California Solar Panel Costs: Savings Guide

California solar panels could be a great investment and help you save thousands on energy bills. The cost of solar panels California residents typically pay is around $17,350 for a 5 kilowatt (kW) system. The average cost of a solar panel array increases if you invest in a larger system. Thankfully, California solar incentives, tax credits, and rebates can help lower the installed cost.

California leads the U.S. in solar energy, producing nearly 30% of the country’s solar power. According to the Solar Energy Industries Association (SEIA), the Golden State is expected to add enough solar capacity in the next five years to power around 5.8 million additional homes. Currently, there are more than 1.8 million solar panel systems installed across the state.

In the last decade, California solar panels have become very common because of rising energy bills, environmental benefits, and California solar incentives encouraging solar adoption. Many residents invest in solar because of falling solar prices and financial incentives. This page covers everything you need to know about the cost of California solar panels, available rebates and tax credits, and how to find a California solar panel company.

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Cost of solar in California

The cost of solar panels California residents (and residents in other states) pay is measured in dollars per watt, but solar system sizes are shown in kW. One kW is equal to 1,000 watts. Data from the Lawrence Berkeley National Laboratory shows the average U.S. solar system size is approximately 8.6 kW and costs $3.67 per watt, or about $31,558 total. Solar panels are a custom product, so every household will need different components and a unique system size to build a solar array to meet their needs. Your energy usage will determine the system size you need.

Solar panel prices vary by state. According to Find Energy, a database that tracks solar prices across the country, the average cost of solar panels in California is $3.47 per watt. The typical system size California residents need to cover the average energy usage is 5 kW. In total, the average solar panel cost California residents pay is normally about $17,350. Here’s how to estimate the total cost using a system size and price per watt:

($3.47 X 5 kW) X 1,000 = $17,350

The average cost of solar panels in California compared to the U.S.

Because of the state’s smaller average system size and lower price per watt, California solar panels are typically cheaper than the U.S. average. Compare the cost of solar panels California homeowners typically pay compared to the national average in the following table.

California residents usually pay expensive electricity rates, according to the Energy Information Administration (EIA). The EIA’s most recent data shows the average residential electric rate in California in June 2023 was 93.8% higher than the national average. Most residents paid about $169 for their monthly energy bill in June. Energy rates in California have risen almost 8% since this time last year and may continue to increase. Meanwhile, solar costs have decreased by 43% in the last decade in California, according to the SEIA.

In general, the bigger the system, the higher the price because larger systems require more solar panel modules. The following table shows a range of estimated solar prices and system sizes using the average $3.47 price per watt from Find Energy. It also highlights the estimated number of solar panels you would need for each system size.

Is solar worth it in California in 2024?

California solar panels can be worth the upfront cost because of the state’s high electricity rates, cheaper solar price per watt, and the growing number of solar incentives available. California residents typically pay high energy bills, lowering the time it takes to experience a return on their solar investment.

While California residents normally pay high energy rates, they use less electricity than other states. Data from the EIA shows the state has an average energy usage of 542 kWh per month. Lower usage levels mean you could install a smaller (and likely cheaper) solar system to cover your energy consumption.

Using the average California electricity rate and energy usage levels, the average annual electric bills in California add up to approximately $1,702. If you invest in a solar array that completely covers your usage, you could almost entirely eliminate your electricity bills. You’ll still incur some utility connection fees if your system is grid-tied (most systems remain connected to the grid).

Based on the average energy bills and cost of solar panels in California, the typical payback period for solar is about seven years. Here’s how we calculated the return on investment:

(Total system cost – 30% tax credit savings) ÷ Annual electricity bill costs = Payback period

$12,145 system cost ÷ $1,702 energy bills = 7 years

Free solar panels in California scam

As solar panels become more popular among homeowners, a growing number of solar panel scams are emerging. These solar scams are designed to steal information, money intended for a solar system, or a combination of both. Some scammers promise free solar panels in California. Residents should keep in mind that there is no such thing as free solar panels in California or any other state. If you meet a door-to-door salesperson or receive a call from someone promising free solar panels, it is almost certainly a scam.

Some solar installers offer zero-down financing through a solar loan. While these types of loans do not require a down payment or money up front, they may come with a high interest rate. Be sure to review the details of a solar loan before signing a contract. Remember, a solar loan is not the same as free solar panels.

Solar panel incentives and rebates in your California city

Buying solar panels is a big decision, whether you purchase them upfront or finance them. Thankfully, there are incentives, rebates, and tax credits in place to lower the cost of solar panels in California. The Residential Clean Energy Credit offers a 30% tax incentive on solar systems installed through 2032. There is no cap on the amount you can claim — meaning you’ll receive the full 30% regardless of the size or price of your system. You can also combine the federal tax credit with other solar incentives. After you apply for the tax credit, you’ll receive your credit when you file your annual tax return the following year.

California also offers a variety of state and local solar incentives. You can find a comprehensive list of solar incentives in your area through the Database of State Incentives for Renewables & Efficiency (DSIRE).

Solar incentives in San Diego

There are incentives at the city and county levels to make solar panels in San Diego more affordable. For example, San Diego’s Green Building Incentive Program waives the building permit and plan check fees for new and remodeled homes that install solar panels. It also reduces the plan check turnaround time by seven to 10 days. The solar permitting process can take up to six weeks, so this program can significantly speed up the installation time. This program’s incentives include:

• Lowering a project’s timeline by approximately 7–10 days
• Waiving the building permit and plan check fees for home solar projects
• Reducing plan check and building permit fees by 7.5% for eligible non-solar projects

Solar incentives in San Francisco

In 2008, San Francisco passed a mandatory green building code for new construction homes and businesses. This building code requires new buildings to meet certain energy efficiency standards, including reducing energy and water use, establishing alternatives to landfills, and new modes of transportation. To meet the energy reduction standards, builders can install solar panels in San Francisco to improve the building’s overall energy efficiency. Other local green building requirements include:

• All-electric new construction projects
• Installation of solar, thermal, or green roofs on new buildings
• On-site facilities for recycling, collection, and transportation of compost
• Wiring for electric vehicle charging

Solar incentives in Los Angeles

In 2009, Los Angeles enacted its Green Building Retrofit Ordinance, which requires all city-owned buildings be retrofitted with energy efficiency technologies, including solar panels. Under this ordinance, at least half of the retrofitted buildings must be located in areas with high poverty and unemployment rates. It also requires all construction jobs be filled by local residents, if possible. In addition to solar panels in Los Angeles, qualifying energy efficiency technologies include:

• Geothermal electric and geothermal heat pumps
• Solar water and solar space heating
• Solar thermal electricity
• Combined heating and power

Solar incentives in Ontario

Ontario solar incentives in 2024 can offset the cost of solar panels in California. Residents in Ontario, California qualify for the federal tax credit, the state’s Self-Generation Incentive Program, and net metering programs in the area. There are also Ontario solar incentives available for residents in Ontario, Canada. If you are searching for current solar incentives in Canada, visit the Ontario government website.

SaveOnEnergy offers a variety of guides and resources to help you find solar incentives in your area. If you’re searching for cost information specific to your home, fill out the form on this page, and we’ll provide a free and instant quote. You can also call the number on this page to speak with a solar expert about the solar options in your area.

Net metering changes in California

Net metering is an incentive that lets you send excess solar energy to the power grid in exchange for credits on your electricity bill. Historically, net metering in California was widely popular and lowered residents’ solar payback period because it offered significant bill savings.

In December 2022, the California Public Utilities Commission passed a new net metering program called NEM 3.0, which reduced the compensation rates residents receive for sending solar energy to the grid by about 75%. April 15, 2023, was the cutoff date to lock in the more beneficial NEM 2.0 rates. Going forward, all new solar systems installed in California will receive NEM 3.0 rates. Specific rates will depend on your local utility.

The main shift in net metering is the difference in rate structure. Previously, net metering in California compensated residents for the full retail value of every kWh of solar power sent to the grid. Under NEM 3.0, the value of solar power is calculated based on avoided cost rates instead of the retail value of electricity. “Avoided cost” refers to the amount it costs for utilities to generate or buy power, which is often lower than what a utility would charge customers for electricity. California NEM 2.0 offered an average rate of 30 cents per kWh, while NEM 3.0’s rate is closer to eight cents per kWh.

How California’s new solar rules could affect you

The shift to NEM 3.0 may increase the time it takes to get a return on investment for solar panels. Many residents are choosing to add or include solar battery storage to their system to store excess electricity for later use instead of sending it to the grid. In fact, Aurora Solar’s recent Solar Industry Snapshot revealed that 83% of solar professionals reported increased consumer interest in energy storage paired with their solar systems. If you are interested in a solar battery for your home, our best solar batteries guide offers details about which batteries stand out in the market.

Why choose California solar power?

There are many reasons why residents choose home solar panels in California. In the last decade, the cost of solar panels has decreased while panel technology has improved. Most customers who choose solar are drawn to lower energy costs, increased independence from the power grid, and environmental benefits.

• Lower energy costs: You can significantly reduce your energy costs by installing solar panels. In recent years, electricity rates in California have risen steadily, with a 71% increase in the last 10 years and an average 3%–4% increase annually. High electricity prices are one explanation for why so many residents are turning to solar as their primary power source. Consumers could save thousands each year in energy costs by switching to solar energy compared to a traditional California energy bill.
• Increased energy independence: Powering your home with solar panels can lower your reliance on the power grid and increase your energy independence. Solar panels generate electricity for your home, so you’ll be less subject to rising electricity rates during times of high demand. Most homeowners who buy solar panels remain connected to the grid so they can still draw power at night or when the sun isn’t shining. If you choose to install a solar battery as a backup source, you may also be able to protect yourself when there are power outages in California. This will depend on the solar battery you choose, as not all solar batteries can retain power when there is an electrical outage.
• Going green: Solar panels aren’t just friendly to your wallet — they’re also beneficial to the environment. Solar energy is a renewable power source, meaning it leaves a much smaller carbon footprint than traditional power sources like gas and coal. When you power your home with solar energy, you can lower your environmental impact because it doesn’t emit the greenhouse gasses that contribute to climate change.

Buying solar panels in California

When installing solar panels on your home, you may have the option to buy or lease the system. When you buy solar panels, you can pay upfront or finance your system over a period of time outlined in a loan agreement. You can also lease your system or sign a power purchase agreement (PPA). A final alternative is community solar, which doesn’t require installation on your roof. Each of these options comes with its own pros and cons and will impact the total price of your solar system.

What’s the average monthly electric bill with solar panels?

If you finance your solar panels, you’ll incur a monthly loan fee until you’ve paid off the system. Your monthly loan payment will depend on the initial cost of your system, interest rates, loan type, and more. Based on the Bankrate Loan Calculator, the average monthly solar loan payment in the U.S. is around $226 before factoring in the 30% federal tax credit, which you can apply to a solar loan. (Bankrate is also owned by SaveOnEnergy’s parent company, Red Ventures). Interest rates will impact how much you pay for a solar loan. It’s important to note that interest rates have risen in the past year.

How much is a solar lease per month?

The amount you pay each month for a solar lease hinges on a few factors, including the term length (most solar leases last between 20–25 years), your credit score, the system size you need, and more. The average monthly cost of a solar lease is between $50 and $250. Keep in mind the solar lease amount can vary by installer as well, so be sure to compare leasing terms from different solar installers before signing a lease.

California solar panel companies

California is a leader in solar power, with a growing number of solar panel companies operating across the state. According to the SEIA, there are more than 1,100 solar installers in California, giving residents a variety of options when choosing an installation company. Solar installers can offer customized solar panel systems that work well for your home and energy goals.

SaveOnEnergy is an independent energy marketplace where you can shop for electricity plans and renewable options in your area. We work with top-tier solar companies offering leading solar products for residents in California. If you are searching for the right California solar installer, here are a few companies to keep in mind:

Solar installer	Year founded	Financing options	Warranty terms
	2011	Cash purchase or solar loan	25-year manufacturer warranty and production guarantee
	2020	Cash payment, solar loan, or lease	25-year manufacturer warranty and 10-year quality guarantee
	2009	Cash payment, solar loan, or lease	25-year quality of work and 25-year product warranties
	2010	Cash payment, solar loan, or lease	Minimum 12-year product warranty and 25-year performance guarantee
	2018	Cash payment or solar loan	30-year performance and 25-year panel warranties
	1985	Cash purchase, solar loan, or lease	25-year full system warranty
	2007	Cash payment, solar loan, or lease	10-year quality warranty; customers who lease their systems receive coverage on maintenance and monitoring

Solar installation California: How to pick the best solar installer

With so many solar installers operating in California, it’s important to thoroughly research your options before signing a contract. When you visit an installer’s website, you likely won’t find a solar system price listed. Instead, you’ll need to provide some information about your home (including your average energy usage), and the installer will give you a quote. We recommend getting quotes from several licensed installers so you can weigh your options.

In addition to the estimated cost of solar panels, you should also think about the following factors:

• Financing options. Some installers offer a variety of purchasing options, including solar loans financed through the installer or a third-party financing company. Other solar installers offer alternatives to purchasing a solar system, such as leases or PPAs. Your financial circumstances and solar goals will determine which options are best for you. Knowing your preferred financing option can help narrow your installer selection.
• Warranties. Solar installers normally offer warranties. The most common warranties from an installation company are performance warranties and quality-of-work warranties. Some installers also guarantee manufacturer warranties. A sturdy warranty is a good sign you’re working with a trusted solar installer.
• Manufacturers. You may have a specific manufacturer brand in mind for your solar panels, such as Tesla, Enphase, Q-CELL, or other popular brands. You should check the manufacturer warranties, specifications, and compatibility between different components when considering different brands. Installers source their materials from many different manufacturers, so be sure to check which companies an installer works with before signing a contract.

Important solar installation factors to consider

Before installing solar panels on your property, you should consider several factors that can impact the effectiveness of your solar system. A few of the most important considerations include:

• The age, angle, and condition of your roof. According to the Department of Energy, solar panels are most effective on south-facing roofs with slopes between 15–40 degrees. They may not be well suited to older roofs that will need a replacement in the near future.
• How much sun your home receives. California gets more sunshine than many other states, making solar power particularly attractive. But it’s important to consider how much sun your home receives in your location. If your rooftop solar system is under complete shade, it will not generate as much electricity as it would if it had direct sunlight throughout the day.
• HOA and neighborhood rules. In some states, HOAs and other neighborhood associations may have restrictions around the installation of solar panels or require prior approval. However, California law prevents HOAs from banning solar panels, so just be sure to follow any requirements and approval processes outlined in your area before you go solar.