In California, the average cost of solar panels and installation varies depending on your system size, available incentives, how much sunlight your home gets, and a few other factors. If you buy the system up front, you can expect to break even in about 5 years, meaning your savings from using solar will cover the installation cost.

New import tariffs in the country will likely increase solar panel prices for homeowners in California. However, improvements in manufacturing and increased competition are helping to balance out some of those price hikes. This blog discusses the average cost of solar panels and installations in California.

Solar Panel Costs in California

The growing solar usage in California has made solar equipment more accessible, and costs have decreased consistently over the past decade. In fact, equipment costs in California have fallen by about 40% over the previous ten years.

The solar industry keeps improving both its equipment and creation methods. Because of this, we expect PV panels' efficiency to keep increasing while their prices continue to drop.

Some potential solar customers think waiting for prices to fall even more before switching is smart. While this might seem logical, it could cost you more in the future.

The main problem with waiting would be increasing electricity costs in California. As fossil fuels become harder to find and more people switch to solar, especially in California, energy prices will likely increase.

The sooner you switch to solar energy, the less money you’ll spend on energy and the more you’ll save. Waiting for more solar equipment costs to drop is generally not a good idea.

Factors That Influence Solar Panel Prices In California

In California, the average cost to install solar panels in 2023 was $16,380 before applying the federal solar investment tax credit. After using the solar investment tax credit (ITC), the price went down to $11,466. This wide range happens because many factors impact the cost. Here are the key things that affect the price:

  • The System Size

When we talk about the cost of solar equipment in California, the size of your system will play a significant role. You want a system that can fit on your roof and fulfill your energy needs. Larger systems will produce more electricity, but more panels translate to a larger system and increased cost. In California, for every extra kW of solar capacity you add, you can expect it to generate about 100 kWh of power each month.

  • Your Installer

California has almost 900 registered solar installers, giving you many choices for your solar company. Picking the right one can lead to a great experience and help you save money. Different companies charge varying amounts for installation and equipment, and similar systems can cost thousands of dollars more or less, depending on the installer. While it might be tempting to go for the cheapest option, you should also consider the value you’re getting. Many top solar panel brands are reasonably priced and offer great efficiency for folks in California.

  • The Equipment You Use

Every solar panel system is unique, and your chosen equipment can significantly affect your overall cost. First, think about the size and efficiency of the equipment. Most homeowners opt for a system that covers their entire energy use, so the efficiency of the panels and the number you need can change.

California has 284 sunny days yearly, significantly more than the U.S. average, at 205. Many homeowners could save money because they do not require high-efficiency solar panels. The number you need also depends on the square footage of the home and the energy efficiency of your home, as these can vary greatly.

If you live in California, you face more power outages than residents of any other state, mainly due to the extreme heat and large population. That is why deciding to have batteries installed for your solar panels is a good idea if you want to avoid the loss of power. Solar batteries provide backup by storing excess energy produced by the solar panels for emergencies, at night, or when the power goes out. Remember that batteries generally cost you between $7,000 and $30,000 before incentives increase your total solar system costs.

  • Your Roof Condition

High-quality solar panels can last between 25 and 30 years, so your roof should be able to last just as long. If it doesn’t, you’ll face the hassle and cost of removing the panels, repairing the roof, and reinstalling them. That can be a frustrating and pricey situation to avoid if possible. If you’re considering a roof replacement, it’s a good idea to do that before installing solar panels.

Also, think about the space you have available. For instance, if you can only install panels on a north-facing roof with a 30-degree pitch, your solar costs may increase by 30% to 40%. This setup will also produce less electricity, making the cost per unit of electricity much higher.

  • Where You Live

The costs of the system are pretty similar across the state. The biggest difference between Northern and Southern California is how fast you can recoup your investment and how much you can save in the long run.

Different Ways To Pay for Solar Panels in California

Installing solar panels can cost about the same as buying a new car. You can pay for them in cash up front, but many people choose to finance instead. Another option in California is to enter a power purchase agreement (PPA). Each choice has its benefits and drawbacks, and your option will influence your overall cost of going solar.

  • Buying Cash

Buying your solar panel system with cash means you’ll face the highest initial costs. But because you won’t have to pay any loan interest, you’ll likely spend less overall than financing. And while initial costs might be high for many, you can expect to recoup that money through savings on your electrical bills in about seven years.

Generally, investing in solar is a smart choice. Also, remember that these figures only include the federal tax credit. California offers many great incentives that could help you save more money in the long run.

  • Solar Loans

Solar loans help you finance your solar panels by requiring monthly payments, including loan interest, until you can pay them off. Most photovoltaic (PV) equipment loans have an annual percentage rate (APR) between 4 and 8 percent, usually lasting five to seven years. These rates can vary based on your lender and credit score.

The loan company often sets your monthly payments close to what you normally pay for electricity. That makes it easier for you to manage the payments. For example, your monthly loan payments in California could be as little as $170.

PV systems loans offer no initial deposit options to assist in making solar energy more accessible. However, putting money down can lower your financing fees and interest rate.

You can also explore Property-Assessed Clean Energy financing in California to keep your costs down. If you’re eligible, that could be a good way to reduce your total expenses.

Remember that financing your solar panels will result in a longer payback period than paying in cash. That’s because of the interest added to your overall equipment cost. On average, financing leads to a payback period of about 10 years, roughly 25 percent longer than when you pay cash.

  • Solar Leases

A solar lease works like a vehicle lease. You pay monthly fees to utilize solar panels owned by a company. That means the company keeps ownership of your panels.

Leases are smart for homeowners who want to help the environment without spending money on solar panels. They can reduce pollution and combat global warming.

Most leases set your monthly payment to match your typical electric bill. So, your expenses stay the same, but you could feel good knowing you’re using clean energy. The standard lease payments in California range between $50 and $250, about the same as the typical monthly energy rate.

Although leases are getting less popular due to many new no initial deposit options, they remain a solid choice for those who can’t afford to buy solar panels outright or don’t have credit for loans.

How Can You Find Good Solar Prices?

California residents enjoy great solar benefits. The available programs make the state among the top locations in the U.S. for solar energy. While many perks and incentives exist, here are a few key ones to consider:

Apply for California’s Investment Tax Credit

First, don’t forget about the federal ITC. It gives you a credit on your income tax returns for 30 percent of your system's total value, including inverters, panels, electric vehicle chargers, and batteries.

Applying for the federal ITC is really simple. Just fill out Form 5695 the next time you do your taxes. You can find all the details you need in the paperwork from your installer. The benefits of this incentive are well worth the little time it takes to apply.

Use the Self-Generation Incentive Program

The California Public Utilities Commission provides this program to solar energy customers, and it’s a great opportunity. Applying is quick and easy.

This program provides rebates for installing solar panels, and the rebate amounts depend on your electrical service provider. You can visit CPUC’s website to learn how to apply depending on your provider.

Find Several Quotes

Later, we’ll discuss how the contractor you pick for your system installation can greatly affect your final cost. Labor prices, travel times, and the quality of installers differ from one company to another.

By gathering several quotes, you could assess them and negotiate between them. Some companies might have product bundles, special offers, or discounts on specific items. Others may lower your price if they recognize that they’re competing.

Make the Most of Your Local Solar Benefits 

There are some great benefits for residents in specific areas. In California, you could qualify for a few solar incentives, such as: 

  • Property tax exclusion — Installing a solar system won’t raise your property’s tax value
  • Low-income solar incentives — The DAC-SASH program offers significant help for low-income families in disadvantaged neighborhoods
  • Local rebates and programs

The Federal Solar Investment Tax Credit

The federal solar investment tax credit (ITC) is a key reason why going solar is more affordable in California. This tax credit gives you 30% off your solar system's total cost, including equipment, labor, and permits, and applies to your federal income taxes.

Just to clarify, the ITC is not a rebate or a deduction. A tax credit directly lowers the taxes you owe, while a rebate is a payment from the government. A deduction reduces your taxable income.

Are There Maintenance Costs For Solar Energy In California?

Solar panel systems in California are mostly low-maintenance. The weather here isn’t usually severe, so the chances of damage to the panels from bad weather are pretty low.

One form of maintenance involves removing the panels if you need to replace your roof and then putting them back afterward. This service can cost up to $1,000; most local installers can help if needed.

However, reliable solar energy service providers will inform you before installation if your roofing structure might need replacement or repairs in the coming ten years. If that is the case, they usually suggest fixing the roof before installing the solar panels to avoid extra costs later.

California gets very little rainfall, so you might need to clean your solar panels now and then to remove dirt, pollen, and other debris. These substances can build up and decrease how well the panels work. In other jurisdictions, rain often washes this stuff away, but it’s a good idea to clean the solar panels about twice a year in California.

You can hire someone to do this for you, typically costing around $400 a year, but using a hose and doing it yourself is much cheaper.

Find a Solar Panel Installer Near Me

If you’re considering solar energy, you’re not alone. Nearly 2 million solar systems are already set up in California. Solar panel systems provide power for over 13 million homes and contribute about 28% of the state’s electricity.  However, the initial cost of installing panels can be high. The good news is that California’s weather is perfect for solar energy, and the long-term savings on your electricity make the upfront costs worth it.

Sun Solar Electric is dedicated to providing solar panel installations, service calls, and products across the Bay Area and Northern California. Give us a call at 707-238-8874 for your free solar panel installation quote.