Solar Energy Overview

The United States is on track to top 3 million solar PV installations this year, adding 1 million photovoltaic panels in just two years, according to a study by Wood Mackenzie Power & Renewables and the Solar Energy Industries Association. The number will exceed 4 million in 2023, the study says.

It took more than 40 years for the first million installations. “The rapid growth in the solar industry has completely reshaped the energy conversation in this country,” said Abigail Ross Hopper, SEIA president and CEO, in a press release announcing the study. The 2.7 million solar systems installed through September 2020 have the capacity to generate nearly 89 gigawatts of electricity. The solar industry employs about 250,000 Americans, the SEIA says.

The expansion of solar is part of a growing movement toward renewable energy. Green energy made up 22.5 percent of all electricity generated in the country in 2020, according to the U.S. Energy Information Administration. Solar energy was responsible for about 14.7 percent of the green energy generated.

When spending the money required for a solar installation, homeowners will want to make sure they’re getting value for their investment.

Some questions to consider asking a prospective installer

• What guarantee does the installer offer?
• Which kind of system does the installer propose?
• Can the roof support the system?
• How much experience does the installer have?
• Is the installer insured and licensed by the state?
• How much, if any, of the work will be subcontracted?

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The amount of electricity generated by renewable methods, including hydroelectric, wind, geothermal, biomass and solar, increased by more than 28 percent from 2016 to 2020. As more Americans voice concerns about global warming, there’s no reason to think more people won’t consider a move toward green energy. For most, that means solar energy.

When it comes to solar energy, California generates the most. The following chart shows how much electricity the top 10 states generated in 2020, as well as the percentage of the U.S. total, all according to the EIA.

(*) Indicates at least part of the state is a deregulated electricity market

The top 10 is split half and half between regulated and deregulated markets. Most states regulate their electricity markets, meaning customers generally get their energy from the local utility. It is generated by sources that include coal, natural gas, nuclear, and, depending on the utility, a mix of renewables.

In states with deregulated markets, customers may pick their provider. Some providers sell electricity plans sourced with varying degrees of renewable energy. Even in those states, the power that comes to a person’s house comes from a variety of sources, including fossil fuels and nuclear. Providers buy renewable energy credits to offset the electricity use of customers who purchase green plans.

Regardless of whether a customer’s market is regulated or deregulated, there is an option for many homeowners – a residential solar system.

According to a 2019 study by the Pew Research Center, about 6 percent of U.S. homes have installed solar panels. About 46 percent of homeowners said they have given it serious thought.

Rooftop or small solar arrays are known as small-scale solar installations. Once again, according to EIA statistics, California leads the way:

That’s a big chunk of money, but there are some ways to manage it. The average cost of installing a residential solar system ranges from $15,000 to $25,000, depending on the size of the system, according to the Center for Sustainable Energy. While that’s a big upfront cost, there are ways to make it a gentler hit on a homeowner’s budget.

• The upfront cost:
• Pay cash. Savings on electricity will pay for the upfront cost of the panels in as little as seven years to 15 or so years.
• Borrow the money. Traditional lenders, some utilities and solar-installation companies offer loans. The interest rates and repayment schedules will vary depending on the amount borrowed and other terms of the loans.
• Solar leasing. Solar companies will pay the upfront costs of installation, and the homeowner pays a set amount each month, for a term of 15-20 years. The key to this agreement is for that repayment cost to be less than the homeowner’s monthly electricity bill.
• Incentives: Tax incentives, federal and state, can offset the amount paid upfront. Note that federal tax credits do not apply for homeowners who use the solar leasing method. Currently, the federal credit for systems installed in 2021 is 22 percent of the cost of the installation. The credit is set to expire in 2022. Check state incentives in this database.
• Net metering: Utilities will buy excess power from home systems. The database of state credits also contains information about this process, known as net metering.

The way solar power works

Alejo Miranda/Shutterstock

The graphic above shows how the photovoltaic panels on a home’s roof capture sunlight (even on cloudy days). The panels act as semiconductors; they have negative and positive layers attached to a conductor. Together, those elements create an electric circuit that turn light into electricity. From there, the energy goes to an inverter that makes it safe for household use. Then it travels to a meter for immediate use or to a battery for storage.

Following are common questions many homeowners have about solar installations:

• Should the roof be replaced before adding solar panels? It depends. Roofs generally last around 20 years. If a homeowner’s roof is nearing the end of that period, it probably makes sense to replace it before adding the rooftop system.
• How long should a residential solar system last? Solar panel guarantees typically run 20-25 years, according to the National Renewable Energy Laboratory. Performance does degrade over time.
• Will a solar rooftop system hurt the home’s resale value? The Department of Energy says a couple of studies have shown the system will increase the resale value by about $15,000.
• What happens at night or on cloudy days? According to the SEIA, photovoltaic panels work in indirect sunshine and when clouds partially obscure the sun’s rays. Battery storage ensures power is available as well, and most systems also remain connected to the standard electric grid.
• What are the best solar panels? The best solar panels vary from person to person, see our full guide here to find the best solar panels for you.

Homeowners considering solar can take the first step by getting a quote from a qualified solar installer. There’s no obligation, but they can get the information they need to proceed.

• Solar Panels for Home
• Best and worst states for solar industry growth
• The cost of solar panels
• Solar Investment Tax Credit
• Solar energy generation by state
• Tesla Powerwall Review
• Best Solar Panels
• Best solar panels for your RV and camper
• Best Solar Battery
• Guide to Monocrystalline vs. Polycrystalline Solar Panels
• Pros and Cons of Solar Energy
• Pros and cons of signing a solar lease
• Long duration battery storage could help solar growth

Updated: 1/06/2022