Worst States for Solar ROI: Where the Numbers Don't Add Up

The States With the Worst Solar Payback Periods

Several states consistently appear at the bottom of solar ROI rankings. Here is what the data shows and why.

Louisiana averages 14–16 year payback periods. Cheap natural gas keeps electricity rates around 9 cents/kWh, NREL data shows the state averages around 4.9–5.2 peak sun hours per day (reasonable but not outstanding), and state incentive programs have been minimal compared to neighbouring states. The combination produces ROI numbers that are genuinely difficult to justify for most homeowners. For more on this topic, see our guide to Best States for Solar ROI in 2026. For state-by-state figures, our guide to Solar Panel Payback Period by State shows where solar pays off fastest.

North Dakota and South Dakota face a double penalty: some of the coldest winters in the continental US reduce annual energy production, electricity rates hover around 10–11 cents/kWh, and both states offer limited state-level incentives. Average payback periods run 13–15 years.

West Virginia sits at 11–12 cents/kWh for electricity and has historically had weak net metering policies that have been revised multiple times — creating uncertainty that pushes financing costs up. Payback periods average 13–15 years and solar adoption rates remain among the lowest in the country at under 0.3% of households.

Mississippi mirrors Louisiana’s economics: cheap electricity (around 10 cents/kWh), no state income tax credit for solar, and net metering rules that have faced repeated utility-backed rollback attempts. Average payback runs 14–16 years.

Oklahoma deserves special mention. Despite receiving excellent sunshine — roughly 5.5–6 peak sun hours per day in the western half of the state — electricity rates around 9–10 cents/kWh combined with limited net metering protections produce payback periods of 13–16 years. Oklahoma is the clearest example of the “sunshine doesn’t automatically mean good solar ROI” principle, and a useful reminder that sun hours alone never tell the full financial story.

Net Metering Rollbacks and Their Real Dollar Impact

Net metering policy changes over the past five years have materially damaged solar ROI in several states. The mechanism matters: under full retail net metering, excess solar power exported to the grid credits your account at the full retail electricity rate. Under net billing or “avoided cost” compensation, you receive only the utility’s avoided generation cost — often 3–5 cents/kWh.

For a homeowner who exports 30% of their system’s production during daytime hours, that difference is substantial. Consider a 7kW system producing 9,500 kWh annually. Under retail net metering at 12 cents/kWh, 2,850 kWh of exports is worth about $342. Under avoided-cost net billing at 4 cents/kWh, those same exports are worth $114 — a $228 annual difference that compounds over 25 years to roughly $5,700 in lost value, not accounting for any rate changes.

Indiana revised its net metering policy in 2022 to phase out retail-rate crediting for new solar customers, moving toward an avoided-cost compensation model. New solar installations in Indiana now face significantly worse economics than systems installed before the policy change. Average payback for new Indiana installations has climbed toward 12–14 years as a result.

Arkansas made similar moves, as did Nevada before partially reversing course after significant industry and consumer pushback. The lesson is that states where utility companies hold significant political influence over energy regulation tend to be higher-risk environments for solar investments, because the net metering rules that validated your original financial case can change after you’ve already committed to a 20-year loan.

Before signing a solar contract in any state, understand not just the current net metering terms but also the regulatory environment. States with independent utility commissions and strong solar-specific legislation offer more policy durability than states where net metering rules are set by utility-influenced commissions with weak consumer representation.