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When the One Big Beautiful Bill passed on July 4, 2025, it reshaped the future of residential solar energy in the United States. One of its most consequential provisions was the elimination of the federal solar installation tax credit, effective January 1, 2027. For years, this 30% incentive helped millions of American homeowners afford the upfront cost of solar energy systems. With it gone, the economics of going solar have fundamentally changed.
But for many homeowners, the decision to install solar panels isn’t only driven by federal incentives. For these homeowners:
- It’s a financial decision: In states where electricity prices are already high and increasing every year, solar provides financial protection for homeowners. Additionally, some states provide strong financial incentives that can help to fill the gap that federal incentives will leave behind.
- It’s a climate decision: A growing number of households are motivated by the urgent need to reduce emissions, improve air quality, and take local action on climate change. And in sunny states, solar is disproportionately productive, resulting in increased ROI and an accelerated breakeven.
- It’s a preparedness decision: Others are concerned about worsening grid instability, frequent blackouts, or the rising cost of electricity from traditional sources.
At SolarTech, we wanted to answer a simple question: Where in the U.S. does it make the most sense to install residential solar panels, even without the federal 30% tax credit? To do so, we conducted a 50-state analysis using public data on:
- Current electricity prices
- Year-over-year electricity price increase
- State-level solar incentives
- Total annual power outage hours
- Total annual sunshine hours
We created a weighted composite score to identify the 10 most favorable and 10 least favorable states for solar installation after federal incentives disappear. Here’s what we found.
Top 10 States for Post-Incentive Solar Installation
| State | Outage Hrs. | Price per kWh | YoY Price Change | State Incentive Grade | Sunshine Hrs. |
| Hawaii | 4.1 | 36.83¢ | -8% | D | 3172 |
| Rhode Island | 1.7 | 25.61¢ | +13% | B | 2606 |
| New Jersey | 1.8 | 16.86¢ | +9% | A | 2499 |
| California | 5.9 | 25.54¢ | -1% | D | 3055 |
| Massachusetts | 4.4 | 25.31¢ | +9% | C | 2634 |
| Maryland | 2.8 | 15.97¢ | +9% | B | 2582 |
| New York | 3.4 | 19.99¢ | +11% | C | 2611 |
| Connecticut | 3.2 | 27.33¢ | +13% | D | 2585 |
| Illinois | 3.5 | 13.36¢ | +11% | B | 2567 |
| Arizona | 0.9 | 13.28¢ | +8% | B | 3806 |
Insights
Hawaii tops the list despite having weak state incentives, simply because its electricity costs are extraordinarily high even with a recent price dip. Solar offers outsized savings potential here, especially when paired with storage for off-grid reliability. Rhode Island combines the 3rd highest electricity prices with a notable 13% YoY increase and moderate grid instability. Its B-grade state incentives enhance the economics, making it a prime candidate for solar installation even without federal subsidies. New Jersey stands out with the strongest state-level incentives (A-grade) and electricity prices that are high enough to ensure long-term savings. The grid is relatively stable, but the combination of financial and environmental benefits drives adoption. California continues to be a solar leader thanks to high electricity prices and frequent outages. Even though recent policy changes have weakened state incentives, the overall economics remain favorable for homeowners, especially those with high usage or EV charging needs. Massachusetts benefits from high electricity costs and decent sun exposure. Its moderate grid reliability and C-grade incentive program are offset by consistently high utility bills that solar can help mitigate. Maryland and New York are both solid mid-Atlantic contenders, combining higher-than-average electricity rates, decent incentives, and moderate grid instability. Connecticut offers some of the highest electricity prices in the country, which outweighs its weaker state incentives and justifies solar investments purely on long-term savings. Illinois breaks into the top 10 thanks to reliable state support and fast-growing electricity prices, despite more moderate baseline rates. Arizona rounds out the list largely on the strength of its abundant sunshine and decent incentive grade, which help push it into the top tier despite a more stable grid and mid-tier pricing.Bottom 10 States for Post-Incentive Solar Installation
These states ranked least favorable due to cheap electricity, minimal incentives, stable grids, and little or negative energy price growth—conditions that make solar hard to justify financially.
State | Outage Hours/Year | Price per kWh | YoY Price Change | State Incentive Grade | Sunshine Hrs. |
Montana | 1.9 | 10.23¢ | -1% | F | 2625 |
Iowa | 1.4 | 8.48¢ | -1% | F | 2691 |
North Dakota | 4.4 | 7.95¢ | 0% | F | 2446 |
Nebraska | 1.2 | 9.33¢ | +3% | F | 2812 |
Idaho | 2.2 | 9.51¢ | +3% | F | 2993 |
Nevada | 2.3 | 9.66¢ | -15% | F | 3633 |
Wyoming | 2.0 | 9.52¢ | +10% | F | 3180 |
Oklahoma | 22.3 | 8.53¢ | +4% | F | 3083 |
Utah | 2.1 | 9.97¢ | +16% | F | 3018 |
Arkansas | 15.3 | 9.60¢ | +6% | F | 2771 |
Insights
Montana has low prices, minimal outages, and declining electricity costs, hardly a climate that favors solar financially, even for climate-conscious homeowners.
Iowa and North Dakota tie for the lowest electricity prices in the country. With no incentive infrastructure and stable grids, there’s little immediate benefit to going solar.
Nebraska and Idaho have similarly cheap and stable power. Their lack of incentives leaves homeowners without financial tools to reduce upfront solar costs.
Nevada, despite being one of the sunniest states, experienced a significant drop in electricity prices (-15%), which weakens the ROI for new solar investments.
Wyoming and Oklahoma suffer from poor policy support and very low electricity prices. Even high outage levels in Oklahoma aren’t enough to compensate.
Utah saw the second-highest electricity price increase in the nation—but starts from a low baseline and offers no state support, making solar an unattractive proposition.
Arkansas combines relatively high outages with cheap energy and no incentives, limiting the appeal for solar installation in 2025 and beyond.
Methodology
To determine the best and worst states for solar installation after the expiration of the federal tax credit, SolarTech created a (weighted) composite score using the following metrics:
- Electricity Prices (45%)
Based on April 2025 residential rates from the U.S. Energy Information Administration (EIA). Higher prices improve the economic case for solar adoption, resulting in a higher composite score. - State Solar Incentives (20%)
Pulled from CNET’s 2024 rankings. Letter grades were converted to numeric values and normalized. Strong state incentives received higher scores. - Annual Sunshine Hours (25%)
Data gathered from NOAA and regional weather stations. More sunshine increases a system’s solar energy yield and ROI, resulting in a higher composite score. - Power Outage Severity (10%)
Based on the most recent System Average Interruption Duration Index (SAIDI) data from the EIA, converted to hours per year. Fewer outages reduced the need for solar as a backup, resulting in a higher overall score. - Year-over-Year Electricity Price Change (10%)
Calculated based on percent change in 2025 vs 2024 price per kilowatt hour in each state (EIA). States with larger price increases received lower scores, since affordability is deteriorating—an issue solar can help address.
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