Solar energy is a plentiful resource in virtually all climates. Areas north of about 45N will have limited solar near the winter solstice, and cloudy places like Seattle have much less than sunny places like Colorado, but there is still enough solar gain even in Seattle to make using solar worth it. Hot, sunny areas with insignificant heating demand still can benefit from understanding solar in that they can be designed to avoid solar gain, and can still use passive cooling techniques. In all areas, ignoring the principles of passive solar design (eg putting in too much glass, especially too much pointed west, orienting the building wrong etc), will result in some energy penalty, even if there is no desire to take use passive solar heat. In fact EVERY BUILDING IS A PASSIVE SOLAR BUILDING, some just perform better than others (click here for a photo essay).
Solar energy has the environmental advantage of not producing any waste products, although in the case of solar electric, we can't completely ignore the impact of creating the solar cells themselves (which can contain toxic chemicals).
There are three general techniques for using solar power in order of increasing cost: passive solar, active solar, and solar electric (PV). Of the three, solar electric is the only technique likely to come very far down in cost, but it is also currently, by far, the most expensive.
Passive Solar: this collection of techniques collects heat in the building without the use of pumps or other power driven means. In its simplest form, passive solar is just a matter of putting around 7%1 of the buildings floor space as glass facing south (eg a 2000SF building, would have 140SF of south facing glass), and protecting it with an overhang sized to keep out the summer sun, and minimizing glass facing other directions. This is called a sun-tempered, and can provide between 20% and maybe as much as 80% of a buildings heating load (depending on climate etc).
To increase the amount of passive solar heat used, the building must have additional thermal mass installed to store the heat, and often use a larger glass area than the 7% guideline. Early solar homes where often very space age looking, but this need not be the case, and passive solar homes have been built in many styles.
Passive solar is a very low cost technology, and at its simplest involves no additional cost. In some areas, passive solar design is standard in green buildings: typically using only a moderate amount of glass and a slab on grade floor as thermal mass. For more, see the passive solar page.
Active solar: This involves either collecting hot air and moving it via fans, or collecting hot water (with glycol antifreeze for colder climates), or other fluid and moving it via pumps, with hot air generally used to heat the house, and hot water generally used for hot water (and potentially for hydronic heating as well). The main advantage of active solar collectors is that the collector can be in places windows don't go: on the roof, out on a porch, etc, with the caveat that the further the collector is from the building, the more heat will be lost between the collector and the building.
An active solar collector could be a simple as a sheet of glass over an airspace that has a blackened back, to an evacuated tube with metal strips coated in special high absorption/low emissivity material. The most common kind of active solar collector are the hot water type (usually just called solar hot water), used as a pre-heat for either hot water, or hydronic heat. Flat plate collectors are used in sunnier climates, and evacuated tube collectors are often used in cloudier climates.2 Solar hot water systems typically run from $5k to $10k.
Active solar air heating systems only make sense when there is plenty of sun, but some constraint makes passive solar not feasible. For more see the active solar page
Solar Electric (PV): Photovoltaic cells (where the name PV comes from), are part of the same technology family as computer chips and LED lighting. In some sense, a PV cell is the opposite of and LED: rather than using electric to emit light, it absorbs light and creates electric. At present solar electric is quite expensive (between $6k and $10k per peak KW, installed, for grid tied systems), even when averaged over the lifetime of the system, but has been coming down in price as new technologies and improved manufacturing processes are developed. Systems installed in sunnier climates will generate 50% (or more) than systems installed in cloudier climates, so the effective cost per kwh will be proportionally smaller. Currently, in small residential installations, cost over the lifetime of the system is probably around 25cents/kwh.
PV uses three general technologies, in decreasing order of collection efficiencies: mono-crystalline, polysilicon and amorphous. Since amorphous cells cost less than polysilicon, and polysilicon less than mono-crystalline, the cost per KW tends to be about the same. The less efficient cells will take up more roof space for the same KW of output.
For more see the solar electric page.
Determining how much solar you have
The amount of solar energy striking your home at any given time is determined by the length of time the sun is up, the angle of the sun, the degree of cloud cover and the shading due to anything blocking the sun during the day. The farther north you go, the less solar gain you have available in the winter when you need it, but luckily there is still usually enough. Homes located on a north facing slope often have much less available gain due to the shading of the slope itself, and so the ideal location is either fairly flat or south facing. Calculating your available gain involves looking up solar gain and weather data for your location in a chart, and is beyond the scope of this discussion (but, see references).
City lots: most urban areas are laid out horribly wrong for giving solar gain, often laying out lots so that each house shades the next one in a north-south row. Streets going E-W are preferable, along with lots that are deep enough N-S to keep one house from shading the next.
Windy crooked streets maybe appealing to some, but they make orienting houses for solar really difficult unless one is willing to have an orientation far tilted from the street (a condition that, in most situations, zoning setback won't allow).
Some cities are adopting solar access laws that prevent your neighbor from blocking your solar access, but these laws are not widespread, and in older neighborhoods with skinny lots, are probably not practical (even they are, residents are not likely to embrace them, especially if they put server restriction on building size and height.)
Passive Solar Energy, Second edition, Bruce Anderson & Malcom Wells,
Brick House Publishing 1994.
A good introductory guide.
The Solar Home Book, Bruce Anderson & Michael Riordan, Cheshire Books,
Out of print, but still available used, this is a good in-depth book.
The Passive Solar Energy Book, Edward Mazria, Rodale Press, 1979
Possibly out of print, but generally available as a used book.
The Passive Solar House, James Kachadorian, Chelsea Green, 1997.
Although empasising only one kind of solar system (designed by the author), the basic principles are there also.
The New Solar Electric Home, Joel Davidson, AATC publications 1987.
Web site from the department of energy, covering about the same material as is covered here.
The California Energy commission, covering mostly PV & solar hot water. In the past there was passive solar info, but I can no longer find it.
1: this is a rule of thumb that works for most situations, but not necessarily all.
2: there is some controversy that surrounding whether evacuated tubes are worth the extra cost. In an anecdotal comparison in Seattle, of a flat plate and evacuated tube system, it appears that the main advantage of the evacuated tubes is that you collect heat using less roof space. The amount extra that the evacuated tubes collect in weak sunlight appears to be swamped by how much is collected on other days, so that the difference in total energy collected isn't that great. However, if you compare by equal surface area, the evacuated tubes will collect more heat..alas of course that measn in the summer also.