Solar Panels in California: Cost and Savings

The average 5-kilowatt (kW) solar panel system costs $3.47 per watt in California, according to Find Energy. This size and pricing results in a total average cost of $17,350 for the state. 

Fortunately, most homeowners won’t end up paying for the full cost of a solar panel system in California. If you purchase your residential solar system, you’ll be eligible for a 30% federal solar tax credit to help you recover thousands from the initial installation cost when you file your annual tax returns. After factoring in savings from the solar tax credit, your net cost in California drops to $12,145 on average.

To be eligible for the tax credit, you must meet the following criteria:

• You own or are currently financing your panels — no solar leases or solar power purchase agreements (PPAs).
• Your solar system was or will be installed between 2022 and 2034.
• The solar system is on your primary or secondary residential property in the U.S.

Every household has different energy needs and may require a larger or smaller solar array than the state average. The following table shows a range of system sizes at California’s average price per watt of $3.47.

Many solar rebates and incentives exist to help reduce the cost of your solar panels. To qualify for most incentives, you’ll need to purchase your solar panels. If you lease your solar system, these benefits don’t apply.

The following table provides a summary of some of the best California solar incentives for homeowners.

Solar incentives in Los Angeles

Los Angeles has a city ordinance requiring all city-owned buildings larger than 7,500 square feet or built before 1978 be retrofitted with technologies to make them more energy efficient, including solar panels. At least half of these buildings must be located in high-poverty or high-unemployment areas, and the installation work must predominantly be done by locals wherever possible.

Solar incentives in San Francisco

San Francisco’s green building code requires newly constructed homes and businesses to meet specific energy-efficiency standards. Builders can install solar panels to meet requirements for reduced energy usage.

Solar incentives in San Diego

Similar to the other California cities mentioned, San Diego has laws and programs designed to facilitate solar installations on new construction projects. Its Green Building Incentive Program waives permit and plan check fees on any new or remodeled homes installing solar panels. It also speeds up permitting and plan check time, which is typically the most time-consuming portion of a solar project.

Solar panel setup

When it comes to installing your solar system, there are a few basic pieces of equipment you can expect:

• Solar panels: There are three primary types of solar panels to choose from: monocrystalline, polycrystalline, and thin-film. Each type comes with its own unique performance and cost.
• Inverter: A solar panel inverter takes the sunlight harnessed from your solar cells and converts it to the electricity needed to power your home.
• Battery: A battery can store excess energy to power your home with solar power at night and on days without sunshine.
• Racking and mounting equipment: Whether you’re doing a ground installation system or creating a solar panel roof, you’ll need racking and mounting equipment to keep your panels in place.

No matter what company you work with to install your solar panels, your installer will walk you through the installation process and ensure you have all the necessary equipment.

If you’re interested in going solar, Choose Energy can help you find the best solar installer to get you started. Fill out our solar form to receive an instant solar estimate for your home today.

Tax credits and rebates are just one way to save money when installing a solar system. You can also expect to earn electricity bill savings each month by using solar energy to power your home.

Currently, the average cost of electricity in California is 27.15 cents per kilowatt-hour (kWh). Since the average home’s electricity usage is 542 kWh, the typical electricity bill in California is currently $147.15 per month. 

Depending on your level of energy independence, you have the potential to save over $1,700 on your annual electricity bill by using solar energy. A solar panel system with a solar battery or solar generator for backup will provide you with the most off-grid independence. Even if you’re only able to reduce your traditional electricity use by half, you could still save more than $800 per year.

With the average California solar system costing $17,350, you could break even on your investment in about seven years.

Because of the prevalence of solar power in California and the amount of sunshine the state gets, achieving energy independence is easier than ever. Energy independence allows you to rely less on the traditional electricity grid to power your home. You won’t be as vulnerable to price hikes in the energy market.

If you install a solar battery to store excess electricity, your home could be protected during an outage or blackout. Once you’ve paid off your installation costs, you’ll essentially receive free electricity from your solar panels, and you may even be able to sell excess energy back to your local utility.

Solar panels are a significant investment, and just as with any large purchase, it’s important to research your options ahead of time. A few things to consider when shopping for the best solar panels of 2023 include:

• Neighborhood rules: In some areas, a homeowners association (HOA) might prohibit a solar system on your property or require approval before installation. California state law prevents HOAs from banning solar systems, but you may still be required to notify the association of your installation.
• Roof angle, condition, and age: According to the U.S. Department of Energy, solar panels are most effective on south-facing roofs with a slope of 15 to 40 degrees. If your roof is old or will need a replacement soon, you should wait for your new roof before installing solar panels.
• Amount of sunlight: The more your solar panels are exposed to direct sun, the more money you can save on electricity. Consider removing any structures that may block sunlight from reaching your solar panels, such as large trees or buildings.

To learn more about the best solar panels in California, give us a call at the number on your screen.

When it comes to paying for solar panels, you have several options. Each has its advantages and disadvantages, but buying with cash will help you maximize the benefits of solar in California.

California residents have over 2,300 solar companies to choose from when searching for a trusted installer. Here are some of the top solar installers in the state:

California was an early adopter of solar power. The state began creating laws to incentivize green energy generation back in 1976 and has continued the same trend since then.

More recently, California lawmakers have practically guaranteed the future of solar power in the state, going as far as to require that all new homes be built with solar panels unless they don’t meet certain required standards. Even before that law, California was far ahead of any other state in terms of solar power. In fact, it has enough solar installed to power over 11 million homes with renewable energy.

Are there disadvantages to using solar energy in California?

Solar panel installation requires a significant upfront cost, averaging $17,350 in California. However, you can offset this cost in a variety of ways, including tax credits, rebates, electricity savings, and an increase in your home’s resale value. 

Is HOA approval required?

California law prohibits homeowners associations from banning solar installation on people’s properties. Your HOA may still require a notice of installation, and there may be specific rules about installation, so be sure to check your HOA’s policies before proceeding.

How does solar power help the environment?

Solar power generation doesn’t cause the same greenhouse gas emissions as traditional electricity generation. As a result, you’re reducing your carbon footprint, combating climate change, and helping to keep the air and water clean.

Is it better to buy or lease solar panels?

Leasing solar panels can be an attractive financing option because it requires fewer upfront costs. However, when you lease your system, you aren’t eligible for tax credits, and you may not have as much opportunity to make your money back. You also miss out on energy independence because you won’t own your solar panel system. If you can’t afford the upfront cost of a cash purchase, consider a solar loan.

What percentage of California energy production is solar?

Solar energy makes up about 27% of California’s electricity, and the state produces around 28% of the nation’s solar power.