With the cost of solar panels plummeting by 70% over the past 10 years there has never been a better time to install solar panels on your California home. The U.S. Congress also just passed legislation to extend the current 26% Federal tax credit for an additional two years to December 31st, 2022. Unfortunately, in the state of California there are no state tax credits for going solar at your home or business.
So, how much does it cost a California homeowner to install solar panels? Well, that all depends on how much energy the home is consuming and how much available roof space (or vacant land) the home has available to install solar panels on. Let us look at an example to dig deeper into the numbers. If we look at a typical home in Laguna Beach, California with a $300/month electric utility bill this homeowner will need to install roughly 31 solar panels (a 9.92 KW solar system) to fully offset their electric utility bill (if the arrays are facing South) and save $3,600 per year on their electricity costs. The cost of this 9.92 KW solar system is $32,240 and includes all engineering plans, procurement of materials, and construction of the home solar system. This is an all-in turnkey price meaning the city permit, taxes, and interconnection to the electric grid are included.
If you want to determine the Return on Investment (ROI) for this project we would deduct the 26% Federal Investment Tax Credit of $8,382 from the solar system’s gross cost of $32,240 bringing the net investment to $23,858. We would then divide your net investment of $23,858 in your home solar system by the $3,600 per year you are saving not paying the electric utility for this energy. In this scenario your ROI is 6.62 years (not factoring in the utilities rising rates, which would make the ROI even shorter).
If you use more electricity than this example your home solar project will cost more money and go up in cost according to the size of the solar system. Much like a roof is priced per square foot solar is priced per watt. While the price per watt of a home solar installation can vary throughout the state the average price per watt for a residential solar project in California is $3.25 (for Tier one solar panels and central inverters). So, if you need 50 solar panels your home solar project will cost $52,000. (We take 50 solar panels X 320 watts = 16,000 watts X $3.25 = $52,000). This is the gross cost that you would pay to the solar contractor to install your solar system on your home and does not include the current 26% Federal Investment Tax Credit. The same math can be used for a smaller home solar system of 20 panels. 20 solar panels X 320 watts = 6,400 watts X $3.25 = $20,800.
A Laguna Beach Home Solar Installation I consulted on in Emerald Bay.
A Laguna Beach Home Solar Installation I consulted on in Emerald Bay
Now that you know how much your home solar system will cost let us talk about the workflow of these residential solar projects. It typically takes about 2 months to complete a residential solar installation. This process starts with contracting a solar installer for the project and is followed by a site audit at the home. Once the site audit has been completed the solar installer will draw up plans for the project and submit them to the city for a solar permit.
All this work is done behind the scenes by the solar installer. Once the city has issued the solar permit the installer’s crew will show up at the home to install the solar system. This typically only takes one or two working days, unless additional work needs to be done to facilitate the solar installation (examples include a re-roof or an electrical panel upgrade). After the home solar system has been built, the installer will call for final inspection with the city. When the city has signed off on the final inspection, the installer will submit the job card and interconnection paperwork to your electric utility to process permission to operate (PTO) your solar system. This final step in the process is when your home solar system is interconnected to the utility’s electric grid, and you can start earning bill credits for any excess energy sent back to the grid that is not used in your home. This is called net energy metering and will be discussed in another blog post.
We used a premium triple black solar panel from Solaria for this Laguna Beach home solar installation.
We used a premium triple black solar panel from Solaria for this Laguna Beach home solar installation
If your home has a roof that is not shaded, or enough vacant land to install a ground mounted solar system on you will be able to fully offset your home’s energy consumption. If you intend to purchase an electric vehicle, install air conditioning, or install a pool we will want to factor those improvements into the size of your home solar system as well.
Want to see how much money you can save with a residential solar system? Get your turn key solar proposal with ROI and financing options by e-mailing us your most recent electric bill (all pages), a picture of the electrical panel outside your home, and a picture of your roof today: firstname.lastname@example.org.
By James Kennedy, Founder and President Beach Cities Solar Consulting LLC