By James Kennedy, Founder and President Beach Cities Solar Consulting LLC
With over one million California home and business owners going solar and all three private electric utilities (SDG&E, SCE, and PG&E) in the state raising electricity rates it is no wonder why every Californian wants to know how much solar panels cost.
Much like a roof is priced per square foot solar is priced per watt. While the price per watt of a home or business 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).
For those of you who are not in the solar industry that would mean that one 320-watt solar panel installed on your roof would cost $1,040. This would include a central inverter with plans and permits for the project. The calculation to get this price would be 320 watts X $3.25 = $1,040.
In reality, no solar company will install one solar panel (because the plans and permits will exceed the cost above) so a more accurate example would be to look at a California home with a $300 per 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 on their electricity costs in the year 2021 and yearly going forward.
California home ($300 per month electric utility bill) = 31 solar panels (a 9.92 KW solar system)= save $3,600 on their electricity costs yearly going forward
If we use the same math above, we take 31 solar panels X 320 watts = 9,920 watts X $3.25 = $32,240. 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. Unfortunately, the State of California does not offer a solar tax credit for home solar systems or business solar systems.
31 solar panels X 320 watts = 9,920 watts X $3.25 = $32,240
If we deduct the 26% Federal Investment Tax Credit of $8,382 the net solar system cost would be $23,858. This would equate to a solar panel cost of $769 per installed panel ($23,858 / 31 solar panels).
This would equate to a solar panel cost of $769 per installed panel ($23,858 / 31 solar panels).
If you wanted to calculate your return on investment or ROI in this project you would divide your 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).
While most California residential solar projects range from 5 KW – 20 KW and are priced in the $3.00 – $3.50 per watt range, there are several other factors, including system size, that affect the cost of a solar project. As the solar project size increases economies of scale kick in and the cost can come down. We typically see this starting at 50 KW for small commercial solar projects (example: 133 solar panels using 375-watt solar panels) with additional cost savings coming in at 250 KW (667 solar panels using 375-watt solar panels), 500 KW (1,333 solar panels using 375 watt solar panels), and 1 MW (2,666 solar panels using 375 watt solar panels) solar project sizes.
In addition to solar system size, using premium solar panels (like SunPower, Solaria, or LG), microinverters, a ground mount, adding an energy storage system to the project, and your roof type (flat, composition shingle, concrete tile, metal, Spanish clay tile, etc.) can all increase cost.
Of course, the solar installer you choose to work with also plays a role, as some solar companies try to undercut the competition by selling solar projects at a loss (this usually leads the company to go out of business) or are out to make a big profit on their solar projects.
If you want to see how much your solar system will cost and how much money you will save you can get started by emailing us an electric utility bill, a picture of your electrical panel (we need to see the circuit breakers), or electrical switchgear (we need to see the sticker on the switchgear), and a picture of your roof today: email@example.com.