Solar Panels in California: Cost and Savings

The average 5-kilowatt (kW) solar panel system costs $3.93 per watt in California, according to Find Energy. This size and pricing results in a total average cost of $19,650 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 could drop to $13,755.

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

• You own or are currently financing the 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 residential primary or secondary 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 price per watt of $3.93.

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 panels, these benefits don’t apply.

Options available to California homeowners include:

• The Residential Clean Energy Credit is a 30% federal solar tax credit available to homeowners who install solar systems on their primary or secondary homes from 2022 through 2032. The tax credit decreases to 26% in 2033 and 22% in 2034 before expiring in 2035 unless renewed.
• The Disadvantaged Communities – Single-Family Solar Homes program helps income-qualified households in switching to solar at no cost.
• Tax exemptions in California prevent solar owners from paying sales tax on their solar equipment. The state’s residents are also exempt from increased property taxes from the installation of solar panels.
• California’s net metering program allows customers to credit their net excess energy generation back to their next bill at an avoided cost rate.
• California residents and businesses can qualify for the Self-Generation Incentive Program, a rebate based on the amount of storage you install with a solar battery.
• Local government and utility programs may also be available in your area.

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 inverter takes the sunlight harnessed from your solar panels 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 a racking and mounting system to keep your panels in place.

No matter what company you work with to install your solar panels, they’ll 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 you can save money when installing a solar system. You can also expect to make electricity bill savings each month by using solar energy to power your home.

Currently, the average cost of electricity in California is 27.07 cents per kilowatt-hour (kWh). Since the average home’s electricity usage is 542 kWh, the typical electricity bill in California is currently $146.72 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 $19,650, you could break even on your investment in as few as eight 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.

Solar panels are a significant investment, and just like 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 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 prohibits 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. California gets a lot of sunshine, but consider any structures that may block the sun from reaching your solar panels, such as large trees or buildings.

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

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. 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 10.7 million homes with renewable energy.

Are there disadvantages to using solar energy in California?

Solar panel installation requires a significant upfront cost, averaging to $19,650 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.

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.

What percent of California energy production is solar?

Solar energy makes up more than 20% of California’s electricity. However, the state produces over 28% of the nation’s solar power.