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Does Your State Support Solar Energy?

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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 (NYSE: 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 (NYSE: PEG  ) 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 (NYSE: NRG  ) 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 (NYSE: XEL  ) 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 (NASDAQ: SCTY  ) 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
Solar is soaring, but there's another company out there capitalizing on a complementary energy and dominating its industry. This company is a leading provider of equipment and components used in energy operations and is poised to profit in a big way from it. To get the name and detailed analysis of this company that will prosper for years to come, check out the special free report: "The Only Energy Stock You'll Ever Need." Don't miss out on this limited-time offer and your opportunity to discover this under-the-radar company before the market does. Click here to access your report -- it's totally free.

Read/Post Comments (3) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 21, 2013, at 1:11 PM, quittalking wrote:

    Some power companies want to kept their power over you!

  • Report this Comment On September 21, 2013, at 1:35 PM, julio2 wrote:

    The feed in rates for residential net metering are too high since they do not reflect the utilities costs for maintaining the grid and for maintaining the base load capacity. When the wind isn't blowing and the sun not shining we have to still get our electricity somewhere. My prediction is that utilities are going to be able to refuse net metering systems in the near future.

  • Report this Comment On September 23, 2013, at 12:19 PM, ffbj wrote:

    Interesting,informative, and well written article, with all sorts of implications. Themes of corporate greed, populism, the coming energy change over, (fossil fuels to renewables) are all touched upon. For me I am going to solar and an electric car, and then buying arch coal, aci and Xcel, xel as a hedge.

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