How Much Do Solar Panels Cost in California?

In the U.S., the number of solar panels required to power most homes typically falls between 17 to 21, with costs after incentives ranging from $16,870 to $23,170. As of April 2023, California's average solar panel price is $2.97 per watt. For a 5-kilowatt solar panel system, the cost of solar panels in California can range from $12,622 to $17,078, with the average gross price being $14,850, below the national average, can be as high as $20,498 or more. 

Highlights & Key Takeaways

• For a 5-kilowatt solar panel system, the installation cost in California can range from $12,622 to $17,078, with the average gross price being $14,850.
• Owning a solar energy system in California can increase your home's value by over 4%, and help protect you against future energy price increases.
• The average home in California requires just over 6,000 kWh of energy to run, which means about 15 solar panels are needed to keep the home 100% dependent on solar energy.
• Solar panels in California are a great way to help protect the environment and place less demand on the U.S. power grid.

How Much Do Solar Panels Cost in California?

With its sunny climate and high energy costs, California is a leader in adopting solar energy. As of December 2022, the state has installed enough solar power to generate electricity for 10.7 million homes, making it the largest solar market in the U.S. Solar panels are a cost-effective way to generate electricity and reduce monthly energy bills. In this blog, we will explore the cost of solar panels in California and what factors influence the price. We will also look at the benefits of installing solar panels and how they can help California meet its renewable energy goals.

How Does the Current Cost of Solar in California Compare to the National Average?

California's current solar panel cost of $2.97 per watt is below the national average of $3.05. Additionally, the state's solar installation cost for a typical 6-kilowatt system is $15,458 after tax incentives, which is also lower than the national average that tends to run between $16,870 and $23,170. This can be attributed to California's robust solar industry and a favorable regulatory environment encouraging renewable energy adoption. 

While the upfront cost of installing solar panels in California may seem high, the long-term benefits of reduced energy bills and a clean energy future make it an intelligent investment for homeowners. Additionally, the state's various financial incentives and tax credits make it easier for homeowners to access affordable solar panel installation options. So if you are wondering how much does it cost to go solar in California, you can anticipate your upfront costs will be somewhere between $12,622 and $17,078.

Are Solar Panels in California Less Expensive Than Electricity Bills?

When considering the cost of solar panels in California or any other state compared to your electricity bills, it’s essential to consider a few factors. Though we’ll dig into these a bit further later in this article, factors such as the cost of electricity in your area, the size of your solar energy system, your energy consumption patterns, and even the type of solar panels you select, can all contribute to how much you are going to pay and save.

With California's high energy costs, it is a common question whether solar panels are less expensive than electricity bills in the state. The average electricity bill in California is $124.62 per month, above the national average of $117.65 per month. This can be attributed to several factors, such as the state's higher energy consumption and the prevalence of high-energy appliances like air conditioning units. 

How Are Solar Costs Trending in California?

The good news for California residents that want a greener solution to the energy that powers their homes is that the state's solar panel installation costs have been trending downward in recent years, despite a slight cost increase in 2021. 

Based on data from the Energy Information Administration, the average cost of residential solar installation in California decreased from $4.91 per watt in 2014 to $3.88 per watt in 2021, supporting that downward trend. Further, just a few years ago, the average cost was $3.49 per watt, considerably lower than the cost of solar installation in 2010, which was trending at $6.19 per watt.

The long-term trend indicates that the cost of solar installation in California will likely continue to decrease as the state remains committed to its renewable energy goals and the demand for solar energy continues to grow. 

How Much Money Can You Save by Going Solar in California?

Though we have shared that your exact savings will vary based on various factors, over 25 years (the lifespan of your solar panels), California homeowners can anticipate a savings of $76,720.59. This figure, provided by EnergySage, assumes that 100% of your energy needs are met by your solar panels and is based on the following factors:

• Electricity demand - 10,632 kWh per year
• Utility rate inflation - 2.5% 
• System size: 8 kilowatts (kW)
• Electricity rate: state average of 26.45, as of December 2022

And based on an average electricity bill of $124.62 before solar panels, the savings will pay you back for your solar panels and easily offset all those energy bills, too.

Is It Better to Buy or Lease Solar Panels in California?

Most homeowners don’t have cash readily available to purchase solar panels. For this reason, they often explore how to finance solar panels. And though there are a variety of personal loans available for solar panel purchases, leasing is also a common approach to fund the investment. 

While there are advantages to buying and leasing solar panels in California, financing a solar panel system may be the better long-term option for homeowners. 

• By financing, homeowners can own solar panels, reap the benefits of reduced electricity bills, and earn money through net metering. 
• Owning the system can increase the home's value and protect you against future energy price increases. 

On the other hand, leasing may be a better short-term option. 

• By leasing, you can avoid the upfront cost of purchasing solar panels.
• Lease payments can add up over time and may not provide the same long-term financial benefits as owning a solar panel system.

Ultimately, deciding whether to buy or lease solar panels in California will depend on your unique circumstances.

What Determines the Cost of Solar Panels in California?

Solar panels in California include installation fees, equipment costs, and incentives offered by the state government. And as we have shared, according to a recent report by the National Renewable Energy Laboratory, California has one of the country's highest average costs per watt for solar panels at $3.72, which is higher than the national average of $2.96 per watt. However, the state's abundant sunshine and strong solar incentives mean that investing in solar panels can still be a financially sound decision for many homeowners. But it’s vital that we still dig into the key factors determining the cost of solar panels in California and provide insights into whether it is worth the investment.

System Size

System size is one of the most significant factors influencing the cost of solar panels in California. Larger systems will require more solar panels and, therefore, be more expensive than smaller systems. As a point of reference, the average home in California requires just over 6,000 kWh of energy to run, which means about 15 solar panels are needed to keep the home 100% dependent on solar energy.

Connectivity

Connectivity is a crucial factor in determining California's solar panel system cost. An on-grid system, also known as a grid-tied system, is connected to the local utility grid, and excess energy produced by the solar panels can be sent back to the grid. On-grid systems do not require battery storage and are typically less expensive to install than off-grid systems.

Conversely, an off-grid solar system is not connected to the utility grid and requires battery storage to provide electricity when the sun is not shining. These systems are typically more expensive to install and require more maintenance than on-grid systems. However, off-grid systems can be a good option for homeowners living in remote areas without access to the utility grid or for those wanting greater energy independence.

Cell Type

The type of solar cell used in a solar panel system is another important factor influencing the cost of solar panels in California. Generally, there are two main types of solar cells - monocrystalline and polycrystalline. But, you’ll also hear of thin film solar panels, bifacial solar panels, and concentrated solar panels, too.

• Monocrystalline solar cells are made from a single, pure silicon crystal and are generally more efficient and durable than polycrystalline cells. They are more expensive to produce, meaning solar panels made with monocrystalline cells are typically more expensive than those made with polycrystalline cells.
• Polycrystalline solar cells are made from multiple silicon crystals and are generally less efficient and less durable than monocrystalline cells. However, they are also less expensive to produce, meaning solar panels made with polycrystalline cells are typically less expensive than those made with monocrystalline cells.
• Thin-film solar cells deposit a thin layer of photovoltaic material onto a substrate. Thin-film solar cells are typically less efficient than monocrystalline and polycrystalline cells and are not as widely used in residential solar panel systems.

Overall, the type of solar cell used in a solar panel system can significantly impact the cost of the system, with monocrystalline cells being more expensive than polycrystalline cells due to their higher efficiency and durability.

Brand and Quality

Higher-quality solar panels come with a higher price tag but often have longer warranties and better energy production rates. The top solar panel brands recommended by EnergySage, including LG, Panasonic, and SunPower, tend to be more expensive but are known for their high efficiency, durability, and reliability. Other brands to consider are ADT Solar and NRG Solar. Consider the manufacturer's reputation and track record when selecting a solar panel brand, as investing in a reliable and established company can provide peace of mind and long-term savings.

Incentives Used

If you are a California resident looking to install solar panels, several incentives can reduce the installation cost and encourage renewable energy use. These incentives include:

• California Solar Initiative (CSI) rebates - You can save up to $0.85 per watt by participating in the California Solar Initiative (CSI) rebate program. The rebate amount depends on the system's expected performance and the installation's location.
• Residential Clean Energy Credit - This is a state tax credit for homeowners who install solar panels, wind turbines, or other renewable energy systems on their property. The credit is worth up to $5,000 or 30% of the cost of the system, whichever is less.
• Disadvantaged Communities Single-Family Affordable Solar Homes (DAC-SASH) Program - This state-funded program provides solar energy systems to low-income homeowners in disadvantaged communities across California. This program provides access to clean energy in underserved communities and reduces energy bills for those who cannot afford them.
• Net Energy Metering (NEM) program - With the NEM program, you can get credits on your electric bill for any excess energy your solar system generates. 
• Federal Solar Tax Credit - The Federal Solar Tax Credit allows you to deduct 26% of the cost of your solar system from your federal taxes. This can result in thousands of dollars in savings.
• Property Tax Exclusion for Solar Energy Systems - In California, solar energy systems are exempt from property taxes. This means homeowners will not have to pay higher property taxes due to their solar installation.
• Sales and Use Tax Exclusion - California also offers a sales and use tax exclusion for solar energy systems. This means homeowners will not have to pay sales tax on their solar system purchases.
• Local rebates and incentives - Many local utilities and governments in California offer additional rebates and incentives for homeowners who install solar panels. These vary by location but can provide additional savings on the cost of a solar system.

Roof Age, Angle, & Condition

The position of your home, the age of your roof and its pitch, and even its condition can influence how efficiently your solar energy system will operate. Older roofs may need to be repaired or replaced before solar panel installation, and roofs with a steep pitch or that face south will typically yield higher efficiency. Additionally, shading from nearby trees or buildings can also impact panel efficiency.

Installer 

Solar panels are a significant financial endeavor, costing California residents an estimated $14,850 in upfront costs. With such an investment, you must do your homework when finding the right installer. An inexperienced installer may incorrectly assess the condition of your roof or install the panels at the wrong angle for your location, which can result in reduced energy output. Additionally, they may use subpar equipment or cut corners during the installation process, leading to lower system efficiency and potential issues down the line. 

Here are some tips on how to find the best solar panel installer near you.

• Look for experience - Choose an installer who has been in business for several years and has a proven track record of successful installations.
• Check for certification - Ensure the installer is certified by the North American Board of Certified Energy Practitioners (NABCEP) or another reputable organization.
• Read reviews - Check out reviews on websites such as Yelp, Google, TrustPilot, the Better Business Bureau, and even the Office of the Attorney General to see what other customers have to say about their experiences with the installer.
• Compare quotes - Get quotes from at least three different installers to compare prices and services.
• Ask for references - Ask the installer for references from previous customers, and follow up with those references to get a sense of the installer's reliability and quality of work.

Permitting

Residential solar panel installation requires permits and inspections, which may vary in cost depending on the permit requirements. Fortunately, the cost of residential permitting is capped at $450 in California at the time of this article. However, solar companies typically include the cost of permits and inspections in their turnkey price for solar installation, which means you may not see these costs separately. 

Financing

Solar panel loans are a type of personal loan offered by various lenders such as LightStream, Credible, SoFi, and Upgrade. The average interest rate for a solar panel loan ranges from 3% to 8%, depending on the lender, the loan amount, and the borrower's credit score, but can be higher. Some lenders may offer lower interest rates for borrowers with excellent credit scores or those opting for shorter loan terms. It's worth comparing loan offers from different lenders to find the best interest rate and terms for your solar panel financing.

When shopping around, look at the following:

• Loan features - Find loan companies that offer loan amounts and repayment options that fit your needs.
• Interest rates and fees - Compare rates and fees across multiple lenders to find the best deal.
• Application process - Select a company that offers prequalification without impacting your credit and allows online loan applications.
• Qualification process - Be aware of the loan requirements, such as credit score, income, or debt-to-income ratio.
• Customer support - Look for companies that offer various ways to contact customer support, such as phone, email, or online chat.
• Online user reviews - Check reviews from previous customers on sites like Trustpilot and the Better Business Bureau.
• Perks and bonuses - Consider if the lender offers auto-pay discounts, referral programs, or other perks.

Average Solar Panel Costs in California

Solar panel costs in California can vary depending on various factors, such as the type of solar panels used, installation costs, incentives, and permits. The average cost of solar panel installation in California ranges from $12,622 to $17,078 before incentives. However, the cost can be significantly reduced with incentives and rebates. Consider the following insights before installing solar panels to make the most cost-effective decision.

Average Solar Panel Cost in California by System Size 

The average cost of installing a 6-kilowatt solar panel system in the state is $15,458 after tax incentives, below the national average cost range of $16,870 to $23,170. However, the total cost of installation will vary based on the size of the system and the installer's costs. Larger solar panel systems will cost more but may result in greater energy savings over time. 

Average Solar Panel Cost in California by Type

Monocrystalline panels are the most expensive option, rated at 380 to 420 watts, costing between $200 to $315 per panel. Polycrystalline panels are slightly less expensive, costing around $250 to $400 per panel. Thin-film panels are the least expensive option, with an average cost of around $150 to $250 per panel. Typically, when you add all the other components, such as labor, design, permits, etc., you can expect to pay around $1,000 per panel for a roof-mounted solar system and approximately $1,200 per panel for a ground-mounted system.

Average Solar Panel Cost per Watt in California

The cost of solar panels is influenced by the type of panel you choose. Monocrystalline panels, known for their high efficiency, are the most expensive, with a price range of $1 to $1.50 per watt. Polycrystalline panels are less expensive and slightly less efficient, costing between $0.90 and $1.08 per watt. Thin-film panels are the least expensive option, with a price range of $0.68 to $0.70 per watt, but they are also the least efficient.

Average Cost of Solar Panels Per Square Foot in California

The average square footage of a home in California is around 1,625 square feet. To understand the average cost of solar panels per square foot in California, consider this national pricing. If your home is similar to the average in the state, you can anticipate that your solar panels will cost between $7,000 and $12,500 based on square footage alone.

Average Labor Cost of Solar Panel Installation in California

If you purchase solar panels, you cannot install them on your own. Solar panel installation requires unique skills, including electrical wiring and basic construction knowledge. Solar panel installers must also know how to read and interpret design plans, perform electrical testing, and use various hand and power tools. Other practical skills needed for the job include working at heights, physical strength and stamina, attention to detail, and good communication skills for interacting with customers and team members.

For this reason, you can’t hire just any contractor to do the job. But on average, the cost to install solar panels in California will fall between $14,460 to $19,260, according to Fixr.

Average Cost to Run and Maintain Solar Panels in California

The average cost to run and maintain solar panels in California is relatively low compared to traditional energy systems. Solar panels require little maintenance, but keeping them clean and debris-free is essential. This can be done by simply hosing them off with water once or twice a year. However, you must have a professional inspection done every few years, if not more frequently, to ensure the panels function optimally. A professional inspection typically costs between $150 and $300. 

How to Calculate the Cost of Solar Panels for Your California Home

Several factors determine the cost of solar panels for your California home. However, you can get a pretty good picture of what to expect using the information in this article and How Do Solar Panels Work with Your Electrical Bill. As a refresher, here is what you should do to make those calculations independently.

• Determine your energy usage - To estimate the solar panel system size you need, first, calculate your average monthly energy usage in kilowatt-hours (kWh) by checking your electricity bills for the past year.
• Calculate the system size - Divide your average monthly usage by 30 to get your daily energy usage in kWh. Then, divide this number by the hours of sunlight you get daily in your location, which you can find online. The result is the size of the solar panel system you need in kilowatts (kW).
• Estimate the system's cost - Multiply the system's size in kW by the cost per watt of solar panels, which varies depending on the type and brand of panels you choose. As of 2023, California's average cost per watt is between $2.70 and $3.20; this can vary depending on the region, the installer, and the system size.
• Factor in installation costs - Installation costs can vary greatly depending on your installation's complexity, location, and the installer you choose. Installation costs range from $2 to $5 per watt, varying depending on various factors.
• Calculate tax incentives and rebates - You may be eligible for various incentives and rebates, which can offset the cost of your solar panel system. The federal solar tax credit currently provides a 26% credit for the cost of the system, and many states and local governments offer additional incentives.
• Do the math on your payback period - Divide the total cost of your system (including installation costs and tax incentives) by your estimated annual energy savings. This will give you the years to recoup your investment in solar panels.

Tips for Getting the Best Price on Solar Panels in California

Researching and shopping around is the best thing you can do to get the best upfront costs on solar panels in California. And, of course, understanding the tax incentives, rebates, and credits available to you, can make it a more lucrative investment in the long run. This all said, here are a few things you can do to get the best price possible.

• Research and compare - Take the time to research and compare solar panel installation companies. Get multiple quotes and compare the pricing, warranties, and equipment offered.
• Take advantage of incentives - California offers various incentives for solar panel installation, including tax credits and rebates. Make sure to take advantage of these programs to reduce the overall cost of installation.
• Consider financing options - Many solar panel installation companies offer financing options to help you spread the installation cost over time. Look into these options and choose the one that best fits your budget.
• Purchase during off-peak season - The cost of solar panel installation may vary depending on the season. Though this might be less of a factor in California, where temperatures are more moderate, consider purchasing during the off-peak season, such as fall or winter, when prices may be lower.
• Negotiate - Don't be afraid to negotiate with the installation company. Ask for discounts or negotiate the price to get the best deal possible.

Are Solar Panels Worth the Cost in California?

The decision to invest in solar panels in California depends on several factors, including the cost of the system. However, the cost of solar panel systems has decreased over the years, making it a more appealing option for homeowners. Suppose you are worried about the upfront costs but still want to reduce your environmental impact and dependence on the electrical grid. Solar power financing can be a viable option to make the installation and upfront investment easier to bite off.

Here are some pros and cons to consider.

Pros

• California has abundant sunshine, making solar energy a viable option for most of the year.
• Solar energy is a renewable and clean energy source that can help reduce greenhouse gas emissions and combat climate change.
• You can save money on electricity bills by installing solar panels and earning credits through net metering programs.
• Solar panels can increase the value of a home and make it more attractive to potential buyers. An article by Architectural Digest indicates that the current push for energy-efficient homes translates to higher home sale prices for sellers. Prospective  buyers will spend 4.1% more for a solar-powered home, or around $9,274.
• California offers various tax credits, rebates, and incentives for solar panel installations.

Cons

• Solar panels can be expensive to install upfront, and the return on investment may take several years.
• Panels require space, and not all roofs suit solar panel installations. Composite shingles are typically the best suited for solar panels, but tile, metal roofing with standing seams, and tar and gravel roofs can be modified to accommodate. Wooden roofs, however, are not well-suited to solar panels.
• Solar panels require regular maintenance, which costs between $150 to $300 per year.
• Solar panels may not produce as much energy during cloudy or rainy weather.
• The installation of solar panels may require building permits and approval from homeowners associations, which can add additional costs and time. Thankfully, the cost of building permits is capped in California at $450.

Best Solar Panel Financing Options in California

Various lenders are available to help you finance your solar panels in California. Here are some of our favorites.

• LightStream - Offers rates as low as 2.99% with borrowing limits as high as $100,000.
• SoFi - A great no-fee loan option, their rates start at 6.99%, and you can borrow as much as $100,000.
• Credible - A good option for those with lower credit scores, interest rates start at 2.49%, and you can borrow between $60,000 and $100,000, depending on your creditworthiness.

Final Word

The cost of solar panels in California can vary depending on system size, panel type, and installation method. However, with the state's incentives and tax credits, solar energy systems have become more affordable and attractive to homeowners in California. To get the best price on solar panels, it is advisable to compare quotes from multiple solar panel installers, consider financing options from reputable lenders such as LightStream, SoFi, and Credible, and maintain your solar panels regularly to increase their lifespan and efficiency.