Top 10 States for Solar Savings in 2026 (Ranked by ROI)

Last updated: February 2026

Not all solar is created equal. A rooftop solar system in Massachusetts will pay itself back in 6–8 years and generate over $80,000 in 25-year net savings. The same system in Montana might take 22 years to break even. The difference is the product of four factors: electricity rates, solar resource (sun hours), state incentives, and net metering policy.

With the residential federal solar tax credit (Section 25D) having expired December 31, 2025, state-specific factors have become the primary driver of solar economics. Here's the definitive 2026 ranking of the best states for solar savings — and the methodology behind each ranking.

The Ranking Methodology

We ranked states based on a composite Solar Value Score that weights four factors:

1. Payback period (most heavily weighted — the single clearest indicator of near-term financial viability)
2. 25-year net savings (absolute wealth creation over system lifetime)
3. State incentive availability (tax credits, SREC programs, direct rebates)
4. Grid parity confidence (stability of net metering policy and electricity rate trajectory)

All calculations assume a standardized 10 kW residential solar system at the state's average installed cost (per EnergySage Q1 2026 data), annual production based on NREL PVWatts location data, and EIA February 2026 residential electricity rates. State incentives are factored at current available rates.

#1: Massachusetts

Payback period: 6–8 years | 25-year net savings: $75,000–$90,000

Massachusetts is the undisputed champion of residential solar savings in 2026 — the combination of the highest continental electricity rates, meaningful state incentives, and strong net metering policy creates economics that no other state matches.

What makes Massachusetts #1:

• Electricity rate: 23.8¢/kWh (EIA February 2026) — second-highest in continental U.S.
• SMART Program: Monthly production incentive payments of $0.10–0.15/kWh for 10 years, adding approximately $1,200–1,800/year in direct income on a 10 kW system
• State tax credit: 15% of system cost (up to $1,000) available for 2026 systems
• Net metering: Full retail credits with generous monthly rollover
• Sun hours: 4.5 peak sun hours/day (surprisingly adequate — New England gets more sun than most residents realize)

System economics (10 kW, $33,500 installed):

• Annual production: ~12,150 kWh
• Annual electricity savings: $2,892 (at 23.8¢/kWh with full net metering)
• Annual SMART incentive: $1,458 (at 12¢/kWh blended rate)
• State tax credit reduction: $1,000
• Net system cost: $32,500
• Effective payback: ~7 years
• 25-year net savings: ~$82,000

#2: Rhode Island

Payback period: 7–9 years | 25-year net savings: $65,000–$80,000

Rhode Island punches well above its size in solar economics. High electricity rates (23.5¢/kWh — nearly identical to Massachusetts), Rhode Island Energy's robust net metering program with monthly credit rollover, and the RI Renewable Energy Fund grant program combine to make Rhode Island the second-strongest solar market in the country.

The RI Renewable Energy Fund provides direct grants of $0.85–1.05/watt for residential systems — up to $10,500 on a 10 kW system — significantly reducing net system cost and compressing the payback period.

Key stats:

• Average installed cost: $32,000 (10 kW)
• RI REF grant: ~$9,000 reduction
• Net system cost: ~$23,000
• Annual savings (electricity + net metering): ~$2,820
• Payback: ~8 years

#3: New York

Payback period: 8–10 years | 25-year net savings: $60,000–$75,000

New York's solar economics are strong and improving. The NY-Sun initiative provides direct rebates ranging from $0.20–0.40/watt through the New York State Energy Research and Development Authority (NYSERDA), and the New York State solar tax credit (25% of installed cost, up to $5,000) provides meaningful additional reduction.

At 21.5¢/kWh average rates (EIA February 2026), every kWh of solar production saves significantly more in New York than the national average. Full retail net metering with monthly credit rollover means oversized systems in summer months bank credits that apply through winter.

Key stats:

• Average installed cost: $32,500 (10 kW)
• NY-Sun rebate: ~$3,000 (at $0.30/watt)
• State tax credit: $5,000 (max)
• Net system cost: ~$24,500
• Annual savings: ~$2,580 (at 21.5¢/kWh)
• Payback: ~9.5 years

#4: New Jersey

Payback period: 9–11 years | 25-year net savings: $55,000–$70,000

New Jersey's distinctive advantage is its SREC-II (Solar Renewable Energy Certificate) program, which generates tradeable certificates for every megawatt-hour of solar production. At current SREC-II prices of approximately $90–95 per certificate, a 10 kW system generating 11–12 SRECs per year earns $990–$1,140 annually in SREC income — entirely separate from electricity bill savings.

This recurring revenue stream makes New Jersey particularly attractive for homeowners who plan to remain in their homes for 10+ years and want to maximize long-term cash flow from their solar system.

Key stats:

• Average installed cost: $32,000 (10 kW)
• SREC-II income: ~$1,050/year for 15 years
• Annual electricity savings: ~$2,040 (at 17.2¢/kWh)
• Payback: ~10 years
• 25-year net savings: ~$62,000

#5: Connecticut

Payback period: 9–11 years | 25-year net savings: $52,000–$65,000

Connecticut has the highest electricity rates in the continental United States — averaging 24.1¢/kWh per EIA February 2026 data. Despite relatively moderate sun resources (similar to Massachusetts), those high rates create a strong economic case for solar.

The Connecticut Green Bank's Smart-E Loan program and the Residential Solar Investment Program have been scaled back from their peak years but still provide meaningful support. Eversource and Avangrid (the state's two utilities) both offer full retail net metering with annual true-up.

Key stats:

• Average installed cost: $33,000 (10 kW)
• State incentive: Limited direct incentives remain in 2026
• Annual electricity savings: ~$2,892 (at 24.1¢/kWh)
• Payback: ~11 years
• 25-year net savings: ~$57,000

#6: Maryland

Payback period: 10–12 years | 25-year net savings: $45,000–$60,000

Maryland's solar market benefits from a robust SREC program (separate from New Jersey's SREC-II, with slightly lower current prices around $65–75/certificate), a state Residential Clean Energy Grant of up to $1,000, and the Maryland Energy Administration's Clean Energy Rebate program offering an additional $1,000 rebate for systems with battery storage.

At 15.4¢/kWh (slightly above national average), Maryland's electricity savings per kWh are meaningful though not dramatic. The recurring SREC income is what elevates Maryland into the top 10.

Key stats:

• Average installed cost: $30,000 (10 kW)
• SREC income: ~$770/year
• Annual electricity savings: ~$1,848 (at 15.4¢/kWh)
• State grants: ~$1,500 total
• Payback: ~11 years

#7: California

Payback period: 11–14 years (NEM 3.0 adjustment) | 25-year net savings: $40,000–$65,000

California's ranking has slipped from its historic top-3 position due to the NEM 3.0 policy change that dramatically reduced solar export compensation. At 28.3¢/kWh — the highest residential rate in the continental U.S. — California still offers exceptional economics for solar self-consumption. But the NEM 3.0 export rate of 5–8¢/kWh has lengthened payback periods for standard rooftop systems.

The key to California solar economics in 2026 is system design: optimize for self-consumption (including EV charging), add battery storage to shift midday solar surplus to evening peak hours, and size the system appropriately rather than over-sizing for export.

Key stats (with battery storage — now nearly standard for CA new installations):

• Average installed cost: $31,500 solar + $12,000 battery = $43,500
• Annual savings (self-consumption optimized): ~$3,400
• NEM 3.0 export income: ~$200 (minimal at 5–8¢/kWh)
• Payback: ~12–13 years
• 25-year net savings: ~$52,000

Key stats (solar only, no battery — less optimal under NEM 3.0):

• Average installed cost: $31,500
• Payback: ~13–15 years
• 25-year net savings: ~$35,000

#8: Hawaii

Payback period: 10–13 years | 25-year net savings: $40,000–$55,000

Hawaii has the highest electricity rates in the nation at 42.1¢/kWh (EIA February 2026) — but also the highest installation costs. The state's unique regulatory environment (no traditional net metering — only Smart Export Tariff or Customer Self-Supply programs), high contractor labor rates, and complex permitting combine to raise system costs.

Hawaii's 35% state income tax credit (up to $5,000) helps offset the higher system cost. With 5.5–6.0 peak sun hours per day in most of the state, solar production is abundant. The financial case for solar in Hawaii is strong — battery storage is nearly universal in new installations because it's the primary way to capture solar value under the current export compensation structure.

Key stats (solar + battery — standard in Hawaii):

• Average installed cost: $36,500 solar + $13,000 battery = $49,500
• State credit: $5,000
• Net cost: $44,500
• Annual savings (self-consumption at 42¢/kWh): ~$4,200
• Payback: ~11 years

#9: Illinois

Payback period: 11–14 years | 25-year net savings: $35,000–$50,000

Illinois' distinguishing feature is the Illinois Shines Adjustable Block Program (formerly the SREC program), which provides upfront lump-sum payments for a 15-year bundle of Renewable Energy Credits. Current Group 14 rates are approximately $76/REC, and a 10 kW system earns roughly 11 RECs/year × 15 years × $76 = a total incentive payment of approximately $12,540 paid at contract signing.

This front-loaded incentive dramatically reduces effective system cost and compresses the payback period despite Illinois' moderate electricity rates (14.0¢/kWh — near national average). Full retail net metering with monthly rollover rounds out a competitive incentive stack.

Key stats:

• Average installed cost: $31,000 (10 kW)
• Illinois Shines upfront payment: ~$12,500
• Net effective cost: ~$18,500
• Annual electricity savings: ~$1,680 (at 14.0¢/kWh)
• Payback: ~11 years
• 25-year net savings: ~$42,000

#10: Colorado

Payback period: 12–15 years | 25-year net savings: $30,000–$42,000

Colorado rounds out the top 10 with solid but not exceptional fundamentals. Above-average sun hours (5.0–5.5 peak sun hours/day in the Front Range), a 15% state income tax credit, and Xcel Energy's full retail net metering program create a respectable financial case for solar.

Colorado's electricity rates (13.2¢/kWh on average) are close to the national average, which limits per-kWh savings relative to Northeast states. But the combination of sun resource, state credit, and a competitive installation market (Denver's solar market has numerous well-established installers driving competitive pricing at $2.95/watt average) makes Colorado a solid solar investment.

Key stats:

• Average installed cost: $29,500 (10 kW)
• State tax credit: 15% → $4,425
• Net effective cost: ~$25,075
• Annual electricity savings: ~$1,584 (at 13.2¢/kWh)
• Payback: ~16 years (at this rate alone)
• With net metering value and rate escalation: ~13 years
• 25-year net savings: ~$36,000

Comprehensive State Rankings Table

Sources: EnergySage Solar Marketplace Q1 2026; NREL PVWatts location data; EIA Electric Power Monthly February 2026; DSIRE State Incentive Database February 2026

Notable States Just Outside the Top 10

Arizona (#11): Excellent sun (5.5–6.5 peak sun hours), competitive pricing ($2.80/watt), but APS's reduced export rate (9–10¢/kWh vs. retail 13¢/kWh) dampens ROI. Self-consumption + battery storage strategy recommended.

Nevada (#12): Restored full retail net metering and good sun hours make Nevada solid. Electricity rates (11.8¢/kWh) are below average, limiting absolute savings.

Minnesota (#13): A surprising performer with strong net metering, a Made in Minnesota Solar incentive program, and better-than-expected solar resource (4.5 peak sun hours in southern MN). Cold climate doesn't meaningfully impair panel performance.

North Carolina (#14): Low electricity rates (12.0¢/kWh) are the primary drag. Abundant sun and competitive installation market, but limited state incentives mean NC has longer payback periods despite good solar conditions.

What Doesn't Make It Into the Rankings

Some states — Idaho, Montana, Wyoming, Alaska, North Dakota — consistently fall outside the top solar markets due to the combination of low electricity rates (9–11¢/kWh), limited state incentives, and moderate sun resources. Solar can still be financially viable in these states for specific situations (high usage homes, off-grid cabins, homes with electric heat), but the standard payback metrics don't support ranking them among the best.

Using This Data for Your Decision

State rankings provide a useful starting framework, but your personal solar economics depend on factors specific to your home and situation:

• Your actual electricity rate (not the state average — your utility and tier may differ significantly)
• Your roof's orientation, tilt, and shading
• Your annual electricity consumption and load profile
• Your specific utility's net metering policy
• Current installer pricing in your local market

Use the Solar ROI Calculator to run your specific scenario with current data — including your state's net metering policy, incentive programs, and February 2026 electricity rates — to see where your home falls in the national solar savings landscape.

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Data sources: EnergySage Solar Marketplace Pricing Report Q1 2026; NREL PVWatts Calculator Version 8; EIA Electric Power Monthly February 2026; DSIRE Database of State Incentives for Renewables & Efficiency February 2026; NYSERDA NY-Sun Program Data; Massachusetts DOER SMART Program Tariff Rates February 2026; Illinois Power Agency Adjustable Block Program Group 14 Rates; Rhode Island Energy Renewable Energy Fund Program