Welcome to your solar panel cost guide for California! As the state with the most solar installations in the country with 1.5 million systems powering 26% of the state’s electricity, more homeowners than ever are going solar. We know going solar comes with a lot of questions – especially about cost. How much will it really cost? What affects the price? And most importantly, is it right for you?
That’s what we’ll cover in this guide. We’ll dive into equipment and installation costs, incentives, and long-term savings. You’ll see how factors specific to your home – roof configuration, energy usage patterns, local sunshine – affect the total cost. We’ll also help you with financing options, hidden costs, and ROI. Whether you’re just starting to research solar or ready to get quotes, this guide will give you the clear, practical info you need to make a smart decision about going solar in California.
What you’ll learn in this guide:
- Real costs of solar panel systems in California for 2024
- Factors that influence your specific installation costs
- Available financing options and incentives to reduce your investment
- Long-term savings and ROI calculations
- Hidden costs to watch out for
- Tips for choosing the right solar installer
Let’s dive in and uncover the true cost of solar panels in California!
Average Solar Panel Costs in California
Before we get into the numbers, let’s be clear that solar installation costs vary depending on personal factors unique to each homeowner. Your energy usage, roof layout, local weather and your energy goals all play a big part in determining the size and cost of your system. And a full solar array is more than just panels – you’ll need inverters, mounting equipment, wiring, monitoring setup, and possibly battery storage or main panel upgrades to make it all work.
That’s why working with an ESP Authorized Dealer is key – we can assess your situation and give you a custom quote for all this. With that in mind, here are the factors affecting solar panel costs in California.
How much do solar panels cost in California? In 2024, for California homeowners, the average installed PV system size of 7kW is likely to cost a minimum of $28,000 to $35,000 before incentives. However, this average does not take into consideration any additional costs of batteries, financing, or other upgrades that may be required to complete the project successfully.
Solar installations will vary in cost based on a range of very personal factors for every homeowner.
There’s much more to an installed solar array than just the panels and electrical equipment, so it’s best to get an appropriately-sized custom quote from a reputable solar sales organization like an ESP Authorized Dealer.
Solar systems that don’t include batteries will often cost an average between $3 and $4 per watt on the low end in 2024. Batteries can hike the overall cost by close to $10,000 per unit, though there are a range of options available and some are less expensive for smaller modular units that can be expanded later. Just like with solar itself, right-sizing the battery based on your personal consumption habits is all-important to make sure you get the best ROI.
Additional costs will often apply, including but not limited to main service panel upgrades, roofing costs, and financing.
Factors Influencing Costs
The cost of solar installation varies widely based on the quality of the panels you select, as well as any batteries. Installation complexity can also vary based on the roof type, angle, and any structural issues. Additional costs may come into play related to electrical upgrades.
Installation complexity
The difficulty of your solar installation plays a crucial role in determining costs. Simple installations on single-story homes with easily accessible roofs and roofing material that’s easy for installers to work with generally won’t have increased costs. Conversely, homes with complex or steep roof structures could see higher costs. Ground-mounted systems, while offering some advantages, typically cost as much as 30% more than roof-mounted options.
Available sunlight
California is known for its abundant sunshine, but the amount of sunlight your property receives can still impact system size and cost. Homes in sunnier regions like Southern California may require fewer panels to produce the same amount of energy as a home in a less sunny area. Northern California installations might need larger systems to produce equivalent energy, potentially increasing costs.
Your roof
The characteristics of your roof play a significant role in determining installation costs. Factors include:
Roof size: Larger roofs can accommodate more panels but increase material and labor costs.
Roof shape and slope: Complex or steep roofs may require specialized mounting systems and additional labor.
Roof material: Some materials, like tile, may require extra care during installation, potentially increasing costs.
Roof condition: If your roof needs repairs or reinforcement before installing solar panels, this will add to the upfront costs.
Shading and orientation: Partially shaded roofs may require additional equipment like micro-inverters or power optimizers to maintain efficiency, increasing costs.
Financing Options
Switching to solar is a significant investment, but there are many financing options to make it more accessible to California homeowners. Your choice of financing affects not only your upfront out-of-pocket costs but also your long-term savings and tax benefits. Let’s go through each option to help you find what’s best for you.
Cash purchase
Paying in cash offers the highest long-term savings as you avoid interest charges and fees associated with financing. The ROI period for cash purchases is typically the shortest, often ranging from 5-7 years.
Solar loans
Solar-specific loans are widely available, with interest rates typically ranging from 3-8% depending on your credit score and the loan term. These loans often have flexible terms, with some lenders offering as short as five years or up to 30 years. It’s not unusual to find loans with monthly payments around the same or lower than your current electricity bills. Importantly, you remain eligible for tax incentives with a solar loan. Some lenders do require a paydown or “amortization” in order to get the payments as low as possible, which is usually accomplished by taking the tax credit or other incentives and using it to buy down the loan balance.
Home equity loans or lines of credit
These options often provide lower interest rates than solar-specific loans. The interest may be tax-deductible, but consult a tax professional to confirm. Keep in mind that your home is used as collateral for these loans.
Leases and Power Purchase Agreements (PPAs)
While these options offer low or no upfront costs, they come with trade-offs:
- Solar leases typically involve fixed monthly payments, often with annual escalators of 1-3%.
- PPAs charge you per kWh of solar energy produced, usually at rates lower than utility prices but with potential annual increases. Both options usually have terms of 20-25 years and often include maintenance, and they may offer similar long-term savings compared to ownership but are not eligible for tax incentives.
Incentives and Rebates
California is committed to renewable energy and has one of the best solar incentive programs in the country. From federal tax credits to state programs and local utility rebates, these incentives can reduce your out-of-pocket costs and speed up your return on investment. Understanding and using these programs is key to getting the most out of your solar investment.
1. Federal Solar Investment Tax Credit (ITC): This program offers a 30% tax credit on the total system cost through 2032. It reduces to 26% in 2033 and 22% in 2034. There’s no maximum limit on the credit amount, making it a powerful incentive for homeowners of all system sizes.
2. California-specific incentives:
- Self-Generation Incentive Program (SGIP): Offers rebates for battery storage systems, enhancing the value of your solar investment.
- Property tax exclusion: 100% of your solar system’s value is excluded from property tax assessments until 2025.
- Local utility rebates: These vary by region, so check with your utility company for specific offerings.
3. Net Energy Metering (NEM): California’s NEM program significantly affects long-term solar economics:
- NEM 2.0 (for systems installed before April 2023): Offers full retail rate credits for excess energy with an annual true-up period.
- NEM 3.0 (for systems installed after April 2023): Provides lower export rates based on the “Avoided Cost Calculator” with a shorter, monthly true-up period. It also offers additional incentives for adding battery storage.
Understanding these changes is crucial for accurately calculating long-term savings and determining the optimal system size for your needs.
Long-Term Savings and ROI
When considering solar for your home, the long-term financial benefits are just as important as the upfront costs. California’s high electricity rates and sunny weather make for a great solar investment and often have faster payback periods than other states. Here’s more on this:
- Annual electricity savings: On average, homeowners can expect to save between $1,400 to $2,200 per year on electricity costs. This varies based on system size, energy usage, and local utility rates.
- Payback period: Most solar systems in California pay for themselves in under 10 years, and possibly as quickly as within 5-7 years. Factors affecting the payback period include system cost, energy production, and electricity rates.
- Lifetime savings: Over a 25-year period, the average California homeowner can expect to save between $40,000 to $70,000 on electricity costs. These savings account for factors like system degradation rate and projected utility rate increases.
- Return on Investment (ROI): Solar installations in California typically offer an ROI of 10-20% annually, making them comparable to many traditional investments.
Hidden Costs and Considerations
While solar can save you a lot, you need to have a complete picture of all the costs before you decide. Beyond the obvious costs of equipment and installation, several other factors will impact your total investment over time, as indicated below.
- Maintenance costs: While solar panels are generally low-maintenance, you should budget for occasional upkeep:
- Annual inspections or on-site technician visits: $150-$300 (optional, may be necessary if remote troubleshooting fails to resolve issues and problems are not warranty-related)
- Central Inverter replacement (after warranty coverage ends, generally 10-15 years; not applicable to microinverters): $1,000-$2,500
- Panel cleaning: $150-$330 annually (optional, but may be necessary in areas with more airborne debris and pollutants)
2. Roof considerations: If your roof needs replacement before installation, this could add $5,000-$15,000 to your project. Additionally, if you need to remove and reinstall panels for future roof work, expect to pay $3,000 or more, on top of the roofing costs.
3. Homeowners Insurance: In general, insurance premiums do not increase from adding solar panels, unlike some other home improvements like hot tubs or outdoor fireplaces. As a side note, solar may increase your home’s value, typically in California by about 3-4%. This can vary based on location and system size, and your insurance provider may not factor this into any calculations of your premium, but it is worth discussing with your specific insurance company.
Environmental Benefits
While the financial benefits of solar are great, the environmental benefits of going solar create lasting change for our planet. Every solar installation reduces California’s carbon footprint and helps fight climate change at home and abroad.
- Carbon offset: A typical 5kW system offsets 4-5 tons of CO2 emissions annually, equivalent to planting about 100 trees each year.
- Water conservation: Solar power uses 99% less water than coal-fired power plants. A 5kW system saves approximately 16,000 gallons of water per year.
- Air quality improvement: Solar energy reduces emissions of harmful pollutants like sulfur dioxide and nitrogen oxides, contributing to better overall air quality in your community.
Choosing the Right Solar Installer
The success of your solar installation hinges on choosing the right professional for the job. Consider these key factors as you make your decision:
Shop around for quotes
Don’t settle for the first offer you receive. Reach out to several installers and aim to collect at least three detailed proposals. Each quote should include:
- A breakdown of equipment specifications
- Estimated energy production
- Clear pricing information
Experience matters
How long has the company been in business? Have they completed many installations, particularly ones similar to what you’re planning? An established track record can be a good indicator of reliability and expertise.
What are others saying?
Take some time to dig into customer reviews across various platforms like Google, Yelp, and the Better Business Bureau. Pay special attention to recent feedback and how the company handles both praise and criticism. This can give you valuable insights into their customer service approach.
Warranty coverage
Protect your investment by understanding the warranties offered:
- Panels: Look for coverage ranging from 10 to 25 years
- Inverters: Expect warranties between 10 to 15 years
- Workmanship: A solid 5 to 10-year guarantee on the installation itself is ideal
By carefully weighing these factors, you’ll be better equipped to choose a solar installer who can deliver quality results for your specific needs.
Solar is a Compelling Investment in California
While the upfront costs of solar panels in California are significant, the long-term financial and environmental benefits make it a compelling investment for many homeowners. By understanding the true costs, available incentives, and long-term savings potential, you can make an informed decision about whether solar is right for your home.
Remember, going solar is not just about immediate savings—it’s an investment in your home’s future value, energy independence, and environmental sustainability. As California continues to lead the way in renewable energy adoption, solar power remains a smart choice for homeowners looking to reduce their carbon footprint and take control of their energy costs. Energy Service Partners can be your partner in solar for your home. Contact us for a free consultation to see if solar is the right fit for you and your home.
FAQs
How long do solar panels last in California?
Most solar panels come with 25-30 year warranties but can produce electricity for 30-40 years. Inverters typically need replacement after 10-15 years.
Are solar panels a good investment in California?
Yes, solar panels are generally a sound investment in California due to high electricity rates, abundant sunshine, and strong incentives. Most systems pay for themselves within 5-7 years.
Is solar worth it in California?
For most homeowners, solar is worth it in California. Long-term electricity savings, environmental benefits, and increased home value often outweigh the initial costs.
Can you go completely off-grid with solar in California?
While possible, going completely off-grid in California is challenging and often more expensive. It requires a large battery system, possibly a backup generator, and navigating complex regulations. Grid-tied systems are more common and cost-effective for most homeowners.