Please ensure Javascript is enabled for purposes of website accessibility

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

By Justin Loiseau - Feb 8, 2014 at 1:17PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Some states don’t want your solar panel kit’s power.

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 (SPWR -0.17%) and SolarCity (SCTY.DL) 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 (BAC -1.38%) 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.

Justin Loiseau has no position in any stocks mentioned. The Motley Fool recommends Bank of America, Exelon, and SolarCity. The Motley Fool owns shares of Bank of America and SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

SunPower Corporation Stock Quote
SunPower Corporation
$24.04 (-0.17%) $0.04
SolarCity Corporation Stock Quote
SolarCity Corporation
Bank of America Corporation Stock Quote
Bank of America Corporation
$33.49 (-1.38%) $0.47
NRG Energy, Inc. Stock Quote
NRG Energy, Inc.
$38.74 (0.73%) $0.28
Exelon Corporation Stock Quote
Exelon Corporation
$44.98 (0.47%) $0.21

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.