Are you a resident of California ready to make the switch to clean solar power? Good news- California is by far the leading state in solar energy, with the highest solar electricity capacity as of 2022. Close to 20% of the state’s power comes from the sun, with almost 23 gigawatts (GW) already installed. California has a highly active solar market, as well as plenty of financial incentives to help get you started.
According to data from 2023, an average-sized, 5-kilowatt (kW) solar panel system costs around $12,500 after factoring in money-saving federal, state, and local solar incentives and tax credits. Read on to learn more about California solar panel installation costs and the potential benefits you will enjoy.
Primary factors that determine costs
Size of the System
The first step is to determine what size of the solar system you’ll need. Figure out your home’s energy needs, and how much electrical usage you’d like your system to cover. Many opt to cover 100% of their energy needs with their solar panels, almost eliminating electricity bills!
The average U.S. home consumes approximately 10,400 kWh (kilowatt-hours) a year, so between 28 and 34 250-watt panels (a popular size) would cover the electrical needs of such a home.
The amount of sunlight you receive also makes a difference in the size of your solar panel system. California earns its nickname, The Golden State, with a high percentage of sunlight each year. An overcast city like Eureka averages just 77 sunny days per year. Cities including Bakersfield, Bishop, Fresno, and Sacramento, average just below 200 sunny days per year, quite a high number!
Here is the equipment you’ll need for a solar power system:
Solar panels – Two technologies currently dominate the market: monocrystalline and polycrystalline. Both work similarly, with monocrystalline having a more streamlined appearance, higher efficiency rating, and the higher cost that goes with that.
Racking – Solar panels aren’t installed right onto your roof- instead, mounted upon a racking system installed upon your roof. The racking system places your solar panels so that they receive maximum energy from the sun, while also avoiding damage to your roof. Instead of roof racking, if you are in the market for a solar carport or ground mount solar, you can find a mounting system to fit your needs.
Inverters – Solar power is received as DC current, and the inverter switches it to AC power, which most homes use.
Performance monitoring system – These let you monitor how effectively your system is running. Performance monitoring systems measure how much energy your system produces per hour and helps to identify any issues that may come up with your solar system.
Solar batteries – Solar power storage systems let homeowners use the solar energy their homes generate when sunlight isn’t available, such as at night or on cloudy days. That way, even if your town is more overcast, you can still benefit from solar power at those less sunny times.
The solar installation company
Solar energy is enjoying increased popularity, especially in leading states like California. There is now a wide range of installers to choose from, in most regions. Installation quotes vary quite a bit, so check with your local companies for estimates in your area.
Sometimes companies charge more because they invest in top-notch equipment, while other times, they spend more on advertising and promotional items, then transfer that cost to the customer.
If you have decided to start the process of installing solar panels, take your time to research the best solar companies in your area. You can also ask neighbors who have installed solar panels how happy they are with the job. You should ask multiple installers for quotes and compare their reviews and the equipment used.
Read More: The Best Solar Companies in California 2023
California Solar Panel Cost of Installation Breakdown
Panels have a reputation for being costly. However, solar panels cost account for about 34% of your total cost. The major investment is actually in labor and overhead costs.
As you compare quotes from installers, be sure to do plenty of research and talk to a variety of service providers in your area. This might take some time, but it could save you thousands of dollars on installation costs.
Large-scale companies have a reputation because they’re already established, so they can charge more and not worry about competition from small-scale businesses. They also frequently charge more to cover their marketing and additional overhead expenses.
California Solar Incentives, Tax Credits, and Rebates
Federal Solar Tax Credit
The biggest incentive currently available to Californians is the federal solar investment tax credit (ITC). This federal tax credit lets you claim 30% of the cost of your new system’s installation as a credit on your federal tax return.
Property Tax Exemption
Solar panels increase the value of a home by an average of 4.1%. This adds up to a sizeable amount when you consider the high cost of real estate in California.
Thanks to the state’s Property Tax Exclusion for Solar Energy Systems, you don’t have to pay additional property taxes on your solar system! This incentive remains active for residential solar panels installed until 2024.
California Solar Initiative
The Disadvantaged Communities- Single-Family Solar Homes (DAC-SASH) program helps low-income homeowners afford solar energy. Eligible customers of Pacific Gas and Electric (PG&E), San Diego Gas and Electric (SDG&E), and Southern California Edison (SCE) receive rebates and funding to help them cover solar panel installation costs.
Property Assessed Clean Energy (PACE)
This program allows homeowners to fund their solar projects by paying the cost back through their income taxes. Be sure to check if this program is available in your county.
Different cities and counties in California may offer you additional solar rebates via your municipality, utility service, or city. Solar Power Performance Payments, also known as production incentives, may also be available in some places.
Solar Financing Options
Paying for your solar system outright means you are the owner of the panels. Owning them gives you some benefits, such as increased home value. If buying isn’t a viable option for you, keep in mind there are also some considerable benefits to solar loans and solar leases/PPAs.
Both offer $0 down, and your monthly payments will most likely be less than your current electric bill. On average, solar loans can be paid off in 7-15 years, while solar leases often come with a 20-25 year term of repayment.
Other Factors That Affect CA Solar Panel Costs
eep in mind that solar energy is a long-term investment, so consider the price and savings you will encounter over the next twenty years or so. Good things to keep in mind are:
Cost of materials needed for installation
Labor and overhead fees from your installer
Savings you’ll receive through federal, state, and local tax credits
The cost and average power usage on your current electric bills
What you can expect to save on future bills (or lack of!)
The Payback Period refers to how long it takes to financially recover from your solar power investment, by profit or savings. In CA, the payback period averages between 5.5-7.4 years.
After a maximum estimate of 7 years, your savings on electricity bills would have paid for the full cost of your system! Solar panels commonly have a 20-30 year warranty, which means you will have many years of essentially free electricity (other than connection fees) after you surpass the payback period.
Resident Electricity Rates in CA
California residents pay some of the highest rates for electricity in the U.S., averaging over 16 cents per kilowatt-hour (kWh). Coupled with the rapid payback period, Golden State residents quickly experience financial gains by going solar!
Your roof’s size and configuration can affect the cost of installation. How steep your roof is, whether it has one level or multiple levels, and even if you have skylights or other items installed are all factors that can also affect your cost.
Your roof’s condition also matters. If you have an old roof, it might need to be replaced, since solar panels tend to last 20-25 years. This expense, however, can be bundled into the solar project and qualify for incentives and rebates.
Costs by City
The cost of solar installation varies based on multiple factors, including the size of your home, how many watts you install, and in which county you reside.
Inyo County has some of the highest costs in the state, averaging just over $20,000 for a 5kWh system, with the price dropping down to $14,200 after applying rebates and incentives. The same-sized system in Imperial County averages just under $15,000, dropping down to only $10,333 after the same incentives are applied!
These figures are just estimates, and solar systems are highly customizable to your finances and power needs.
Once your system is installed, it is pretty self-sufficient, for the most part. Solar panels require minimal maintenance throughout the year, such as cleaning and inspection. Regular cleaning of your system will keep it running smoothly, and an inspector can alert you if a problem arises.
Professional cleaning companies charge an average of $3 – $10 per panel, or a flat rate of at least $100. Some people opt to clean their own systems, but make sure to speak with your installer before trying it yourself!
The average cost for an inspection is about $150 per year. During these inspections, the contractor searches for cracks or issues with the system—the price to repair a solar panel averages around $650.
Installation companies often offer warranties to cover your system’s performance, workmanship, and equipment. In the event of damage due to inclement weather, your homeowner’s insurance will likely cover some of that expense as well. Be sure to check with a professional in that area for more information.
Home Value Increase
Investing in solar power for your home is likely to give you the bonus of increased property value. Considering California’s robust solar market, homes have an increased value and sell faster when their solar systems are purchased and not leased.
In a 2018 study, solar-powered properties in San Francisco sold for an average 4.1% higher than comparable non-solar homes, equivalent to a $41,658 value on a $955,200 home!
How to Calculate Your Solar Installation Costs
Solar Panel Cost Calculator
A great resource to help estimate costs for your specific home and project is Project Sunroof. Powered by Google Earth, Project Sunroof estimates your personalized solar quote using Google Earth’s images to determine two key factors in deciding solar costs- your roof’s shape and local weather.
Project Sunroof prompts you for your electric bill information to help estimate how many solar panels you’d need and what the cost would be. You can then compare funding options for your project.
California is a standout leader in the solar energy sector, with a higher amount of solar power installed than any other state in the union. There’s no better time than now to get started on your switch to clean solar energy, as the ITC and other money-saving incentives will not last long. Talk to installers in your area to get started on your solar energy system!
People also ask
The average cost of solar panels in California is $3.10/watt. Prices have gone down in recent years and will likely continue to, but incentives and tax credits won’t last, so this is a great time to get started.
In short, yes. The market is only expanding, and as a resident of the U.S.’s leader in solar energy, you have a considerable amount of incentives to get you started. The 5.5-7.4 year payback period is nice and short, and you’ll immediately begin to save on your electric bills. Plans are so customizable these days that you’re sure to find one to fit your needs.
That depends on several factors, including the solar panels’ wattage, size of your home, and your average energy usage. It also depends on how fully you want to cover your electrical needs. If you use an average of 10,400 kWh of electricity per year, then it would take 28-34 250-watt solar panels to cover your electrical needs fully.
They tend to last between 20-25 years. After that period, panels may still produce electricity, but production will likely slow down. They are quite durable and require little maintenance- only an annual cleaning and inspection, which can let you know about any potential issues in your system. Be sure to research your panels’ warranties, ensuring they’re well-covered for defects and environmental damage.
You can- but it comes with some risks. You’d surely save upfront, as home solar kits cost much less than a professional installation. However, quality, workmanship, and proper installation are not guaranteed in the same way, so be sure to research how reputable the manufacturing company is.
Installers are often highly experienced, licensed, certified, and familiar with the installation process. Often solar panel warranties just cover work done by licensed professionals, so think on it before committing to the DIY method. A professional’s experience comes with a higher price tag, but it may be worth it in the long run.