Does Your State Support Solar Energy?

When it comes to solar, not all states are created equal. Our nation is divided on renewable energy, and some states are pushing rooftop solar while others are pulling. Here's how your home stacks up.

The power of power purchases
A corporation can only be as innovative as regulation allows. Rooftop residential solar systems have dropped dramatically in price over the past decade, putting costs at competitive rates with residential power prices for the first time ever.

But not everyone's elated. Utilities have both embraced and rejected putting power in the hands of the people, and state governments are divided on whether its citizens are worthy of their own solar systems.

The secret recipe for home solar success depends on something called a "power purchase agreement," or PPA. This financial trick allows households, utilities, and solar manufacturers to work together to optimize long-term power production and keep heavy cost burdens off any one entity. Currently, there's an almost 50-50 split on power purchase agreement regulations across the nation:

Source: Database of State Incentives for Renewables & Efficiency.

If you're looking to raise the roof on your own solar system, it's best to head west or to New England. While many states remain ambiguous on PPA support, six states are openly opposed to third-party solar PPAs.

Corporate lovers and haters
Pennsylvania-based PPL has embraced home-based solar generation and provides its customers with a guide to determine whether local power could be a cost-effective move for them. PPL can connect both wind and solar systems to its power grid, allowing the utility to pump power back into its system on windy days, creating a potential win-win for buyer and seller. For its part, PPL can then snag state-required renewable-energy credits via its purchases.

Source: PPL.

New Jersey's PSE&G has been at the forefront of solar financing, which lends money to customers to cover up to 60% of the total cost. Individuals can pay back the loan over 10 years with cash at 6.5% interest or renewable-energy credits, and PSE&G is pre-approved by regulators to recover all costs for its project.

NRG Energy goes one step further and has developed its own rooftop solar unit to sell directly to businesses. The utility also offers PPAs for both businesses and households and has more than 2,000 MW of solar set to develop, with projects ranging from its own solar farms to hospital rooftop systems.

But other utilities aren't so sunny on solar. Pinnacle West Capital's Arizona Public Service and Colorado-based Xcel Energy are allegedly asking regulators to cut back on incentives or increase charges on rooftop solar users, and a recent viral video accuses Xcel of actively blocking Boulder's campaign for local power.

Meet your maker
No matter where solar succeeds, rooftop manufacturers are the back-end winners of any household solar boom. SolarCity acquired Paramount Solar last month for $120 million, setting the company up for more marketable rooftop installations than ever before. SolarCity CEO Lyndon Reave expects his company to put up 1 million rooftop projects over the next five years, and increasingly lower operating costs could make his dream a rational reality.

Can rooftop solar succeed?
Policy is far from perfect for rooftop solar, but smart states and corporations are adapting to adopt local solar systems. Consumers are demanding it, and competitive prices are making it increasingly viable across the nation. Rooftop solar is on the rise.

The future of our energy
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Fool contributor Justin Loiseau has no position in any stocks mentioned, but he does use electricity. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo.The Motley Fool owns shares of SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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