Best States for Solar in 2026: Incentives, Net Metering, and Payback
California, Massachusetts, New Jersey, and Arizona top the list for solar ROI. High electricity rates matter more than sunshine — Massachusetts outperforms Arizona on payback.
Photo by NASA / Unsplash
The best states for solar ROI are not necessarily the sunniest states. Massachusetts outperforms Arizona on solar payback despite fewer annual sun hours, because Massachusetts electricity rates are nearly twice as high. Electricity rate is a stronger driver of solar ROI than sun hours.
Top states for solar ROI in 2026
California: High electricity rates ($0.25–0.35/kWh in PG&E and SCE territory), strong sun (5.5 hr/day), mature installer market. Payback: 6–8 years. State incentives: SGIP battery rebate, no state income tax on solar.
Massachusetts: High rates ($0.22–0.28/kWh), active solar incentive market, strong net metering (for now). Payback: 5–8 years. State credit: 15% up to $1,000. SREC market adds ~$50–90/MWh.
New York: NY-Sun program, 25% state credit up to $5,000, high rates. Payback: 6–9 years.
Arizona: Exceptional sun (6.5 hr/day), low rates ($0.12–0.16/kWh). High production but lower savings per kWh. Payback: 8–11 years. State credit: 25% up to $1,000.
New Jersey: Strong NJ SREC market, high rates, net metering. Payback: 7–10 years.
States where solar is harder to justify
States with electricity rates below $0.10/kWh (Louisiana, Oklahoma, Wyoming) see longer payback periods — often 12–18 years. Solar still makes sense if you're replacing a system, but ROI is lower.
States with poor net metering (South Carolina, Alabama, Mississippi) reduce the value of excess solar production.
Use the Solar Cost & Savings Calculator to estimate payback for your specific state and electricity rate.
See how this applies to your situation
Calculate solar costs for your state →