Cash flow graph based on cash purchase of a
California solar power overview
California is among the top states in the U.S. for home solar. High levels of solar irradiance, high electric costs, the 26% federal tax credit, and their net metering policy ensures that residents will benefit immensely from installing solar panels in California.
Are solar panels worth it in California
Solar panels have fallen in price by more than 80% in the last ten years. In 2020 they also remain subsidized by the 26% federal tax credit and the net metering law, making them an excellent investment. They offer a return well above the long term average return from both the share market and also property investment.
Another way to look at this question is the levelized amount you will pay for each kWh of power you will use over the next 25 years with and without solar panels. As you can see below the savings are significant.
Levelized cost of solar energy
Levelized cost per kWh is the cost of the solar system divided by the total number of kWh produced by a solar system over it’s lifetime
If you don't get solar
(forecast avg California electric rates over the next 25 years)
The most significant incentive to install solar panels for homes and businesses is the federal tax credit. Right now, the federal tax credit is equal to 26% of the total installed costs of installing a solar system. At the end of 2020, the amount of the credit will fall to 22%. This means that in order to maximize your savings potential, the best time to go solar in California is now.
California does have a state-wide net metering policy called NEM 2.0. In 2016, the California Public Utility Commission instituted NEM 2.0 which brough three major changes to net metering in the state, including:
Imposing interconnection fees
Changes regarding non bypassable charges
Requiring utilities to implement time of use rates
NEM 2.0 mandates that each utility must set its own interconnection fee for customers to pay when they install solar. The new net metering policy also requires utilities to determine a time interval at which they will measure the amount of energy obtained from the grid.
Nonbypassable charges will then be paid on every kilowatt-hour (kWh) discharged from the grid within any given interval.
Some utilities in California do offer additional solar incentives. For example, the Sacramento Municipal Utility District offers their customers a $300 rebate when they install solar panels on their roof.
Property tax exemptions
California has a property tax exemption for solar panel systems. Under the Property Tax Exclusion for solar Energy Systems, 100% of the assessed value of the solar system is exempt from the homeowner’s property taxes.
Solar panels power your house when they can but your home uses the utility company for power at other times. In 2020 "solar systems with battery storage" are becoming more popular. These are known as hybrid systems.
How do solar panels work?
Grid-tied solar system
Solar panels are mounted on your roof and wired together in groups called solar arrays. The power they generate flows into a solar inverter where the direct current (DC) electricity is converted into alternating current (AC) electricity that can be used by your home or exported to the electric grid.
Off-grid solar system
Off-grid solar power involves meeting all your energy needs from the power of the sun. There’s no utility to fall back on. This means the solar installation needs to power the home not just during the day, when the sun is shining, but after dark as well.
No, but cleaning them can improve power generation if they are dirty.
Will residential solar power system cost fall in California in 2020?
Given this environment, and the effect of import tariffs placed on solar panels by the Trump administration during 2018, it is hard to see that solar power system prices in California will fall during 2020.
Can you buy DIY Solar Panel Kits and install them yourself in California?
Yes you can! In some cases, you can save $3,000 or more when you install solar yourself, even after receiving the federal tax credit. Despite the potential for savings, data from Lawrence Berkeley Labs shows that only about 3% of homeowners choose DIY solar.
Reasons for this include:
The permitting and inspection process for the utility, the state, and municipalities can be quite complex.
The installation work is both dangerous and difficult, with electrical work having to be performed at heights.
Often times, solar electricity customers will be charged a premium for DIY installations, which can limit savings.
In some states, a solar system needs to be installed by a qualified solar contractor in order to take advantage of incentives. In California, a solar installer must hold a C-46 Contractor License in order to be considered qualified. Utilities and incentive programs may have additional requirements.
What are the pros and cons of installing solar panels in California?
The biggest advantages in California for installing solar panels are the net metering policy and the 26% federal tax credit. Plus, there are some local utility incentives available that can save you even more.
There are not many disadvantages to installing solar panels in California. If you’re a California homeowner, you’ll be kicking yourself that you didn’t get solar while all of these incentives were still around.
Likely cost based on an average of prices charged for solar systems of that size in the last year in California or
The likely payback period on your solar panels and your investment return.
Your total lifetime solar savings based on each of the major solar finance options, a cash purchase, a cash purchase funded with a HELOC (home equity line of credit) and a zero-down PPA or third party lease product.
If you want to see all of the above but also see live pricing, the three best solar deals available in your city and
get binding quotes from each of these solar companies then use this California solar panels calculator.
This calculator requires you to also input your name and contact details because most of our 200+ installer
partners will only authorize the sharing of their live solar pricing where we have validated that you are a real
homeowner with a home in their service area. We respect the privacy of your data and only share your contact details
with the solar companies you ask us to get binding quotes from.
Please keep in mind that the best source of up-to-date information on incentives are the solar installers who specialize in your area.