What Should You Pay For Solar In California?

Find Out For Your Home Based On Recent Installations In Your ZIP

Solar power in California

Last fact checked on June 12, 2019 by Catherine Lane

California is one of the best places in the nation to install solar panels. A combination of high average sun exposure, expensive utility rates, the solar tax credit, and the state’s net metering law means homeowners can get an excellent return by installing solar panels on their homes.

The Golden State also has some of the most aggressive greenhouse gas emission goals in the nation. California’s renewable portfolio standard requires utilities to derive 60% of their retail electricity from renewable sources by 2030.

 

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Solar power in California

California solar power facts

$3.75
/watt

Average cost of a 5kw solar power system in 2019
Price shown before incentives

6 Years 7 Months

Average payback time

$69,064

Average lifetime savings
Price shown after repayments of capital


/kWh

levelized cost of solar energy

42¢
/kWh

If you don't get solar
The forecast average utility price over the next 25 years

8,621
kWh

Annual power production

Cash flow graph based on cash purchase of a 6.06kW system

This 6.06kW system would offset 100% of your energy usage if your typical monthly bill in California is $171, however your situation may vary so try our solar calculator to get a result tailored to you.


Solar companies in California that provide pricing through the Solar-Estimate marketplace

39


Best solar offers currently available in your city


Solar calculator and quote comparison tool

Compare solar quotes from the top solar companies in California

How much do solar panels cost in California

$3.75 per watt

Cash purchased solar system
Before 30% solar tax credit

$4.17 per watt

Financed solar system
Before 30% solar tax credit

17.3¢ cents/kWh

Lease/PPA
Av. 15 year term, 2.5% price escalator

What are the pros and cons of buying solar panels for your home in California

The biggest advantages in California for installing solar panels are the 1-for-1 net metering law and the 30% federal tax credit.

There are not many disadvantages to installing solar panels in California. If you’re a California homeowner, you’ll be kicking yourself that you didn’t get solar while all of these incentives were still around.

Enter your details to calculate the cost and savings you are likely to get from installing solar panels for your home.

Best brands of solar panels

To find the best brands of solar panels you can use America's most trusted solar panel comparison and reviews website, SolarReviews.

However, reviews of solar panels can be a bit meaningless because most consumer owners have not had any issues and so whilst solar company reviews are very important when choosing solar installers they are of less use when choosing solar panels.

For more information to help you make an informed decision about this topic, I would recommend this article about buying solar panels.

 

Unlock live pricing on the best solar panel brands!

 

How much electricity will solar panels produce in California

Solar panels produce different amounts of energy in different locations.

Around the Sacramento area solar panels installed on a south facing 29 degree pitch roof will typically produce:

1,550kWh per year per 1kw of peak DC (direct current) capacity

For more information about how your location, roof direction and roof tilt affects solar power production use the solar panels calculator and enter your zipcode below.

 

See how much electricity your solar panels could produce

I want to buy a solar panel kit and install it myself

What rebates, solar tax credits and other solar incentives are available in California

What solar incentives and tax credits are available in California?

The two main incentives to install solar in California are the 30% federal solar tax credit and the net metering law.

Many upfront utility-based incentives that were established under the California Solar Initiative are now exhausted for residential customers and are nearly exhausted for commercial customers.

However, the case for investing in solar has never been stronger due to reductions in the price of solar systems helping to compensate for the lack of some upfront rebates.

 


 

Net metering in California (NEM 2.0)

Since 1996, utility companies in California have been required by the California Public Utilities Commission to offer full 1-to-1 net metering (NEM) to their customers. This means that utilities are required to give you the full retail value for each unit of solar power you personally generate and send back into the grid.

In 2016, California instituted NEM 2.0. NEM 2.0 brought three main changes to the previous NEM policy:

  • Paying interconnection fees;
  • A change to nonbypassable charges; and
  • Requiring the use of time of use (TOU) rates.

 

Interconnection fees

Previously, customers were exempt from interconnection fees. Under NEM 2.0, utilities set a standard mandatory interconnection fee.

 

Interconnection Fees for Investor-Owned Utilities
Utility Systems 1 MW or smaller System greater than 1 MW
Pacific Gas & Electric $145 Total cost of interconnection
Southern California Edison $75 $800
San Diego Gas & Electric $132

$800

 

Nonbypassable charges

NEM 2.0 requires nonbypassable charges to be paid on each kWh of energy a customer consumes from the grid (about $0.03) at a metered interval to be determined by your utility.

Example:

Let’s say from 12:00PM to 1:00PM the following happens:

  • You use 3 kWh of energy
  • Your solar PV system produces 2kWh of energy
  • Therefore, your consumption from the grid is 3 kWh - 2 kWh = 1 kWh

During that 1 hour interval, you are using 1 kWh more than you are producing with solar. Therefore, you will pay a nonbypassable charge on that 1 kWh.

 

Time of use rates

The final big change of NEM 2.0 is the transition to TOU rates. Customers using TOU rates pay different rates for electricity based on the time of day. Utilities provide a default TOU rate that customers will be put on, but other rate plans may be available. Check your local utility’s website for the best TOU rate for you.

 

Property Assessed Clean Energy (PACE) Loan Program

California has taken advantage of PACE loan programs to meet their emission targets. These loans are paid back through an increase in your property taxes and are attached to the property, not the property owner. So, if you get a PACE loan and decide to move, the loan stays with the property and the next property owner will continue to pay off the loan. This is a great option if you want to go solar but aren’t sure how long you will be staying in your current house.

California is home to CaliforniaFIRST, the largest PACE program in the US.

PACE loans are also available through the HERO program.

 

Property tax exemption

California homeowners can now save on their property taxes with the installation of residential solar systems. Typically, having a solar system on your property would increase your property taxes, however The Property Tax Exclusion for Solar Energy Systems exemps 100% of the assessed value of a solar system from residential property taxes.

 


 

Is a purchase, lease or PPA agreement best?

Generally speaking, you will make the largest savings over time if you purchase solar panels outright yourself.

However, this is not always the case.

If you are in a position where you do not have a federal income tax liability, you won’t be able to take advantage of the 30% federal solar tax credit.

In this case, you may be better off with a third party-owned solar lease. With a solar lease, you still will not be able to claim the federal tax credit but you will not have to pay the upfront costs of installing and maintaining a solar system.

 


 

What is the payback period for installing solar panels in California?

The payback period for installing solar panels in California is usually between 4 and 8 years. This is dependent on the size of the system, the brand of solar panels you buy, the amount you were previously paying for power, and whether you lease or buy the system.

This represents an excellent low-risk investment.

California Solar Calculator

Regardless of what you want to know about the economics of installing solar panels for your home or business in California we have a solar calculator that can show you exactly the information your require.

 

You can either use our full monthly solar calculator that shows you everything you could possibly want to know or you can use one of our range of smaller calculators for specific solar calculations that focus on providing you only with the specific information you require.

 


 

What you can find out about installing solar panels in California using our full monthly solar calculator

This solar calculator requires you to input your address, utility company, your average monthly power spend - It tells you:

If you want to see all of the above but also see live pricing, the three best solar deals available in your city and get binding quotes from each of these solar companies then use this solar panels calculator. This calculator requires you to also input your name and contact details because most of our 200+ installer partners will only authorize the sharing of their live solar pricing where we have validated that you are a real homeowner with a home in their service area. We respect the privacy of your data and only share your contact details with the solar companies you ask us to get binding quotes from.

 

Unlock live pricing in your state!

 

Solar calculator

Going solar in California

Check out all of the ways energy providers of California can help you be more energy efficient and save money.

The following programs are available:
Incentive Name Eligibility Type
Residential Renewable Energy Tax Credit Federal Personal Tax Credit
Property Tax Exclusion for Solar Energy Systems State Property Tax Incentive
Silicon Valley Power - Solar Electric Buy Down Program Utility Rebate Program
SMUD - PV Residential Retrofit Buy-Down Utility Rebate Program
Ukiah Utilities - PV Buydown Program - Currently Being Revised Utility Rebate Program
LADWP - Solar Incentive Program Utility Rebate Program
Find your local rebates and incentives

Your city may have further incentives to offer. Please keep in mind that the best source of up-to-date information on incentives are the solar installers who specialize in your area.