Net metering is the utility rule that decides what a rooftop solar system is worth. It sets the credit a home receives for the electricity its roof sends back to the grid, and that credit, combined with the local retail electricity price, drives almost the entire payback calculation. This report ranks the economic upside of a solar roof state by state using verified data, then overlays the direction of net metering policy so homeowners and installers can see where a solar roof pays back fastest and where the rules are moving against it.
The core finding is direct. Electricity price is the single largest measurable driver of solar roof payback, and it varies more than fourfold across the United States. Net metering policy then acts as a multiplier on that value, and in 2026 that multiplier is shrinking in a growing number of states as utilities replace full retail net metering with net billing and successor tariffs.
Executive summary
- The average U.S. residential electricity price was 18.44 cents per kWh in May 2026, according to the U.S. Energy Information Administration (EIA).
- Residential rates ranged from 12.35 cents per kWh in Idaho to 52.00 cents per kWh in Hawaii in May 2026, a spread of about 4.2 to 1 (EIA).
- Because the value of a solar roof scales with the retail rate it offsets, the same 7 kW system pays back several times faster in a high-price state than in a low-price state, before any policy adjustment.
- In the third quarter of 2025, 45 states plus the District of Columbia and Puerto Rico took distributed solar policy action, and net metering was the most-addressed category with 57 separate actions, according to the NC Clean Energy Technology Center.
- California’s Net Billing Tariff, known as NEM 3.0, reduced export compensation by roughly 75 percent compared with the prior retail credit model, per the NC Clean Energy Technology Center.
- The 30 percent federal residential clean energy credit under Section 25D applies only to expenditures made on or before December 31, 2025, under H.R.1, the budget reconciliation law signed on July 4, 2025.
- Roofing Brief calculation: losing that 30 percent credit adds about $6,825 to the net cost of a benchmark 7 kW system and extends simple payback at the U.S. average rate from about 10.3 years to about 14.7 years, all else equal.
- Verify the current rule for any specific state and utility at DSIRE before making a purchase decision, because per-state status is changing quarter by quarter.
Key findings
- The U.S. residential electricity price averaged 18.44 cents per kWh in May 2026 (EIA, Electric Power Monthly, Table 5.6.A).
- Hawaii had the highest residential rate at 52.00 cents per kWh in May 2026, about 2.8 times the national average (EIA).
- Idaho had the lowest residential rate at 12.35 cents per kWh in May 2026 (EIA).
- California residential electricity averaged 33.25 cents per kWh in May 2026, the highest among the contiguous 48 states in this sample (EIA).
- Six Northeast states clustered near or above 27 cents per kWh in May 2026: New York at 29.93, Rhode Island at 29.46, Massachusetts at 28.82, Maine at 28.63, Connecticut at 27.37, and New Hampshire at 27.33 (EIA).
- Sun Belt states with strong solar resource but lower rates included Florida at 15.17, Arizona at 15.23, and Texas at 16.44 cents per kWh in May 2026 (EIA).
- In the third quarter of 2025, states and territories took 217 distributed solar policy actions, the most common being net metering changes (57 actions), residential fixed-charge or minimum-bill increases (43 actions), and community solar (40 actions), per the NC Clean Energy Technology Center.
- Connecticut, Colorado, Minnesota, New York, Arizona, and California led all states in distributed solar policy activity in the third quarter of 2025 (NC Clean Energy Technology Center).
- California’s NEM 3.0 Net Billing Tariff bases export credits on hourly wholesale values and cut export compensation by roughly 75 percent versus the previous retail credit (NC Clean Energy Technology Center).
- In the third quarter of 2025, Nevada regulators adopted new demand charges for Nevada Power, West Virginia approved net billing for Appalachian Power and Wheeling Power, and Washington’s PacifiCorp requested a net metering successor tariff (NC Clean Energy Technology Center).
- The 2024 NREL benchmark installed cost for residential rooftop solar was $3.25 per watt-dc, with soft costs alone accounting for $1.64 per watt-dc (NREL, Solar Industry Update).
- Residential PV benchmark costs fell about 65 percent from 2010 to 2024 (NREL).
- The United States added 43 GW of new solar capacity in 2025, equal to 54 percent of all new electricity-generating capacity, with solar and storage combined making up 79 percent (SEIA and Wood Mackenzie, U.S. Solar Market Insight 2025 Year in Review).
- The residential segment installed 4,647 MWdc in 2025, a 2 percent decline from 2024, while total U.S. solar installations fell 14 percent year over year (SEIA and Wood Mackenzie).
- The 30 percent Section 25D residential credit does not apply to expenditures made after December 31, 2025, while the Section 48E business credit for leased systems, power purchase agreements, and prepaid products remains available through the end of 2027 (26 U.S. Code Section 25D; H.R.1, 2025).
Why net metering decides solar roof economics
A rooftop solar system rarely produces exactly what a home uses at the moment it is produced. Midday generation often exceeds household demand, so the surplus flows to the grid. Net metering is the accounting rule for that surplus.
Under full retail net metering, each exported kWh earns a credit equal to the retail price the home would otherwise pay, so a kWh sent out at noon offsets a kWh pulled back at night at the same value. Under net billing and successor tariffs, exports are credited at a lower rate, often tied to wholesale or avoided-cost values rather than the retail rate. California’s NEM 3.0 is the clearest example, with export compensation reduced by roughly 75 percent compared with the prior model, according to the NC Clean Energy Technology Center. The mechanics of these tariffs are covered in more depth in our companion explainer, Net Metering Explained: How It Works in 2026.
The practical result is that two identical roofs, with identical systems and identical sunshine, can have paybacks that differ by years based only on the retail rate and the export credit rule. That is why this report treats electricity price as the primary economic signal and net metering policy as the risk multiplier layered on top.
Electricity prices by state: the primary payback driver
The table below lists verified residential electricity prices for a representative set of states from the EIA Electric Power Monthly, Table 5.6.A, for May 2026. Prices are preliminary estimates from Form EIA-861M. Higher prices mean each kWh a roof generates is worth more, which shortens payback before any policy adjustment.
| State | Residential price (cents/kWh), May 2026 | Vs. U.S. average (18.44) |
|---|---|---|
| Hawaii | 52.00 | +182% |
| California | 33.25 | +80% |
| New York | 29.93 | +62% |
| Rhode Island | 29.46 | +60% |
| Massachusetts | 28.82 | +56% |
| Maine | 28.63 | +55% |
| Connecticut | 27.37 | +48% |
| New Hampshire | 27.33 | +48% |
| New Jersey | 23.27 | +26% |
| Texas | 16.44 | -11% |
| Georgia | 15.84 | -14% |
| Arizona | 15.23 | -17% |
| Florida | 15.17 | -18% |
| North Carolina | 15.09 | -18% |
| Washington | 14.95 | -19% |
| Louisiana | 14.15 | -23% |
| North Dakota | 13.61 | -26% |
| Nevada | 13.60 | -26% |
| Nebraska | 13.59 | -26% |
| Utah | 12.96 | -30% |
| Idaho | 12.35 | -33% |
Percentage columns are Roofing Brief calculations derived from EIA state prices against the EIA U.S. average of 18.44 cents per kWh for May 2026. The high-price cluster in Hawaii, California, and the Northeast is where a solar roof offsets the most expensive electricity, and therefore where payback is fastest on the price factor alone. The low-price cluster across the Mountain West and parts of the South and Pacific Northwest is where the same generation is worth the least.
The policy overlay: where net metering is weakening
Electricity price sets the ceiling on a solar roof’s value, but net metering policy determines how much of that value a home actually captures on exported power. The clearest verified signal in 2026 is the pace of change. In the third quarter of 2025, net metering was the single most-addressed distributed solar policy topic, with 57 separate state actions, and utilities continued a broad shift toward net billing, according to the NC Clean Energy Technology Center.
Three verified moves from that quarter illustrate the direction. Nevada regulators adopted new demand charges for Nevada Power. West Virginia approved net billing for Appalachian Power and Wheeling Power. Washington’s PacifiCorp requested approval of a net metering successor tariff. California’s shift to the NEM 3.0 Net Billing Tariff, which cut export compensation by roughly 75 percent, was already in force. Alongside these export-side changes, residential fixed-charge or minimum-bill increases were the second-most common action in the quarter with 43 instances, which raise the fixed portion of a bill that solar cannot offset.
The combination matters for roof economics. A state can have a high retail rate, which is favorable, while simultaneously moving to net billing and higher fixed charges, which erodes the export value and the offsettable share of the bill. California is the leading case of exactly this tension: the highest contiguous-state retail rate paired with one of the least generous export tariffs. Because per-state status changes each quarter, homeowners should confirm the current rule for their utility at DSIRE, the policy database maintained by the NC Clean Energy Technology Center, before signing a contract.
Cost, market context, and the federal credit change
The other half of payback is system cost. The NREL benchmark installed cost for residential rooftop solar was $3.25 per watt-dc in 2024, of which soft costs such as permitting, sales, and overhead accounted for $1.64 per watt-dc. Residential benchmark costs have fallen about 65 percent since 2010, according to NREL.
Demand context comes from SEIA and Wood Mackenzie. The United States added 43 GW of new solar in 2025, which was 54 percent of all new generating capacity, and the residential segment installed 4,647 MWdc, down 2 percent from 2024. Total installations fell 14 percent year over year. Our sibling report, Rooftop Solar Technical Potential by State, quantifies how much of that demand U.S. roofs could physically support.
The largest single change to residential solar economics in 2026 is federal, not state. Under H.R.1, signed July 4, 2025, the 30 percent Section 25D residential clean energy credit does not apply to expenditures made after December 31, 2025. The Section 48E business credit, which underpins third-party-owned systems such as leases and power purchase agreements, remains through the end of 2027. The mechanics of claiming and stacking credits are detailed in our guide, Solar Roof Tax Credit in 2026, and full installed-cost math is in Solar Installation Cost in 2026.
Roofing Brief calculations: modeled solar roof payback
The following figures are original Roofing Brief calculations built from the verified inputs above. They are illustrative models, not published statistics. Each states its formula, inputs, and limitations. Actual payback depends on household usage, financing, and local solar resource, which should be localized with the NREL PVWatts tool.
Calculation 1: Payback sensitivity to electricity price
Formula: net system cost divided by annual bill offset. Inputs: a 7 kW-dc system at the NREL 2024 benchmark of $3.25 per watt-dc equals $22,750 gross; applying the 30 percent Section 25D credit (available on expenditures through December 31, 2025) gives a net cost of $15,925; annual generation is modeled at an illustrative 1,200 kWh per installed kW, or 8,400 kWh per year, under full retail net metering. Annual offset equals 8,400 kWh times the state retail rate.
| State | Retail rate (May 2026) | Annual offset value | Modeled payback with 30% credit |
|---|---|---|---|
| Hawaii | 52.00 c/kWh | $4,368 | 3.6 years |
| California | 33.25 c/kWh | $2,793 | 5.7 years |
| New York | 29.93 c/kWh | $2,514 | 6.3 years |
| Massachusetts | 28.82 c/kWh | $2,421 | 6.6 years |
| Connecticut | 27.37 c/kWh | $2,299 | 6.9 years |
| U.S. average | 18.44 c/kWh | $1,549 | 10.3 years |
| Texas | 16.44 c/kWh | $1,381 | 11.5 years |
| Florida | 15.17 c/kWh | $1,274 | 12.5 years |
| Idaho | 12.35 c/kWh | $1,037 | 15.4 years |
Limitations: the model assumes flat generation of 1,200 kWh per kW per year, which is a mid-range placeholder that is too low for high-sun states like Arizona and too high for cloudy northern states. It assumes full retail net metering, no rate escalation, no maintenance cost, and cash purchase. It is a sensitivity model to show how much the retail rate alone moves payback, not a quote. Inputs: EIA residential prices, May 2026; NREL 2024 cost benchmark.
Calculation 2: The net billing haircut
Formula: apply an export-value factor to the offset. Logic: under a net billing successor tariff, exports are credited below retail. Using California NEM 3.0 as the reference, where export compensation fell about 75 percent (NC Clean Energy Technology Center), and assuming a household exports half its generation and self-consumes half, the blended value factor is 0.5 plus (0.5 times 0.25), or 0.625 of full retail value. Payback therefore stretches by a factor of about 1.6.
Applied to California, the modeled 5.7-year full-retail payback with the credit becomes about 9.1 years under a net billing tariff. This is a Roofing Brief calculation. Limitation: the 50 percent export share and the 25 percent export credit are stylized assumptions drawn from the California example, and real export shares and credit rates vary widely by utility and by how well a home matches usage to midday production, for example by adding battery storage.
Calculation 3: The federal credit cliff
Formula: compare net cost and payback with and without the 30 percent credit. On a 7 kW system at $3.25 per watt-dc, the 30 percent Section 25D credit is worth $6,825. Its expiration for expenditures after December 31, 2025 raises the net cost from $15,925 to $22,750. At the U.S. average rate of 18.44 cents per kWh, modeled payback extends from about 10.3 years to about 14.7 years, a 4.4-year increase. This is a Roofing Brief calculation using the NREL benchmark and EIA average rate. Limitation: it holds generation and rate constant and does not account for third-party ownership, which can still access the Section 48E credit through 2027.
Synthesis: the solar roof value map
Combining the two verified factors, the strongest solar roof economics in 2026 sit where a high retail rate meets an intact net metering rule, and the weakest sit where a low rate meets a net billing successor. Hawaii and the high-rate Northeast states occupy the favorable corner on price. California occupies a split position: the highest contiguous-state rate but a net billing export tariff that, by the Calculation 2 model, offsets much of that price advantage. The low-rate Mountain West and parts of the South sit in the weak corner on price regardless of policy. This is a Roofing Brief interpretive framework, not a published ranking.
What this means for your roof
Solar and net metering economics only matter if the roof under the array is sound. A solar system is typically warranted for 25 years, so installing on a roof with less remaining life means paying to remove and reinstall panels at reroof time. The standard guidance is to reroof first if the covering is near end of life, then mount. High-value net metering states raise the stakes of that timing, because a delayed or poorly sequenced install postpones the fastest paybacks. For homeowners weighing the sequence, our reporting on 2026 solar policy news tracks the federal and state changes that move the deadline math.
Methodology
Source selection prioritized primary and official sources. Electricity prices are from the U.S. Energy Information Administration, Electric Power Monthly, Table 5.6.A, for May 2026, the most recent state-level data available at the time of writing. Policy activity is from the NC Clean Energy Technology Center’s The 50 States of Solar report for the third quarter of 2025, published October 16, 2025. Installed-cost benchmarks are from the National Renewable Energy Laboratory’s Solar Industry Update for 2024. Market volumes are from the SEIA and Wood Mackenzie U.S. Solar Market Insight 2025 Year in Review. Federal credit terms are from 26 U.S. Code Section 25D as amended by H.R.1, signed July 4, 2025.
Inclusion rule: a statistic was included only if it traced to one of these sources and specified a value, a timeframe, and a geography. Exclusion rule: state-by-state payback figures and net metering counts published by solar-marketing and calculator websites were excluded as unverifiable against primary data, and are not cited here. Where a number is derived, it is labeled as a Roofing Brief calculation with its formula and inputs. Conflicting cost benchmarks exist: NREL’s $3.25 per watt-dc is a modeled benchmark, while market surveys such as EnergySage report lower gross medians; this report uses the NREL benchmark and flags the difference. Last updated July 2026.
Source quality ranking
Tier 1, primary and official: U.S. Energy Information Administration (Electric Power Monthly); National Renewable Energy Laboratory (Solar Industry Update); 26 U.S. Code Section 25D and H.R.1.
Tier 2, credible research bodies and trade associations: NC Clean Energy Technology Center (The 50 States of Solar, DSIRE); SEIA and Wood Mackenzie (U.S. Solar Market Insight).
Tier 3, expert commentary: not relied upon for any statistic in this report.
Excluded: solar-installer marketing pages, calculator sites, and unsourced state payback roundups.
Citation lines
- Source: U.S. Energy Information Administration, Electric Power Monthly, Table 5.6.A, May 2026.
- Source: NC Clean Energy Technology Center, The 50 States of Solar, Q3 2025, published October 16, 2025.
- Source: National Renewable Energy Laboratory, Solar Industry Update, 2024 benchmark.
- Source: SEIA and Wood Mackenzie, U.S. Solar Market Insight 2025 Year in Review.
- Source: 26 U.S. Code Section 25D, as amended by H.R.1, signed July 4, 2025.
Chart recommendations
- Residential electricity price by state, May 2026. Data: EIA Table 5.6.A. Insight: the 4.2-to-1 spread that sets solar roof value. Citation-worthy because it isolates the single largest payback driver from one authoritative source.
- Modeled solar roof payback vs. retail rate. Data: Roofing Brief Calculation 1. Insight: payback roughly quadruples from high-rate to low-rate states. Citation-worthy as an original, transparent sensitivity model.
- Net metering policy actions by quarter. Data: NC Clean Energy Technology Center. Insight: the accelerating shift to net billing. Citation-worthy as a policy-momentum indicator.
- The federal credit cliff. Data: Roofing Brief Calculation 3. Insight: the 4.4-year payback swing from the Section 25D expiration. Citation-worthy for tying a federal date to a household payback number.
Journalist-friendly additions
Most quotable statistics
- Residential electricity ranged from 12.35 cents per kWh in Idaho to 52.00 cents per kWh in Hawaii in May 2026, a spread of about 4.2 to 1 (EIA).
- Net metering was the most-addressed distributed solar policy topic in the third quarter of 2025, with 57 separate state actions (NC Clean Energy Technology Center).
- California’s NEM 3.0 cut solar export compensation by roughly 75 percent (NC Clean Energy Technology Center).
- The 30 percent federal residential solar credit does not apply to expenditures after December 31, 2025 (26 U.S. Code Section 25D; H.R.1).
- Roofing Brief calculation: the loss of that credit adds about $6,825 to a 7 kW system and pushes modeled payback at the U.S. average rate from about 10.3 to about 14.7 years.
Data limitations
EIA May 2026 prices are preliminary estimates. Payback figures in this report are Roofing Brief models built on a flat generation assumption and a full retail net metering assumption unless stated otherwise, and they are sensitivity illustrations rather than quotes. Per-state net metering status changes quarterly and should be confirmed at DSIRE. The NREL cost benchmark is a modeled figure that runs higher than some market surveys.
Downloadable dataset recommended fields
State; residential price (cents/kWh); data month; net metering regime (retail net metering, net billing, or successor tariff); export credit basis; residential fixed charge; modeled annual offset for a 7 kW system; modeled payback with credit; modeled payback without credit; policy-change date; source URL.
Press summary (about 150 words)
A rooftop solar system’s payback is set mostly by two numbers: the local electricity rate it offsets and the net metering rule that prices the power it exports. In May 2026, U.S. residential electricity averaged 18.44 cents per kWh but ranged from 12.35 cents in Idaho to 52.00 cents in Hawaii, according to the EIA. That 4.2-to-1 price spread means the same 7 kW system pays back several times faster in high-rate states than in low-rate ones. Policy is moving against solar owners at the same time. In the third quarter of 2025, net metering was the most-addressed distributed solar policy topic, with 57 state actions, as utilities shifted toward net billing, per the NC Clean Energy Technology Center. California’s NEM 3.0 already cut export credits by about 75 percent. Adding to the pressure, the 30 percent federal residential solar credit expired for expenditures after December 31, 2025.
Five suggested headlines
- Where a Solar Roof Pays Back Fastest in 2026, by State
- Net Metering Is Shrinking: 57 State Actions in One Quarter
- The 4.2-to-1 Electricity Price Gap That Decides Solar Roof Payback
- California Has the Priciest Power and One of the Weakest Solar Export Rules
- The Federal Solar Credit Just Expired: What It Does to Payback
Frequently asked questions
See the FAQ section below for ten questions answered with verified statistics.
FAQ
What is the difference between net metering and net billing?
Full retail net metering credits each exported kWh at the retail electricity rate, while net billing credits exports at a lower rate, often tied to wholesale or avoided-cost values. California’s NEM 3.0 net billing tariff cut export compensation by roughly 75 percent versus the prior retail model, according to the NC Clean Energy Technology Center.
Which state has the most expensive residential electricity?
Hawaii had the highest residential electricity price at 52.00 cents per kWh in May 2026, according to the EIA Electric Power Monthly, Table 5.6.A.
Which state has the cheapest residential electricity?
Idaho had the lowest residential price at 12.35 cents per kWh in May 2026, per the EIA.
What was the average U.S. residential electricity price in 2026?
The U.S. residential average was 18.44 cents per kWh in May 2026, according to the EIA.
Does a high electricity rate make a solar roof pay back faster?
Yes. Because each generated kWh offsets the retail rate, higher rates shorten payback. In a Roofing Brief calculation using EIA May 2026 rates and the NREL 2024 cost benchmark, a 7 kW system modeled at 3.6 years payback in Hawaii versus 15.4 years in Idaho with the 30 percent federal credit.
How many states changed net metering rules recently?
In the third quarter of 2025, states and territories took 57 net metering policy actions, the most of any distributed solar category, according to the NC Clean Energy Technology Center.
Is net metering going away?
Full retail net metering is being replaced by net billing and successor tariffs in a growing number of states, with utilities in Nevada, West Virginia, and Washington all advancing changes in the third quarter of 2025, per the NC Clean Energy Technology Center. Traditional net metering still exists in many states, and current status should be verified at DSIRE.
How much does a residential solar system cost in 2026?
The NREL benchmark installed cost for residential rooftop solar was $3.25 per watt-dc in 2024, which is about $22,750 for a 7 kW system before incentives (NREL). Market surveys report lower gross medians, so quotes vary.
Is the 30 percent federal solar tax credit still available?
The 30 percent Section 25D residential credit does not apply to expenditures made after December 31, 2025, under H.R.1. The Section 48E business credit for leases and power purchase agreements remains through the end of 2027.
How much does losing the federal credit change payback?
In a Roofing Brief calculation, the expired 30 percent credit adds about $6,825 to a 7 kW system and extends modeled payback at the U.S. average rate from about 10.3 years to about 14.7 years.
Reviewed by The Roofing Brief Team. Last reviewed July 2026.