“My electric bill was skyrocketing,” he says. “I really needed to get a handle on what was going out, versus what was coming in.”

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Mr. Gelber’s solution was to purchase a solar-power generator for his home, with rooftop photovoltaic panels. He says that while concern about the environment played a role in his decision to go solar, economics convinced him to take the plunge.

“I’m in support of anything that will address global warming and our power consumption,” the 65-year-old Mr. Gelber says. “That’s very important to me. But I think that’s secondary to the economics of it. It’s going to pay for itself in eight to 10 years, and essentially I have free electricity for the rest of my life.”

As electricity prices rise and government incentives and technology improvements make renewable-power systems more affordable, a growing number of people are embracing self-generation. And while as much as 85% of the demand for home solar-power generation is in California — the state with the most generous financial incentives — the market is growing in other states, including New Jersey and New York, and could take off nationwide if more states implement favorable rules and funding, advocates say.

“This market wouldn’t be happening without these government incentives,” says Lisa Frantzis, managing director of renewable and distributed energy at Navigant Consulting, an independent consulting firm in Burlington, Mass. “There’s a convergence with prices coming down, concern about climate change, volatility in the power market and people concerned about energy security.”

California Takes Lead

By far, the most widely used home renewable-power systems are rooftop solar panels that absorb the sun’s rays and convert them into electricity.

In California, people who install their own solar power or other renewable generators can get rebates of as much as $2.50 per watt of electricity produced. Residential customers of San Francisco-based PG&E Corp. utility Pacific Gas & Electric Co., who install an average-size system of about 4,600 watts, can expect to obtain a rebate of at least $10,000, utility spokesman Keely Wachs says. California’s rebates are based on the electricity output of the solar generator. The highest-performing, most efficient system would qualify for the full $2.50-per-watt rebate, whereas systems on roofs that have heavy shade, or smaller surface areas, for example, would qualify for a lower rebate amount, such as $2.20, $1.90, $1.55 or less per watt, Mr. Wachs says…

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