Is Solar Worth It in California? (2023 Homeowner's Guide)

How Can You Figure Out if Solar Panels Are Worth It In California?

Even though California is the number one state in the country for solar conversions, going solar won’t be right for every homeowner in the area. Determining if solar will benefit you takes some careful calculations, and there are several things that can influence your decision. We’ll discuss the most significant factors below.

• Your home’s energy use
• Cost of going solar in California
• Average payback period in California
• Average buy-back rates in California
• Your roof’s exposure to the sun
• Solar outlook in California

Your Home’s Electricity Consumption

Most importantly, you’ll want to consider how much energy your home uses in an average month, as your solar panels will slowly pay for themselves by reducing your electricity expenses.

Solar panels are generally considered valuable in homes that use more than 500 kilowatt-hours every month. You can determine your average energy usage by looking at your past electric bills. In California, the typical consumption is just 572 kWh.

Homeowners who use much less than the average might find that the return on investment is too low to make going solar a worthwhile endeavor. However, the average energy rate should also be considered. We’ll discuss this in greater depth below, but know that most CA residents will still benefit from solar conversion even if their energy needs are a bit low.

Cost of Going Solar in California

The average price of solar panels in California is around $16,380 before the federal tax credit or $11,466 after the credit is taken into consideration. This assumes the typical price of $2.73 per watt, which is slightly above the national average of $2.66, and the average system size needed to offset electric consumption, which is 6 kW, well below the national average.

Solar panels are more valuable in areas where electricity rates or energy usage is high. Although Californians use far less energy than most residents throughout the country, they pay an average of 20.45 per kilowatt-hour, which is significantly more expensive than the average of 13.15 in the US.

Given the very high price of power, most Californians will find solar panels well worth the investment.

Average Solar Payback Period in California

In most cases, solar panels pay for themselves by providing you with energy savings. The time it takes panels to pay themselves off is referred to as the solar panel payback period.

The average payback period in the United States is 12 years, but the high price of electricity and the small solar system requirements in California allows homeowners to pay off their panels in an average of just 8 years. A payback period anywhere between 5 and 11 years in California is considered normal.

If you use a solar calculator to estimate your payback period and find that it will take longer than 11 years, your overall savings will likely be below the state average of $29,734. You’ll still save money in most cases with a longer payback term, but it will take more time to break even.

Average Buy-Back Rates in California

Most states have energy buy-back programs or net metering policies that allow solar customers to sell any excess energy production back to their local utility company for a credit on their energy bill or for a profit.

The California Public Utilities Commission mandates that all utility providers offer net metering, but it doesn’t specify the rate at which you’re credited for the energy you send to the grid. The specific policy available will depend on your utility provider.

Luckily, many electric companies in CA will credit customers at the retail rate, which is the best-case scenario. Given the area’s high electricity prices, it’s crucial to minimize the energy you pay for, so you might want to couple your panels with a battery backup to maximize your savings if your utility company has a sub-optimal net metering policy.

Your Roof’s Exposure to the Sun

Solar panels are only as efficient as the sunlight they receive, so the amount of sun that normally hits your roof throughout the day is an important thing to consider. California as a whole experiences an incredible 278 days of sunshine a year, which means that solar panels are a great option for most residents.

However, there are some property-specific things you’ll need to consider, like shading from trees or nearby buildings and where your roof faces. Solar panels will be much less valuable on properties with heavy shade, and homes with north- or east-facing roofs aren’t ideal for panels.

You can have a professional solar panel installer assess your property for solar panel viability if you’re unsure of the amount of sun your roof gets daily.

Solar Outlook in California

California was an early adopter of solar energy, and the industry within the state has only grown since. Residential solar installations have grown consistently over the past decade, and there are no signs of a downturn in the near future. The State of California is environmentally friendly in general, so the current solar incentives make it one of the most solar-friendly places in the country. The policies and incentives are likely to improve, if anything, going forward.

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What Are the 4 Main Benefits of Going Solar in California?

Going solar is worthwhile for most homeowners, but many California residents aren’t fully aware of the benefits of going solar in the Golden State.

Below, we’ll discuss some of the financial and environmental upsides to installing solar panels in California.

1. Electricity bill savings
2. Lower taxes and access to other incentives
3. Increased home value
4. Eco-friendly

Electricity Bill Savings

Saving money on you energy bill has never been easier with solar energy. In fact, solar panels typically pay for themselves because they provide savings on your electric bills from month to month.

This is one of the most significant financial benefits of going solar, especially in an area like California, where monthly electric bills are higher than the national average. Most Californians pay around $116.94 each month for power, so you’ll save just over $1,400 annually if you can eliminate your energy bill.

The average lifetime savings enjoyed by California solar customers is around $29,734, and that’s after the upfront expenses of going solar are recuperated. Plus, going solar means you’ll be less reliant on your power company, so you’ll essentially lock in electricity rates for the 25+ years your panels are expected to perform.

Lower Taxes & Access to Other Incentives

California is one of the best states for solar incentives, and residents receive them from both the state and the federal government. Perhaps most notable is the federal credit (ITC), which is an incentive offered by the federal government as a credit to your federal income tax liability. The ITC is for 30% of the full expense of your solar power system, which, in California, averages out to $4,914. Below are some of the other solar incentives available in California:

• Self-Generation Incentive Program (SGIP): This is a statewide solar incentive that provides solar customers with a rebate for all solar storage installation expenses.
• Active Solar Energy System Property Tax Exclusion: This is a property tax exemption that prevents your solar panels from causing your property taxes to go up.
• Single-Family Affordable Solar Homes (SASH) Program: This is an incentive to make solar equipment more affordable and accessible to low-income homes.

Home Resale Value Increase

One of the most significant benefits enjoyed by solar customers is the fact that panels may increase home value. In fact, in a recent EcoWatch solar survey, 63% of homeowners agreed that they would pay more for a home equipt with solar panels than a home without.

And according to a research study done by Zillow, solar panel installation will bump up your home value by an average of 4.1%.³  In California, where the average property sells for around $758,360, that’s an expected value increase of approximately $31,093!

This bump in value could be even higher in more expensive areas, like Beverly Hills, Los Angeles, San Diego and San Francisco. It’s worth mentioning that this value increase is only expected if you use cash or a solar loan to acquire your panels. Leases and power purchase agreements (PPAs) will not boost your home value.

Clean, Renewable Energy

Finally, there are some environmental benefits to converting to solar energy as well. Most notably, you’ll reduce your carbon footprint, help reduce pollution and help battle global warming. You’ll also become less reliant on your energy company and fossil fuels as a whole, so you’ll be free from the expected increases in electricity prices in the future.

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What Should Californians Look Out For When Considering Solar?

Going solar in California is worth it for most homeowners, but even if you confirm that it makes sense for your home, you’ll still have a few things to think about. Below, we’ll discuss some additional considerations you should make when converting your home to clean energy.

• Upfront fees
• Payback periods
• Net metering policies
• Outlook on solar policies and incentives
• Weather and climate
• Companies that push financing options that don’t help you maximize your ROI

Upfront Expense

Of course, every homeowner will be concerned with the upfront expense, especially in an area like California, where the average per-watt price for solar equipment is above the national average. You can keep your initial investment amount down by opting for affordable solar brands, limiting the add-on equipment — like solar batteries and EV chargers — you install and choosing a no-money-down loan option.

We do not recommend solar leases or power purchase agreements (PPAs), as these options are rarely as beneficial as financing or buying your panels outright.

Average Payback Periods in California

As we mentioned above, solar panels typically pay for themselves by reducing or eliminating your electric bills. The estimated time it takes for the panels to recuperate the total system expense — also called the payback period — is a crucial piece of information that can help you estimate how much money your photovoltaic system will save you and when you’ll start to see a return on your investment.

If your payback period is longer than the upper average of 11 years in California, the amount of money you’ll get back will be lower and will take longer to realize.

Net Metering Policies in California

Net metering is a policy that lets you sell any excess energy production for a credit to your electric bill — for power pulled from the grid at night or on cloudy days, for example. The State of California mandates that all utility providers offer net metering to customers, but the policy can vary depending on your electric company.

We recommend you check with your provider before signing anything, and remember that you can install a solar battery — and take advantage of the SGIP incentive — to help eliminate your utility bills if the net metering policy available isn’t ideal.

Pending Policies & Changes to Incentives

The solar industry is relatively young in the grand scheme of things, and it’s constantly changing throughout the country and especially in solar-friendly states like California. While the policies and incentives make California the number one state for solar conversions, it’s possible that things will improve, making the state even more solar-friendly.

It’s not recommended to wait for better incentives to come along because you could start saving money sooner if you install panels now, but it’s worth doing some research to see if rebates or policies have gotten better before you begin the process.

Weather & Climate in California

California residents are spoiled by 278 sunny days per year, which is 135% of the national average. The weather is extremely conducive to solar energy, and with a general lack of extreme weather in most cities, the majority of homeowners don’t have to worry too much about damage to their panels.

In some parts of California, cloudy days and rainfall are more common, particularly in the mountainous portions of the state. Solar panels will be less efficient on cloudy days, but even the least sunny parts of California receive more sun than much of the country.

Additionally, rainfall can help keep your panels clean, which will increase the amount of sunlight they can absorb when it’s sunny. Overall, the weather is not much of a concern for California solar customers.

Companies Pushing Solar Leases or PPAs

Finally, it’s important to be aware that not all solar panel installation companies are the same, and there are some disingenuous installers out there, especially in places like California, where the demand for solar is so high.

You should be keenly aware of companies pushing solar system leases and power purchase agreements (PPAs) or those that promote these purchase options by offering “free panels.” These options are never as beneficial as a cash purchase or finance, as they don’t increase your home value, they don’t let you benefit from the federal tax credit and they provide far fewer solar savings over time.

Unfortunately, California has been home to many solar scams, including installers posing as the local government or utility companies, offering unrealistic tax benefits that won’t come to fruition and even massive scams that defrauded investors and homeowners out of millions of dollars. You need to be careful which company you hire to handle your rooftop solar project.

We strongly recommend opting for a reputable and vetted solar company with a proven track record for success.

So, Will Solar Be Worth it for Your California Home?

Given the high price of energy in California and the abundant sunlight residents experience throughout much of the year, most CA residents will find that installing solar panels is well worth the investment. However, solar conversion is not ideal for everyone, so it’s best to use a solar calculator to estimate your upfront expense of solar panels, your payback period and your lifetime savings before you commit to anything.

In most cases, you’ll need to consider the size of the solar panel system you need, the amount of sunlight your roof gets, your monthly energy needs and more before confirming if solar is a good option for your home. Calculating the overall costs vs savings ratio that you can get from installing solar panels will be your first step in the decision process.

No matter what, we suggest contacting a vetted solar installer to help you figure out if solar will benefit you.

Read More About Going Solar in California

• What Are the Best Solar Companies in California?
• Does California have Solar Incentives?
• How Much Do Solar Panels Cost in California?
• Homeowner’s Guide to Solar Panels in California

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