It's Official: Solar Is Taking Over in California

California has officially gone where no state has gone before. The golden state pulled 5% of its power from solar last year, and this year's ramping up to be another record breaker. Here are three reasons why, as well as some of the companies helping Cali go green.

1. Scale, baby, scaleWhen it comes to solar, bigger can be better. California's utility-scale solar generation jumped from 3.8 million MWh in 2013 to a whopping 9.9 million MWh in 2014. That's more than three times the solar generation of second place Arizona, and well beyond the assets of other states.

Source: EIA.gov.

When you're dealing with large-scale solar, it's simple to trace the source of California's success. Check out the table below for some of the biggest installations in 2014. These and others helped boost the state's utility-scale solar capacity from around 3,500 MW in 2013 to 5,400 MW by the end of last year.

For investors, scale can mean security. Builders like First Solar (NASDAQ: FSLR) have advantages that smaller corporations just don't have. It spent $144 million last year on research and development, alone. That's more than many solar start-ups can expect in sales. And for the ultimate owners, First Solar Company allows them to invest in an asset, not just an idea---and as you'll see below, these are important assets in California.

2. You've got to have standardsStates can set renewable portfolio standards to help solar soar. The California government has mandated that, by 2020, 33% of all electricity must come from renewable energy. Forward-thinking electricity providers are already preparing, ramping up solar installations across the state.

That means that there's no shortage of utilities on the hunt for green power. Long before a massive solar farm fires up for the first time, First Solar and other manufacturers have orchestrated power purchase agreements (PPAs) with the likes of PG&E Corporation or Edison International . Utilities are generally still far from reaching 33% renewable energy capacity, so there are plenty more 10-, 15-, and 20-year PPAs to come.

Renewable portfolio standards aren't just for California. Look no further than the largest solar-producing states to understand their impact. Of the top ten, Florida is the only state to not have instituted a renewable portfolio standard.

When you buy a stock, you're investing in both the present and discounted future value of a company. So for a company that's already set itself up for a regulation-friendly future, investors won't have to worry about expensive alterations and last-minute risky renewable investments. Utilities like PG&E Corporation and Edison International have been steadily ramping up their renewable assets for years, and investors should make sure their own utilities investments are acting accordingly.

3. Green grassrootsCalifornia has made leaps and strides with scalable solar -- but a sizable slice of the state's solar pie comes from rooftop solar panel kits. By the end of 2014, home and business solar systems amounted to over 2,300 MW of capacity. Solar installers like SolarCity Corporation have taken California's household-level solar incentives, rebates, and net-metering policies and bundled them into an impressive package for potential customers.

SolarCity is California's number one solar installer. The company has a whopping 30 centers spread across the state, and has also partnered with The Home Depot Inc to make its product even more accessible. And for customers who don't want to deal with worrisome debt, SolarCity and other California installers offer simple no-money-down financial lease products that allow them to start saving on their energy bill today.

Source: SolarCity Corporation.

Investors in rooftop solar panel companies enjoy a different type of scale and diversification. While there may not be a mega solar farm, its assets are spread out among cities and states throughout the country, reducing any regulatory or regional energy shift risk. SolarCity Corporation doesn't only operate in Californiait operates in 15 other states and Washington, DC, too. So while it may not have the scale to cut installation costs to the levels of First Solar Company, customers in California and elsewhere seem to have no problem paying a theoretical price premium to slap a solar panel kit on their own roofs.

Stick with solar?California wins first solar place for 2014, and will most likely continue to be a front-runner. But forward-looking long-term investors can make solar stock picks anywhere based on these three principals, setting themselves up for powerful profits for years to come.

The article It's Official: Solar Is Taking Over in California originally appeared on Fool.com.

Justin Loiseau owns shares of General Electric Company, Google (A shares), and Google (C shares). The Motley Fool recommends Google (A shares), Google (C shares), Home Depot, and SolarCity. The Motley Fool owns shares of General Electric Company, Google (A shares), Google (C shares), NRG Energy, and SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.