Solar Panels in California: Cost and Savings

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There are many incentives in place to help reduce the cost of your solar panels. Options available to California homeowners include:

• The 26% federal solar tax credit available to all homeowners who install solar systems on their primary or secondary homes in 2021. 
• California’s net metering program, which allows customers to credit their net excess energy generation back to their next bill at the current retail rate.
• Local government and utility programs that may be available in your area.

Solar energy in California may help lower your electric bills 

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

The average cost of electricity in California is 20.45 cents per kilowatt-hour, with the average electricity bill being roughly $109/month. Depending on your level of energy independence using your solar panels, you have the potential to save up to $1,308 on your electricity bill by using storage. Even if you’re only able to reduce your traditional electricity use by half, you still save more than $650 per year.

With solar system prices starting around $15,000, you could break even just through electricity bill savings in as few as 11.5  years. And that doesn’t even account for the tax credits and rebates that may also help you save money.

Because of the prevalence of solar power in California and the amount of sunshine the state gets, it’s easier than ever to achieve energy independence. This is a great benefit of installing a solar system for your home, because when you’re energy independent, you aren’t as reliant on the electricity grid to power your home.

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 solar panels include:

• Do you have an HOA? In some areas, an HOA might either 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.
• What is the angle of your roof? 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.
• What is the condition and age of your roof? If your roof is old and will need to be replaced soon, you may want to wait for your new roof before installing solar panels.
• How much sun does your home get? The more your solar panels are exposed to the 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.

California was an early adopter of solar power. The state began creating laws to incentivize green energy generation as far back as 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 CA 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, California residential solar energy systems are responsible for more than 1,000 megawatts each year.

Are there disadvantages to using solar energy in California?

Solar panel installation requires a significant upfront cost ranging from $15,000 to $25,000. However, this cost can be offset 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 state law prohibits homeowners associations from banning solar installation on people’s properties. Your HOA may still require notice of installation.

How does solar power help the environment?

Solar power generation doesn’t cause the same greenhouse gas emissions that traditional electricity generation does. As a result, you’re reducing your carbon footprint, helping to combat climate change, and keeping your 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 the tax credits, it doesn’t increase the value of your home, and you may not have as much opportunity to make your money back.

What percent of California energy production is solar?

Solar energy makes up more than 20 percent of California’s electricity. However, the state produces more than 33 percent of the nation’s solar power.

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