Are Solar Panels Worth It In California?

California is home to the highest concentration of solar energy users in the United States. According to the California Energy Commission, 15.4% of California’s in-state energy generation comes from thermal and photovoltaic solar power and they are pushing to increase that number over the next decade. As of January 1, 2020, all new-built single-family homes are required to include solar panels and business and commercial buildings will soon have the same requirement. California is clearly serious about switching to greener, cleaner energy.

This sounds great for the environment, but what does it mean for you? Is investing in a solar system really worth it? The short answer is: Yes! No matter where you live, modern solar technology is nearly guaranteed to be worth the investment. If you live in California or are planning on moving there, then solar is a must!

Don’t just take our word for it, let’s crunch some numbers so you can see that solar energy is a quality investment. The main factors that we need to examine are the cost of solar and the cost of electricity and how one can offset the other.

The Cost of Solar In California

Let’s start by taking a quick look at the cost of solar in California. Because California is such a large and diverse state, the cost of a solar system can vary quite a bit from city to city. For the purposes of this article, we’re just going to focus on averages, but if you would like an estimate that is a little closer to your specific needs, check out our solar cost calculator here.

The average cost for solar in California is currently resting at $2.85 per watt. Based on the average electricity usage in California, most homeowners would need a 5kW to 8kW system to produce enough energy to power their home completely. This means that you can expect to spend somewhere between $14,000 and $23,000 for a full installation.

Check out this chart to see how the different size systems measure up in terms of cost.

All the prices listed here are based on the average cost, so they will vary by company and location, but you can see that this is quite an investment. Thankfully, there are a couple of things that can help to offset the cost from the very beginning.

California’s Solar Incentives

California has some of the best solar incentives in the country. Not only do they offer state-wide net metering, but many cities and towns offer regional rebates and unique incentives for those who choose to invest in solar.

If you’re not familiar with net metering, this is the process by which you can earn credit with the electric company for the extra energy your system produces. Depending on your electricity provider, you can earn close to the retail value for every extra kWh your system generates above what you use. Unfortunately, some new policies have been implemented over the last year to lower how much you can earn on net metering in California, but there is still the potential to earn at least a little extra.

The federal government is also encouraging residents to install solar with the Investment Tax Credit. This credit allows you to deduct 26% of your installation costs off of your taxes. How many other home improvements come with a 26% return on investment in the first year? Not many.

The Cost Of Electricity in California

According to the Energy Information Administration, the average cost of electricity in California as of June 2021 was 23.11 cents per kilowatt hour (kWh). Although the cost of electricity in California is nearly double the national average, Californians use significantly less electricity each month resulting in mostly average to lower than average electricity bills.

The average residential home in California uses approximately 532kWh per month. This means that the average electricity bill ranges around $122 per month. This may not sound quite right for your home, but remember we’re just working with averages here. At $122 per month, the typical California resident can expect to pay about $1,475 a year for electricity.

When Will You See The Benefits of Solar?

Now it is time to put these numbers together and see what kind of timeframe you can expect before you start to truly reap the financial benefits of this investment. Keep in mind that there are several factors at play that can impact the exact amount of time this can take, but this should give you a general idea.

As you can see, it will take approximately 6 years for your system to generate enough energy to pay for itself. If for some reason you choose not to take advantage of the federal tax credit it would take closer to 8 years to make your money back. You may be thinking that that is a substantial amount of time, but if you consider the typical lifespan of a solar system, it is a relatively short amount of time.

Most solar systems are designed to work at peak efficiency for 25 to 30 years. Many companies guarantee their systems to last at least that long. After the 30 years are up, the system will start to lose efficiency, but not immediately and typically at a very slow rate.

How Much Money Will I Save?

Since every system is different and the cost of electricity fluctuates, we can’t tell you exactly how much money you can save. However, we can give you a general idea. If we base the amount on the current average price of electricity you could be looking at a savings of $35,400 over the 24 years after you’ve made back the cost of the system. This amount does not include any amounts that you may save or earn through net metering or energy storage.

This also does not include any amounts that you would still be saving after the initial 30 years of peak efficiency expire. You can always work with your installer to replace solar panels as they wear out so you don’t have to worry about losing efficiency as quickly which will help you save even more.

Is Solar Worth It In California?

With a well-maintained solar system, you could be looking at basically free electricity for decades as long as the sun is shining. Since we all know that sunshine is a guarantee in the Golden State, you can rest assured that solar is absolutely worth the investment for anyone who lives in California.

If a full solar system is a bit out of your reach right now, you can always start using solar power in smaller ways. You can easily do everything from charging your laptop to keeping your drinks cool all with the power of clean, free solar power. Check out our Green Living section for even more ideas.