rooftop solar costs have remained relatively stable, and they are likely to continue doing so. Demand is increasing, and economies of scale are helping to maintain cost-effectiveness. This bodes well for the rooftop solar industry, making it not only a sustainable but also a cost-effective solution for consumers.
As for the broader outlook, approximately 5% of U.S. households have rooftop solar, a figure based on 2020 data from the Energy Information Administration with subsequent estimates of growth. While rooftop solar’s share in the U.S. may seem modest, it’s part of a growing trend. It’s worth noting that this percentage varies widely across different states and regions, making generalizations about costs challenging.
To explore the rooftop solar market further, resources like the Lawrence Berkeley National Laboratory’s “Tracking the Sun” series and RMI’s interactive tools are available for more in-depth information and estimations at the county level.
In conclusion, the rooftop solar industry is on an upward trajectory, and utilities should recognize and adapt to this reality. As electricity rates continue to rise nationwide, rooftop solar is becoming an increasingly attractive and sustainable choice for many households.
Source: Inside Climate News
