Are solar panels worth it for SCE electric customers?
If you spend more than $70 per month for energy and your roof gets sunshine, a solar-energy system could be a great way to go.
Here is six reasons why solar is a smart investment in SCE territory:
- SCE Rates Are High
You pay a lot for energy - and energy cost is the most important factor behind solar energy's financial value. When life gives you lemons (high energy rates), make lemonade (solar power)!
- Solar Got Cheap
The cost of solar energy systems has plummeted over the last decade. In fact, the cost of residential solar is less than half what it was only 8 years ago.
- The Grid is Your almost 100% Efficient Battery
SCE will give you close to full credit for every solar kWh you send to the grid (called net metering). And unlike most utilities, those solar credits can be applied forward and backward (within the annual true-up period). Your sister visited last July and turned the house into a snow globe? No problem—the solar credits from August will take care of it. Your mother-in-law visited last December and cranked up the guest bedroom's electric heater? All good—September credits have you covered.
- You Can Cut Your Tax Bill
The federal government offers a variety of tax credits for things they support, such as child care, higher education, retirement savings, and, yup, solar energy. You can apply 26% of your solar system's cost to your tax bill. No problem if you don't expect to owe taxes—the credit can be carried forward up to 20 years.
- Southern California is VERY Sunny
It does not hurt that you are in bright and sunny Southern California. In fact, the Jones family in Pomona gets more sunshine than anywhere else in the United States (according to the U.S. National Renewable Energy Lab).
- You Can Go Solar For Free (Sort of)
The cost of solar has come way down in recent years, so it might work for you to pay cash for your solar system. But if you decide to finance your system (most homeowners do), many solar loans are now available.
Unlike most conventional banks, solar-loan providers understand the solar purchase and they have designed their loan options accordingly. For example, many solar-loan providers will offer a lower monthly payment right away if you're willing to apply the 26% federal tax credit value to loan principal in 18 months (in other words, make a 26% advance payment once you've cut your next tax bill by that amount).
Your first solar loan payment will probably be less than your electric bill savings—in which case, you will start earning cash with solar immediately. And your net savings will grow over time because SCE increases electric rates almost every year while your loan payment stays the same.
To recap, you do not need to wait seven or more years to recoup your cash. You can cut your net energy cost immediately with solar (net energy cost = all-in energy cost, including the solar loan payment). For SCE-territory homeowners who understand the solar opportunity, it's an easy financial decision.
See your solar panel installation cost from your local solar companies around California
How much will solar panels save the average SCE residential 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.
If I enter the details for a SCE customer that has a power bill of $206 per month into the best online solar panels calculator it tells me that I need a 6.88kW solar system that will produce 11,035 kWh's per year and that this system will likely return the owner a $90,405 profit even after repaying the capital over 25 years.
Zero-down financed solar system estimate for a SCE customer
Monthly savings year one $103
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 SCE 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||6.88 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 SCE customer?
The payback period for an SCE 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 SCE 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 SCE territory
Estimated system size 6.88kW (100% usage offset)
Pay Back Period
Est. Cost/WattEstimated Cost Per Watt
(after 26% tax credit and local incentives)
Annual Power Generation
Your total savings over the life of the system are estimated to be $90,405
|Estimated south facing roof space required||459 sq-ft|
|Levelized cost of power from this system over 25 years||5¢ cents/kWh|
|System cost reduction by upfront incentives||-$4,776|
|Average cost of utility power over 25 years (if you don't get solar)||40¢ cents/kWh|
|Equivalent Return on Investment (IRR)||23.0%|
|Monthly Savings year 25 (for 100% energy usage)||$592.40|
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 SCE customers for installing solar?
As is the case with most utilities around America, SCE 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 2020 is the 26% 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, for all systems installed before 1/1/2025. Properties that change hands after 2024 may not continue to be eligible.
Sonoma County - Energy Independence Program
Loan provided at fixed interest rate of 5.99% paid back through increase in property taxes. Linked to the property not the property owner.
Change to net metering policy, mandatory interconnection fees, nonbypassable charges, and time of use rates
California Solar Initiative - Single-Family Affordable Solar Housing (SASH) Program
Up-front rebate of $3 per installed watt for systems up to 5.0 kW. Third-party owned but NEM benefits accrue to homeowner.
Self-Generation Incentive Program
Small Residential earns $.25/Wh of storage capacity
City of San Francisco - Low-Income Solar Energy Incentive Program
"$100/kW base incentive, $2,000/kW for low-income, $250/kW for choosing a city installer. Cap: 4.0 kW per meter"
LADWP - Net Metering
Retail rate net metering, calculated every month. Applies to all except Taxes and Minimum Charges
Residential Renewable Energy Tax Credit
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)||6.88 kW|
|Annual Power Generation||11,035 kWh|
|Pay-back time (assuming Cash purchase)||5 Years|
|Internal Rate of Return (IRR) on Investment||23 %|
|Total Upfront Incentives and Rebates||-$4,776|
|Net Cost of System after rebates and incentives||$13,593|
|Total Cost of Utility Power Avoided over 25 years||$110,157|
Please note that the investment return figures do not include the possible increase in property value.
What are the environmental impacts from SCE customers installing solar panels for their home?
While 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 6.88kW solar system.
A solar system generating 11,035 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 SCE territory produce?
The amount of power produced by solar panels across the SCE service territory varies depending on the specific location and the characteristics of the roof on which the system is installed. You can enter your zip code below to see power production for your exact situation, and also get pricing from local solar companies.
See power production and also get pricing from local solar companies
Who are the best solar companies that service my local part of the SCE territory?
As the SCE 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, competitive solar quotes that take into account my home and my power usage?
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 making your power bill zero.
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 - although this can be complicated by local building codes that may specify "set back" distances. Most solar companies can measure roof spaces free of charge online, using tools that are similar to Google Maps (but are more accurate).
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 and request quotes from solar companies through one interface.