We look at state electricity rates, the “15-cent rule,” and what it means for solar.
In the United States, around 5% of households have rooftop solar, which is significantly lower compared to countries like Germany (20%) and Australia (30%). One of the key reasons for this disparity is that electricity in the U.S. has traditionally been cheap, making rooftop solar less financially attractive. However, this is changing as utilities across the country are raising their electricity rates with state regulatory approval, reflecting increased operational costs and a desire to boost earnings.
The tipping point for customers to consider rooftop solar on a financial basis is often estimated at around 15 cents per kilowatt-hour, which results in a monthly bill of approximately $130 for an average household’s electricity consumption. When electricity rates reach or exceed this threshold, it becomes more financially feasible for companies that offer rooftop solar to demonstrate potential savings to customers.
Energy industry analysts, such as Pavel Molchanov of Raymond James, highlight that utility rates tend to rise over time, making rooftop solar an appealing solution for homeowners seeking to escape escalating utility costs. This trend is driving increased demand for rooftop solar in the United States, despite historically low adoption rates.