If you are a resident of Los Angeles, you may be considering a residential solar panel installation. As the years go by, the cost of electricity is steadily rising. According to the figures, you can expect the cost of electricity to increase by as much as 3% per year.
Moreover, residents of Los Angeles can expect hotter summers in the coming years. This means that people will use their air conditioning more. But, unfortunately, those AC units take up a great deal of electricity. These factors mean that people in Los Angeles face huge energy costs in the coming years.
Due to this, many people are switching to solar, which is also a green and clean energy source.
That said, people are still concerned about solar panel costs. After all, they are not exactly cheap to purchase. However, be aware that the price has come down by 80% in the last decade, making solar installations more feasible.
This article looks at how much it will cost to install solar panels in Los Angeles. Today’s primary goal is to determine the payback period – how long will it take for solar panels in LA to pay for themselves?
To do this, we first need to determine a few other things. We need to know how much energy residents of Los Angeles use and how much it costs. We also need to know how much power solar panels can produce based on peak sunlight. We can then determine the solar panel payback period in LA using these figures.
Residential Energy Usage and Costs in Los Angeles
First, let’s determine how much money you currently spend on electricity. In Los Angeles, the average household uses roughly 573 kWh of energy per month. For the record, this is over 36% less than the national average of 903 kWh per month.
Second, the rates for electricity in Los Angeles are 15.34 cents per kilowatt-hour. This is substantially higher than the national average of 11.88 cents.
Finally, residents of Los Angeles pay an average of $88 per month for their energy. This is substantially lower than the national average, $107 per month. Californians spend an average of $1,056 per year on residential electricity.
The Cost of Solar Panels in Los Angeles
Now that we know how much you pay for your power let’s determine the initial cost of installing solar panels. Generally speaking, bulk pricing applies to solar panel installations; the larger the system, the less it costs per watt. However, this bulk pricing structure does not seem to apply in California.
Based on our research, a 5kW system costs the same per watt as a 10kW system. So, how much will the initial installation of solar panels in LA cost?
- 3kW – $8,460
- 4kW – $11,280
- 5kW – $14,100
- 6kW – $16,920
- 7kW – $19,740
- 8kW – $22,560
- 9kW – $25,380
- 10kW – $28,200
Solar Incentives in California
Although the upfront cost of solar panels in Los Angeles might seem relatively high, there are some incentives to consider. First, there is the ITC or investment tax credit. This is also known as the federal solar rebate program.
The federal solar rebate program offers a 26% discount on the upfront cost of all solar installations. In other words, you only have to pay 74% of the actual price as listed above. So, what does the cost of a solar panel installation look like after this federal rebate?
- 3kW – $6,260
- 4kW – $8,347
- 5kW – $10,434
- 6kW – $12,521
- 7kW – $14,608
- 8kW – $16,694
- 9kW – $18,781
- 10kW – $20,868
Be aware that this federal credit will not last much longer. The rate will remain at 26% until the end of 2022. Then, until the end of 2023, the rebate will drop to 22%. After 2023, there is yet no set plan to renew this rebate. That said, with so many people going solar, one would hope that the federal government has a new plan.
How Much Energy Do Solar Panels Produce In California?
For the record, the average or most common solar installation size is 5kW. Therefore, this is what we will be basing our calculations on.
On average, a 5kW solar system can produce roughly 20kWh of electricity per day. This equates to 600kWh hours per month. On that note, a 10kW system will produce 40kWh per day or 1,200kWh monthly.
However, these calculations are based on peak sunlight hours. The standard amount of peak sunlight hours used for solar panel output calculation is 4 hours.
However, people in Los Angeles get an average of 5.62 hours of peak sunlight per day.
This means that the same 5kW solar panel installation can produce roughly 29% more power. Therefore, in LA, that 5kW solar system should produce 25.8kWh daily or 774kWh monthly.
On that note, a 10kW system would produce 51.6kWh daily or 1,548kWh monthly. With so much sunlight, solar panel installation in Los Angeles is more feasible.
The Payback Period of Solar Panels in Los Angeles
We have now determined the figures needed to calculate the payback period for solar panels in Los Angeles. But, first, let’s review the figures required for this calculation.
- Residents of Los Angeles use 573 kWh of electricity per month.
- This costs residents of California $88 monthly or $1,056 annually.
- The cost of a 5kW solar installation in Los Angeles is $10,434.
- That 5kW solar system can produce 774kWh monthly.
Therefore, based on these figures, a 5kW solar system more than meets LA’s residential monthly energy needs. Furthermore, with an initial cost of $10,434, and yearly savings of $1,056, the payback period is 9.88 years.
However, a net metering program in California allows solar panel users to get 4 cents per excess kilowatt-hour produced.
Since people in Los Angeles use 573 kWh per month, a 5kW system can produce even more savings. Based on the figures, a 5kW system would produce an excess of 201 kWh of electricity per month.
The net metering rate of 4 cents per kWh would produce additional monthly savings of $8.04 per month. This equates to $96.48 per year. Thanks to net metering in California, the yearly savings can be as high as $1,152.48.
Based on yearly savings and the cost of solar panels in LA, the payback period would be 9.05 years.
Property Tax Exemptions
One last thing to consider with solar panel installations in LA is the property tax exemption. Solar panels significantly increase property values. In many places, this would raise property taxes. However, LA has an active solar energy tax exclusion plan; your property taxes will not increase after installing solar panels.
Final Thoughts
Based on the figures, it’s safe to say that solar panels in Los Angeles are definitely worth it. The payback period is not that long, and you can save a lot of money in the long run.