Are solar panels worth it for Pacific Gas and Electric electric customers?
PG&E has more customers with solar panels than any other utility in the nation. There are three main reasons for this.
- PG&E electricity rates are amongst the highest electric utility rates on the US mainland;
- The PG&E service territory covers areas of central and northern California that enjoy high solar irradiation levels and so solar panels installed in their territory produce more power than those installed in other places; and
- PG&E offers net metering which is a generous incentive that means you earn a retail rate for excess solar power that you export to the grid. Without this incentive solar panels would be far less attractive.
If I input the details for a PG&E customer that has a power bill of $270 per month into the best online solar panels calculator it tells me that I need a 9.32kW solar system that will produce 13,613 kWh's per year and that this system will return the owner a $135,262 profit even after repaying the capital over 25 years.
How does PG&E net metering work?
Net metering is a method of compensating owners of solar panels for the solar power that they generate during the day that is in excess of the daytime electricity needs of their home and so in exported into the PG&E grid.
Net metering has existed for some time in California and along with the 30% solar tax credit is the most important incentive supporting solar in California.
In 2016 the California Public Utilities Commission (PUC) approved the NEM 2 law which applies to all publicly owned utilities in California, including PG&E. Net metering is available throughout the PG&E territory.
Net metering is important because without this incentive PG&E would not be required to pay you a retail price for your excess solar energy that is exported. Many consumers are unaware of how generous this incentive is and how important it is that they get their solar power system installed before caps are reached in the PG&E territory.
NEM 2 was a win for the solar industry but it did slightly reduce the amount of compensation you get for power exported to the grid. The PUC decided that there were certain non bypassable charges that should be paid on every kilowatt hour (kwh) of electricity used from the grid that represent the cost of certain social programs that are paid for by all grid users (such as low income subsidies on power bills).
The non bypassable charges currently add up to approximately 2.5 cents per kwh meaning that you actually get 2.5 cents less than the full retail rate for the power you export.
How much do solar panels cost for your home?
The payback period for PG&E customers that install solar panels is amongst the best in the nation.
For an average PG&E customer owning a single family home and with a power bill of $270 per month the gross cost for installing a 9.32kW solar system is $30,383, which is $3.26 per watt. Upfront incentives (including the 30% federal solar tax credit) reduce this cost by $9,115 making the net cost $21,268.
See my solar panel installation cost from your local solar companies around California
How much do I save if I install solar panels for my home as an PG&E customer?
The savings will vary depending on how much your power bill is now, the time of day that you use power and the size of system you decide to purchase. Often the size of the system and the savings generated are dictated by available roof space. It can also vary based on the direction of your roof or any shading of your roof that effects output.
Here is a monthly and lifetime solar estimate for the same customer used above that has a $270 per month electric bill prior to solar and who installs a 9.32kW solar system.
Zero-down financed solar system estimate for a PG&E customer
Monthly savings year one $115
The graph above shows the savings for this customer in the first month that their solar system is live. It assumes that the system is purchased via a 100% loan product.
One of the common reasons why people have been slow to install solar panels despite the excellent financial return that they give to PG&E customers is that often the first months savings are not enough to motivate them to go through the process of buying solar. However, it is important that people realize that solar savings grow over time as utility prices increase. As can be seen in the graph, the solar saving are sizeable when totalled over the life of the system, not just the first month.
The graph below shows the savings for the same customer over 25 years. Please note the overall profit is slightly less than what was displayed for a cash purchase of the same system above. The difference being that we have included the cost of interest in the lifetime savings summary below.
Zero-down financed solar system cash flow
|System Size||9.32 kW|
The above cash flow projection assumes a solar system that offsets 100% of power usage, a finance rate of 3.99%, a financing period of 20 years, a minimum utility charge equivalent to 10% of bill without solar, and a utility cost inflation rate of 4.5% p.a.
What is the average payback period for residential solar panels for an PG&E customer?
The payback period for an PG&E customer installing solar panels on their roof at home depends on their power usage prior to installing solar, the time of day in which they use power and the size of system they install. What we have done below is copy an extract from the leading online solar panel savings calculator which shows that the payback period for a typical PG&E customer as we've discussed above. You can visit this calculator yourself and enter your own current power bill to see your solar savings and your likely payback period. You'll note that for customers with larger monthly power bills the payback time is usually slightly shorter because the cost of solar systems per watt usually reduces as the system size increases.
See your savings and payback period based on your electricity use and location in the PG&E territory
Estimated system size 9.32kW (100% usage offset)
Pay Back Period
4 Years 7 Months
Est. Cost/WattEstimated Cost Per Watt
(after 30% tax credit and local incentives)
Annual Power Generation
Your total savings over the life of the system are estimated to be $135,262
|Estimated south facing roof space required||621 sq-ft|
|Levelized cost of power from this system over 25 years||6¢ cents/kWh|
|System cost reduction by upfront incentives||-$9,115|
|Average cost of utility power over 25 years (if you don't get solar)||42¢ cents/kWh|
|Equivalent Return on Investment (IRR)||24.7%|
|Monthly Savings year 25 (for 100% energy usage)||$776.51|
System prices are estimated based on the average reported cost of systems installed in the past year. Pay Back Period and Equivalent Return on Investment are calculated based on a 100% cash purchase. Estimated Cost Per Watt is calculated after claiming all applicable incentives. This estimate assumes you are able to take full advantage of potential tax benefits.
Cash Flow graph - Cash Purchase of this system
What incentives, tax credits and rebates are available to PG&E customers for installing solar?
As is the case with most utilities around America, PG&E no longer offers up-front cash incentives paid by the utility to encourage their customers to install solar panels. There are some upfront incentives available for customers on low incomes and some available for new home construction. You should ask your local solar company about whether you may be eligible for any such incentives. Solar may also be eligible for some wider energy efficiency grants or credits although these are also limited in scope and application.
The major financial incentive currently available until the end of 2019 is the 30% federal solar tax credit. However the way this works is that the full cost of the system needs to be paid to the installer and this tax credit can then be claimed back as cash when you next do your taxes.
Property Tax Exclusion for Solar Energy Systems
Total cost of solar system is exempt from property taxes
Sonoma County - Energy Independence Program
Loan provided at fixed interest rate of 7% paid back through increase in property taxes. Linked to the property not the property owner.
Western Riverside Council of Governments - HERO Financing Program
Loans to support installation of renewable energy sources paid back through increase in property taxes. Linked to the property not property owner.
Change to net metering policy, mandatory interconnection fees, nonbypassable charges, and time of use rates
Residential Renewable Energy Tax Credit
|Ongoing Production Incentives||Value Per Year|
|Marin Clean Energy - Feed-in-Tariff (Local)||$1,089 per year|
|TOTAL (over System Lifetime)||$21,780|
Please keep in mind that the best source of up-to-date information on incentives are the solar installers who specialize in your area. If you still are unsure about the eligibility criteria of some of the solar incentive programs, please discuss with the solar installer representative who may contact your shortly, or visit the solar incentives discussion forum where the most common questions are likely to have already been answered.
Detailed information about your estimate
|System Size (for 100% usage offset)||9.32 kW|
|Annual Power Generation||13,613 kWh|
|Pay-back time (assuming Cash purchase)||4 Years 7 Months|
|Internal Rate of Return (IRR) on Investment||24.7 %|
|Total Upfront Incentives and Rebates||-$9,115|
|Net Cost of System after rebates and incentives||$21,268|
|Total Cost of Utility Power Avoided over 25 years||$144,386|
Please note that the investment return figures do not include the possible increase in property value.
What are the environmental impacts from PG&E customers installing solar panels for their home?
Whilst most home owners ultimately decide to install solar panels because of the financial savings they offer over time, for some people it is the environmental impacts of this choice that drive the decision to install solar. Here is a break down of the environmental benefits delivered by the installation of a 9.32kW solar system.
A solar system generating 13,613 kWh per year will save you money AND make the world a nicer place
on average per year
Reduces CO2 emissions
metric tons per year
Equivalent to planting
Equivalent to driving
less per year
CO2 emissions calculation based on the electricity generation and emissions data for your state in 2015 as published by the US Government Energy Information Administration.
How much power do solar panels installed in the PG&E territory produce?
The amount of power produced by solar panels across the PG&E service territory varies depending on the location and local climate.
See power production and also get pricing from local solar companies
What rate does PG&E actually pay me for excess solar power I export?
If we consider the ETOU-B summer tariff this would mean you get 23.5 cents for off peak power exported before 4 pm and 33.5 cents for power exported after 4 pm. You can work out what you will get paid for power exported at any time of day and in either winter or summer by simply deducting the non-bypassable charge (2.5 cents per kwh) from the retail power price that applies at that time on your rate schedule.
Who are the best solar companies that service my local part of the PG&E territory?
As the PGE territory covers a number of cities there are different solar companies operating locally in each as well as some that cover the whole territory.
If you are up to the stage of wanting quotes from solar installers you can get a system sized for your house and up to four quotes from installers that service your area for free online by entering your zip code below.
See my solar panel installation cost from your local installers
How much electricity will solar panels produce where I live?
How do I get accurate solar quotes that take into account my power usage with APS?
To get accurate solar quotes you (or your solar company) needs to work out how many solar panels you need on your home.
To do this they need to know your power usage patterns. This will allow you to come up with the amount of solar panels you would ideally want to make your power bill zero. See below for ways that you can get hold of your power usage data either for your own analysis or to share with a solar company that you wish to have quote your home.
Once you determine the right amount of solar panels you then need to measure your roof to see how many panels will actually fit on your roof. Most solar companies can measure roof spaces online using tools that are similar to Google Maps (but are more accurate) such as www.nearmap.com.
The www.solar-estimate.org website is the leading solar marketplace in America and allows you to both do an accurate online estimate of your needs yourself and, if you wish, request quotes from solar companies through one interface.