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What are the average solar savings a home in California will get from installing solar panels?

The statistics show that on average homes in California use the third least amount of power on average out of all US states at just 577 kWh per month. However, this statistic is not that helpful to work out solar savings because there is a large amount of high-density housing in the largest cities in California and this skews the average electricity consumption down.

It is really only single-family homes where installing solar panels on your roof to save money is possible and so it is the consumption number for free standing homes that matters most. Unfortunately, there are no government statistics published for use of power by stand alone single family homes only. So, to try and get the average power consumption numbers for houses that go solar we need to turn to solar marketplaces where hundreds of thousands of consumers input their power bills to try and get an accurate estimate of how many solar panels they need and how much installing solar panels on their home will cost.

What this data shows is that of the people that request quotes for solar in California through the Solar-Estimate marketplace the average electricity bill is $320 per month, or an annual power spend of $3,840.00.

This is around triple what we would get if we multiplied the average statewide consumption (577 kWh per month) by the average price of power in California (18.48 cents per kWh as at 2017). On these numbers, the average power bill in California in 2018 is $107 per month or $1,294 per year.

Do you measure solar savings before or after accounting for the system cost?

Solar savings are usually measured as the avoided utility electricity cost. On this basis alone we see that based on government data the average solar savings possible in California by installing solar panels is $1,294 per year (EIA). However, the average avoided cost of homes that actually install solar panels is $3,840 (solar-estimate.org). This difference demonstrated the point that it is mainly large users of electricity who install solar.

This way of measuring solar savings as just the avoided electricity cost is of little use because it does not consider the cost of the system. A better measure is: Solar savings = the avoided electricity cost less the cost of the system and less interest or holding costs on the capital used to purchase the system. Solar savings depends on the cost of installing solar panels on your home and the method and cost of financing the purchase of the system.

An estimate of average solar savings in each utility region in California based on a household with a $250 per month electricity bill

CityStateAverage cost of Utility power $/kWhEstimated system sizePayback period25-year profit (savings less cost)Top rated solar companies in your city
Los Angeles California 0.17 9.45 kW 5 years 3 months $108,123 View companies
San Diego California 0.17 8.9 kW 6 years 1 month $103,812 View companies
San Jose California 0.17 14.79 kW 7 years $98,566 View companies
San Francisco California 0.17 8.48 kW 5 years 5 months $107,545 View companies
Fresno California 0.17 8.7 kW 6 years $104,226 View companies
Sacramento California 0.17 8.86 kW 6 years 1 month $103,865 View companies
Long Beach California 0.17 8.39 kW 5 years 10 months $105,021 View companies
Oakland California 0.17 8.75 kW 6 years $104,146 View companies

 

Sample savings from average sized solar systems per utility 

Utility

System size for 100% use

Annual Production

(kWh )

Payback

IRR %

Total avoided electricity cost over 25 years

Cost of system after 30% tax credit

Net solar savings

SDG&E

7.8 kw

11,729

5.5 years

20.9%

139,000

$18,500

$120,500

PG&E

8.44 kw

12,605

5.9 years

18.7%

133,000

20,000

$113,000

LADWP

10.08

15,306

6.9 years

16.6%

133,000

22,500

$110,500

SoCal Edison

8.9

13,392

6.1 years

16.1%

133,000

20,500

$112,500

 

Please note these savings assume a utility price inflation of 3.5% compounding and do not include the interest cost if this system is purchased by a loan. However, as loans can be repaid out of savings in less than 7 years interest costs are relatively small in California and would in each case only reduce lifetime savings by a few thousand dollars.

Why does the NEM 2 net metering make calculating solar savings in California difficult?

The new NEM program approved by the California Public Utilities Commission in December 2016 brought in two changes to the way that net metering operates with the major investor owned utilities, PG&E, SDG&E and Southern California Edison. Most notable amongst these changes was that if you install a solar system and want to be paid retail rates of credit for excess solar power exported to the grid, then you can be forced onto a time of use rate plan by your utility. This is not that much of a drama because in the next year or so all residential power rate plans from the big investor owned utilities in California will be time of use anyway.

However, it has now made it extremely difficult to estimate solar savings for a home in California unless you have accurate data about the time that the particular customer uses power. For this reasons none of the free online solar calculators at the moment are particularly accurate for estimating solar savings in California because none of them ask questions relating to the time of day in which you use most power.

The only people that are capable of providing accurate solar savings estimates for homeowners in California at the moment are solar companies because they have specialist software that can help them model your electricity usage profile. However, this requires getting your electricity usage data in half hourly or hourly increments from your utility and analyzing it. Unfortunately, this means it is a little harder to get an accurate quote for solar than what it was.

We are developing a California specific solar calculator to improve our current solar panel calculator. In the interim, if you use our current solar savings calculator we will produce an online estimate of what your solar savings would have been if you were able to stay on a tiered rate plan. We then pass your details to a solar company to help you get hold of your electricity usage interval data and work out your correct savings by analyzing this data.