Dubbed the “Golden State” because of its abundance of sun throughout the year, California is one of the best places to invest in solar energy.
Some estimates suggest that this state has the highest solar capacity in the US. Aside from having a lot of sunlight, California state policies and incentives for installing solar panels help boost the number of users.
But what about the average cost of solar in California?
The following sections explore the price range you can expect in this state. There’s also information on when you can expect to get a return on your investment.
Plus, you’ll learn more about which solar panels to choose and how much energy you can save.
The average cost of a solar system is between $12,000 and $16,000. And if you calculate it as cost-per-watt, the range is $2.41 – $3.27 per watt. So, the gross price, on average, is about $14,000, which doesn’t include all the state incentives you might get.
Incentives and rebates alone can shave off thousands of dollars, which we’ll discuss later in the article. Also, it’s best to compare the prices of various solar companies because shopping multiple providers may save you an additional 20%.
California’s solar prices are roughly the same, if not a little cheaper, than in other states. For example, the average price for a 6kW system in Oregon is $15,200. The same system in New Jersey sets you back $16,400.
Overall cost also depends on the installation company you choose and the type of solar panel.
You’ll want to know when you’ll get a return on your investment via electricity savings. This is called the “solar payback period” and is defined by the number of years it takes to start seeing a return. In California, the solar payback period is about six years.
A solar system installation is a long-term investment, and you should be looking at the savings from that perspective. For instance, you could save upwards of $55,000 over 20 years.
Also, you don’t necessarily have to pay the entire installation charge up front. As mentioned, California offers many financing options and incentives to help make your household greener. These include solar leases, Purchase Power Agreements (PPAs), and loans that don’t require any down payments. But keep in mind that paying the total amount upfront typically leads to getting the best long-term value.
The following list gives you the average costs of solar power systems based on how much energy they generate. Note that these are averages and do not include incentives or rebates, and that the prices may have changed by the time you read this article.
- 3kW – $8,500
- 4kW – $11,400
- 5kW – $14,200
- 6kW – $17,000
- 7kW – $19,900
- 8kW – $22,700
- 9kW – $25,500
- 10kW – $28,400
Typical household power consumption is around 900kWh a month for a 2,500 square home with a family of four. That’s about 1.25 kWh an hour. But if you use air conditioning a lot, your power needs might be higher.
You will need to determine the average electric consumption for your household, then get a system that can offset at least 20%-30% of that amount.
With so many different options available, it might be tricky to make the correct choice on your own. Selection of the right system may depend on the size of your property, its location, and the preexisting electrical grid.
Aside from the solar panels themselves, you’ll need inverters, racking systems, and batteries. Some of these elements aren’t mandatory. But it pays to install batteries and have the benefit of a backup power system in case of an outage.
Premium solar systems with high efficiency are usually more expensive, but you get better warranties, some of which may include free maintenance for a designated period.
To select a solar system, you should first determine your household’s power requirements, then gauge the optimal efficiency of your solar system. Installing something that can produce much more power than you need may be unnecessary.
A solar system’s efficiency and output are proportionate to the amount of sunlight it receives. California typically produces more energy from sunlight than states in the Northeast, for example, which receive less sunlight each year.
With that in mind, there are some general criteria that help you determine the energy output, including:
- Panel orientation
- Panel angle
- Panel type
These criteria go into an energy production estimate, and it will show you a reasonable estimate of how much energy you will produce and how much money you’ll save.
There are specific solar energy calculators online that can help you get a ballpark figure. However, it’s best to consult with your solar company because they’ll know how to use the specifics of your location to give you a more accurate number.
As mentioned, there are plenty of incentives like net metering, rebates, and tax incentives. Don’t miss your chance to use them because they may drive down the average cost of solar in California.
Solar rebates depend on your local area and start at $500 off the total invested amount. You can also get $0.95 off for each watt on the capacity you install.
To give you an example, the RMEA (Rancho Mirage Energy Authority) gives you a rebate of $500. The money covers the cost of the PTO (Permission to Operate), and that money goes to the local utility company.
Recently, there has been some controversy over net metering across different states in the US. Some states minimized net metering rebates, or chose to remove them altogether, reducing the savings available to residents.
However, this shouldn’t concern you. The incentives are still available in the Golden State, and they’re among the top reasons to go solar.
But how much of a net metering incentive should you expect in California?
Californian homeowners who install solar get bill credits at retail rates to cover the extra power. These credits come from the utility company and cap at 5% of the customer’s peak demand.
Note that this is the statewide incentive, and the number of credits you get may vary slightly where you live. Therefore, it’s best to first check the net metering program for your exact location.
You can use the ITC (Investment Tax Credit) to drive down the cost of installing a solar system. The savings can go up to 26%, a significant saving considering the average cost of solar in California.
The ITC only applies to homeowners who buy a solar system, either through a loan or cash purchase. If you decide to lease a system, you won’t be eligible for this tax incentive.
If you qualify for this incentive, you can get a $3,900 tax deduction if you purchase a $15,000 solar system. But there are certain limitations you should know.
The 26% residential tax incentive will only last until December 31st of 2022. In 2023, the percentage drops to 22%. The drop isn’t that big, but you should install a solar system as soon as possible because the tax incentive will be eliminated after 2023. Owners of commercial solar systems will still get a 10% deduction after 2023.
DAC-SASH stands for Disadvantaged Communities-Single-family Solar Homes. This program rebates qualified homeowners upfront. Based on your income level and family status, you might be eligible.
DAC-SASH is not a statewide incentive; it only applies to areas serviced by certain utility companies, including:
- PG&E (Pacific Gas & Electric)
- SDG&E (San Diego Gas & Electric)
- SCE (Southern California Edison)
If you’re a customer of one of these companies, get in touch with the provider to determine if your family meets the criteria for DAC-SASH.
In addition to the cost of installation and equipment, inspections, permits, and the installation company profit margins add to the total price tag.
But you shouldn’t think of this as an expense, rather as an investment. That’s because the more solar panels you add, the greater savings you’ll be making down the line.
The panels are one of your biggest expenses. For residential purposes, you have two solar panel options – polycrystalline and monocrystalline. The latter is more expensive but a more efficient type, and the former is more affordable while the efficiency is somewhat lower.
However, it’s not only about the panel. The inverter, which is the device that turns solar power into usable energy, will also drive the price up or down.
Lastly, you need to be particularly careful about the installation quality. Some companies offer very cheap quotes, but that usually means that the quality just isn’t there.
Remember, installing solar panels is an investment for the next 20 or more years. Therefore, it’s best to ensure you’re working with the best installer in the market, even if they are more expensive.
When considering the average cost of solar in California, you need to keep in mind you’re investing for the future. The investment isn’t insignificant, even with the rebates and incentives.
The amount of money you’ll save in 20 or more years is enormous. Not only that, but the overall value of your property might also increase because you have made it more energy efficient.
Installing a solar system is one of the best home upgrades you can make. Waiting for about six years for it to start paying dividends isn’t that long.