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California has the largest population and economy in the United States. It is well known for its abundance of year-round sunshine and its high solar energy consumption rate.1 Unfortunately, the state is also known for having high electricity rates.
Through its Title 24 regulations, California became the first state to require most new homes to have rooftop solar, starting in 2020.2 This new requirement puts California squarely at the forefront of solar generation. What do these trends mean when it comes to solar pricing?
If a homeowner doesn’t take advantage of tax rebates or incentives, the cost of going solar in California can be significant. The estimated average cost of a residential solar system in the state is $8.70/watt, or $34,800 for a typical 4000-watt (4kW) solar system.3
As a way to promote clean energy, the federal government has established two nationwide solar incentives. The first incentive is the Federal Solar Tax Credit (ITC)4, which provides homeowners with the opportunity to claim a 30% tax credit on expenses associated with the installation of their solar panels if construction commences before the end of 2019 (after that, the amount steps down and eventually ends for residential installations). The ITC can assist homeowners by offsetting the initial cost of installation.
The second incentive is the Property Tax Exclusion5 for Solar Energy Systems. If you install a new solar system on your home, your current property tax will not increase. This exclusion will remain in place until the property changes ownership.
California supports homeowners’ investments in solar power by providing a wide variety of solar incentives and tax rebates. The following incentives are available through the state:
This program provides incentives to qualified low-income homeowners to help offset the cost of a solar electric system.
This program provides incentives to qualifying customers of Pacific Gas & Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas & Electric (SDG&E).
You won’t always consume all of the energy that is produced by your solar system. That’s why California offers solar customers the benefit of Net Energy Metering (NEM), a special billing arrangement which provides credit to customers with solar systems for the full retail value of excess electricity generated by their system.
Solar panels are a significant financial investment for homeowners, and when it comes to financing your solar system, the following options are available to you:
Home equity loans are a popular type of loan that many homeowners use to finance their solar panel system.
A PPA is when a third party owns and maintains your solar system, selling the kilowatt-hours back to the customer.
A solar lease is an option for homeowners seeking financing in California. You can enter into a contract with a solar leasing company, which agrees to loan the amount that is needed for the system and installation costs. This cost is then repaid over some time while the benefits of owning a solar system are still received.
This is a program that will loan the entire cost of an eligible energy upgrade to a homeowner to be repaid over a period of time, with monthly payments added to the homeowner's property tax bill.
Going solar in California is a wonderful way to save money long-term while doing something positive for the environment. Your LG PRO installer can help you figure out your solar system's payback time.
1. “California Statistics,” California Distributed generation statistics Energy.Gov-
2. “California's Energy Efficiency Standards”-Building Energy Efficiency Program-
3. “Pricing PV Systems” Go Solar California-
4. Tax Credits for Solar System Purchase” Go Solar California-
5. “Property Tax Exclusion for Solar Energy Systems,” Energy.Gov-
6. “Single Family Affordable Solar Housing,” Go Solar California-
7. “Multifamily Affordable Solar Housing (MASH),” Go Solar California-
8. “Net Energy Metering in California,” Go Solar California-
9. “Home Equity Loans” Go Solar California-
10. “Power Purchase Agreements” Go Solar California-
11. “Solar Leases” Go Solar California-
12. “Property Assessed Clean Energy (PACE)” Go Solar California-
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