Do Solar Panels Make Sense in the Midwest? What You Need to Know

It took about 40 years to place in 1 million photo voltaic installations within the US. The subsequent million took solely three years to put in (PDF). That is an acceleration that hasn’t actually slowed down. Whether or not it is since you’re making an attempt to make the most of the federal tax credit score earlier than it goes away or another motive, you is likely to be trying to go photo voltaic quickly.

Whereas the Midwest is not California or Arizona, that does not imply placing photo voltaic panels on a Midwestern roof is a silly concept. In lots of conditions, it may be a clever monetary choice. Beneath is a few key info on the Midwestern states from which you’ll be able to hone in on the data particular to your state of affairs. Look right here should you stay in New England or on the East Coast.

The price of electrical energy

We’re taking the Midwest to imply the next states: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin. This group makes up the US Vitality Data Company’s east north central and west north central areas.

Electrical energy costs in 2020 ranged from $10.22 per kilowatt in North Dakota to $14.32 per kilowatt in Wisconsin. Common month-to-month payments, which mirror the quantity of electrical energy used in addition to the value, landed pretty near $100: Illinois ($93.98), Indiana ($120.34), Iowa ($107.78), Kansas ($113.52), Michigan ($109.86), Minnesota ($102.11), Missouri ($115.35), Nebraska ($109.30), North Dakota ($113.26), Ohio ($107.30), South Dakota ($121.77) and Wisconsin ($99.42).

These payments are decrease on common than different areas within the US, however nonetheless quantity to properly over $1,000 a yr. Electrical energy charges and payments are probably greater now. From 2020 to 2021, the typical price of electrical energy elevated by 4.3%, the biggest enhance since 2008.

The price of photo voltaic panels

Photo voltaic panel installations fluctuate in price from state to state, roof to roof and contractor to contractor. With a purpose to examine prices throughout tasks, the photo voltaic trade talks about the price of installations in watts per greenback: the whole capability of a photo voltaic set up divided by its price. Photo voltaic panel prices are falling, however for uneven causes. Whereas {hardware} prices have fallen by about 40 cents per watt per yr, the prices related to gross sales, labor and set up solely fell by 10-20 cents per watt per yr.

The typical price of photo voltaic panels nationwide is $3.28 per watt in keeping with the analysts at Wooden Mackenzie. Because of completely different sources of knowledge, the photo voltaic panel market EnergySage finds common costs under Wooden Mackenzie’s. EnergySage reviews common costs for a few of the Midwestern states: Illinois ($2.98), Indiana ($3.25), Iowa ($3.02), Michigan ($3.10), Minnesota ($3.04), Ohio ($2.68) and Wisconsin ($3.02). This record is incomplete as a result of EnergySage does not function in each state or have sufficient information to calculate averages. This is likely to be as a result of the Midwest lags behind a lot of the remainder of the nation on residential photo voltaic.

In a current presentation to buyers (PDF), the photo voltaic firm Sunrun advised buyers that in Midwestern states, between 0 and 1% of the out there market has adopted residential photo voltaic. Whereas different states exterior the Midwest are at comparable ranges, some components of the nation, like New England and the Southwest, are a lot farther forward.

The price of panels can be affected by incentives just like the federal funding tax credit score for photo voltaic, which returns 26% of the price of a photo voltaic panel set up come tax time. The federal tax credit score will drop to 22% in 2023 and is slated to finish in 2024, although it technically might be prolonged.

State and native incentives all through the Midwest are total, weaker than these in New England, however aren’t far off from these within the Southeast, the place extra individuals are going photo voltaic. There’s variation all through the Midwest; you will discover extra state particular info within the Database of State Incentives for Renewables and Effectivity.

Almost each state within the Midwest has a web metering scheme to compensate photo voltaic panel homeowners for the surplus electrical energy they produce. South Dakota doesn’t. Clients there are compensated at an prevented price charge, which is often as much as the utilities to determine and usually a smaller quantity than provided underneath web metering. Most states additionally supply exemptions for the property tax enhance including photo voltaic panels would incur. They usually supply gross sales tax exemptions too. Kansas limits the property tax exemption to 10 years. Iowa and North Dakota set the restrict at 5. 

Whereas statewide incentives lag behind different areas, city- and utility-specific incentives exist. Indianapolis, Chicago, Cincinnati and extra supply rebates or decreased allow charges. Utilities in Iowa supply rebates for photo voltaic panels.

A number of Midwest states present choices for folks to promote the photo voltaic renewable vitality certificates their panels generate. Illinois’s SREC market is just open at sure occasions, when SRECs will be offered on long-term offers as much as 15 years. Ohio has its personal SREC market and permits close by states (Indiana, Kentucky, Michigan and West Virginia) to promote inside it. This will increase provide and drives the value down. An SREC on the Ohio market price $5.75 on the time of this writing.

The photo voltaic potential of the Midwest

The Midwest is towards the underside for photo voltaic adoption thus far. The regional leaders are Missouri (187.7 photo voltaic installations for each 100,000 folks) and Iowa (185.74 installations per 100,000 folks). Missouri and Iowa rank twenty eighth and twenty ninth respectively amongst all states by that metric. The Midwest additionally has two of the underside three states for photo voltaic adoption: North and South Dakota.

Photo voltaic potential is not a technical time period and will be outlined in a couple of other ways. By one definition — the quantity of vitality a standardized photo voltaic panel would generate if mounted horizontally — the Midwest charges round 4 kilowatt hours per sq. meter of panel per day (PDF), in keeping with the Nationwide Renewable Vitality Lab. 4 kilowatt hours is about as little as the contiguous US will get. Nonetheless, in components of Missouri and South Dakota that very same sq. meter of photo voltaic panel would produce nearer to five kilowatt hours per day and in Kansas and Nebraska it is nearer to six.

By one other measure — how a lot of the typical electrical energy invoice the typical residential photo voltaic array may offset — the outlook is a lot better. Whereas the typical photo voltaic array in Minnesota and Missouri would offset 60-70% of a median electrical energy invoice, in keeping with the identical NREL examine. In Iowa, Indiana, North Dakota and Ohio, it is 70-80% and in Illinois, Kansas, Michigan, Nebraska and South Dakota it is 80-90%. In Wisconsin it is 90-100%.

Whereas different components of the nation have extra solar and stronger incentives, there are nonetheless important financial savings on vitality to be gained from photo voltaic panels within the Midwest. 

That is an outline, although, and every particular person going photo voltaic may have a unique calculus to make, given the impression of roof design and course, vitality utilization and the supply of photo voltaic installers. The overall info reveals that photo voltaic within the Midwest might be value an extended look.