Residential solar systems are becoming an increasingly popular trend in the United States. By the end of 2018, the U.S. had installed enough solar panels to power 12.3 million homes, and the solar industry managed to generate a $17 billion investment in the economy. These statistics indicate that the implementation of a small-scale solar system can be an economically feasible and relatively mainstream venture. 

Residential solar systems offer a standard 6 kilowatts average. Due to this relatively small scale –contrasted with high-capacity industrial panels– residential rooftop solar panels are a viable option for homeowners looking to upgrade. Depending on the total cost of the investment, domestic rooftop solar can cut or eliminate electric bills over time.

Thanks to innovation, the cost of solar panel installation has decreased by around 70 percent over the past decade. And, in the last year alone, the market for residential solar systems saw around a 5 percent decrease in cost. What was once a far-off dream or a commodity for the rich is now attainable for Americans across socioeconomic strata. 

In addition to the well-known benefits of renewable energy, the implementation of a grid-connected system in a residential capacity allows for a substantial monetary payoff. A grid-connected renewable energy system employs multidirectional flow hardware and allows the power generated by solar panels at home to be fed back into the grid when an excess is generated. Due to the intermittency problem presented by wind and solar technology today, being tied to a grid, with the option for power to flow in both directions is critical.  

This means that during peak production, homeowners do not need to invest in expensive and inefficient battery storage, and can instead divert or even sell power to the utility company. And when the sun is not shining, those homeowners can rely on the cheap, abundant power produced by plants and other homes tied into the system. This is far preferable to being an island home sustained by only rooftop solar, and provides dynamic options for distributing too much power so it does not overload and harm the technology at home.

Many electric utilities in various states permit net metering, a practice that allows for excess electricity generated by residential solar systems to reduce electricity meters. In a given month, if more electricity is used than is fed into the grid, a household will pay the power provider for the difference between what power was used and what power was produced. In different markets, more options for selling or trading energy may be offered.

The concept of a “smart grid” has also entered the eco-energy conversation. A smart grid utilizes digital technology to permit an exchange of information between energy consumers and power providers. The energy supplier is then able to obtain useful information about consumption patterns in various areas they service, and, subsequently, consumers can acquire insight into their personal energy usage and make necessary adjustments to maximize the efficiency and cost-effectiveness of their energy systems. Smart grids also offer the potential for decentralized power, and with homes producing their own power and multidirectional flow capability, if a plant goes down, power can be redirected from another plant or even from home to home.

Due to aged, and, at times, faulty energy grid infrastructure, smart grid technology is a cost-efficient opportunity to modernize energy distribution and ensure that the grid can provide communication to utilities and consumers. Rooftop solar and smart grids go hand in hand, and when homes become miniature power plants, the decentralized and green future of energy generation and distribution will become a reality.  

By Blair Hassett, Public Policy Intern


The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.