Good Luck Getting Paid For Your Solar Panel Kit in These 7 States

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Source: Lawrence Berkeley National Laboratory 

If you think all you need to install a solar panel kit is a hammer and nails, think again. There's an incredibly important regulation that makes it possible to sell your solar panel kit's power back to the grid – and it's missing from seven states. Here's what you need to know.

Net Metering – (Nearly) Everyone's Doing It

It's easier than ever to install a solar panel kit. Intallers SunPower Corporation (NASDAQ: SPWR  ) and SolarCity (NASDAQ: SCTY  ) have big plans for your rooftop. While renewable energy accounts for just 3.2% of our nation's total electricity use , SunPower Corporation and SolarCity Corporation are revolutionizing the way we produce and consume power. The answer: residential solar panel kits.

Solar power has the unique capability of capacity at a micro-level. Forget windmill farms and polluting plants, solar panel kits put power production on your rooftop. SunPower Corporation describes the process in five simple steps :

Source: SunPower Corporation 

SunPower Corporation has chalked up over 100,000 installations since it was founded in 1985 , and just last week secured another $220 million in financing from Bank of America (NYSE: BAC  ) to keep business booming .

But more recent rival SolarCity Corporation isn't hiding in SunPower's shadow. SolarCity Corporation CEO Lyndon Reave predicts his company will install one million solar panel kits in the next five years  – and he may be right. Solar power is expected to soar, and everyone's getting in on it – even this year's Super Bowl stadium .

Source: NRG Energy 

Not All States Are Equal

Well, not everyone. Solar panel kits are only as good as their state's regulation. Net metering, or the ability to sell unused energy from rooftop systems back to the grid, has been met with silence or backlash in some states.

In one example, a net meter allows a household with a 4 kilowatt solar panel kit to offset around 4,900 kilowatt hours of electricity every year – equivalent to $380 in savings . This video from Exelon Corporation's CommonWealth Edison subsidary explains how a solar owner can can sell his/her electricty back to the utility.

Net metering is crucial to keeping solar power competitive with other energy sources, but policy is missing from Idaho, South Dakota, Texas, Tennessee, Mississippi, Alabama, and South Carolina. Here's a map, which also lists individual capacity limits in kilowatts.

Source: Department of Energy 

 If you're buying a solar panel kit, you'll see firsthand that solar power providers are picking their battles. SolarCity Corporation keeps operations in-house, stretching its services to just 31 operation centers across 14 states . SunPower Corporation works through third-party providers, but its 400 dealers with 6,000 employees  across the nation won't change whether or not you can sell your surplus solar power back to the grid.

Is Your Solar Panel Kit Screwed?

If your state doesn't offer net metering possibility, you'll save less money and your system will waste electricity. But it's not all bad. For better or worse, only 20% to 40% of the average customer's solar system electricity makes it back to the grid . That means that if you can swallow the costs of solar – which have dropped around one-third in the past three years  – you could still be saving. And if you do buy your first solar panel kit in one these states, it might be well worth your time to give your local political leader a ring, too.

Regulation Elation

Solar is stuck in a regulatory rut – but state legislators nationwide have been much friendlier to another electricity source: natural gas. The Motley Fool is offering a comprehensive look at three energy companies set to soar as natural gas grows and we highlight them in the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free.

Read/Post Comments (11) | Recommend This Article (10)

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 February 08, 2014, at 2:41 PM, ManoftheRepublic wrote:

    If there is no net metering, you will only have a CHANCE of recovering IF you live in the Southwest...And if they dropped the federal subsidies then you would not even there,.,.

  • Report this Comment On February 08, 2014, at 3:29 PM, Freddyfreebe1 wrote:

    In Canada they install solar panels on your roof. They maintain them and don't charge you anything. all they want is to make the money from the power you don't use. So you get free electricity without any cost to you. Such a big difference , how greedy business in this country have gotten. But companies in this country are suckered into sending PAC to the GOP, that is why big business and the rich gets all those tax breaks while the country goes down the tube,.

  • Report this Comment On February 08, 2014, at 3:54 PM, speculawyer wrote:

    Idaho, South Dakota, Texas, Tennessee, Mississippi, Alabama, and South Carolina . . . Gee, can anyone see what they have in common? SMH.

  • Report this Comment On February 08, 2014, at 5:37 PM, TreeWalker wrote:

    I live in SD. Each power company/coop decides its own policies. You'll never get net metering, keep in mind that sometimes your solar power isn't worth much. That is when it is produced outside peak times, especially in the winter. Our coop would pay us 4.2 cents/kwh for the times we produce more than we use. They charge us 6.5 for our normal load and 4 for our electrical heating. Our coop has lowered kwh rates and charges a peak use fee for electricity used at peak times.

  • Report this Comment On February 08, 2014, at 9:00 PM, johnnuttall2000 wrote:

    Interest the lead photo is of a house in India.....

  • Report this Comment On February 09, 2014, at 2:49 AM, MotleyFoolStinks wrote:

    Yes, they have in common they are good states, not liberal hellholes.

  • Report this Comment On February 09, 2014, at 8:58 AM, kdavis860 wrote:

    Processing electricity from solar panels is expensive to the utilities, and those costs are passed along to other customers. Many states require the utilities to buy back the extra power at rates higher than they actually charge for it, creating an incentive for fraud - like you run a power cord from your neighbor's house and back feed the utility's own power to it at a profit and split the proceeds with the neighbor. I don't know if this problem is large or small, but it's possible because it's similar to having a gas station that sells gas for $3.75/gallon but allows you to return any you don't use for a credit of $7.00 per gallon.

    I'm glad the production costs on solar are dropping, and I would love it if they continued to drop until it can compete on its own, with no mandates or subsidies, but right now its not even close.

  • Report this Comment On February 09, 2014, at 2:56 PM, fuskiegirl21 wrote:

    I hope that South Carolina adopts a policy soon. We plan on retiring to the beach there and I definitely want solar panels on the house.

  • Report this Comment On February 10, 2014, at 12:58 AM, badkat7 wrote:

    I look forward to the rise of hydrogen fuel cells. Because when they become commercially successful in cars I will have one installed in my house. The solar will then be used to crack hydrogen from water to run my house at night. I seriously hope that within 10 years I will be able to turn off the utility companies forever.

  • Report this Comment On February 10, 2014, at 9:47 AM, CrazyDocAl wrote:

    Net metering is going to be phased out. When the number of houses with solar panels was a tiny fraction of the electric companies total number of users it was easy to hide. But now that the number is growing net metering is forcing those who do not have a solar panel system to pay more to subsidies those who do.

    The issue will go to court as too many homes can't take advantage of a solar panel system. It could be their house doesn't face the correct direction, their lot is too small, etc.

  • Report this Comment On May 03, 2015, at 8:28 AM, nooldfool wrote:

    I don't know what all the noise is about. Of course net metering will go away as soon as conservative friends of big business can make it go away.

    I've been very interested in alternate energy since the so called "energy crisis" of the 1970's. I have an engineering background and became very interested in micro hydro. I got nowhere with the electric utilities then and expect that no one will get anywhere with them today.

    The fact is you are dealing with MONOPOLIES!!!

    These monopolies were legislated into existence and rely on legislation to keep them in existence. One would think that when you see a huge power plant on the horizon that that is the most efficient way to produce power and it most likely is. Then it sends its power out over an octopus of transmission lines with up to 50% line loss and the whole scheme falls apart. The fact is that these power MONOPOLIES are only efficient at extracting wealth from the rate payers pocket's!! The fact is that we had a more efficient power system when every community made their own power but I suppose we won't get back to that until there is a national revolt.

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