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A solar system and installation costs between $15,000-$20,000 on average in California battery chargers
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Leonardo David is a writer and energy consultant who has worked on projects funded by the Inter-American Development Bank. An electromechanical engineer, he has written about solar energy and the electrical power industry since 2015.
Tori Addison is an editor who has worked in the digital marketing industry for over five years. Her experience includes communications and marketing work in the nonprofit, governmental and academic sectors. A journalist by trade, she started her career covering politics and news in New York’s Hudson Valley. Her work included coverage of local and state budgets, federal financial regulations and health care legislation.
The average cost of solar panels in California is $2.51 per watt, or $12,550 for the average sized solar panel system of 5 kilowatts (kWs) in the state. This is less than the national average of $2.85 per watt, or $17,100. In addition to the 30% federal solar tax credit, California offers a property tax exclusion for solar systems, and if you add a home battery, you can claim a state-sponsored rebate.
As a conservative estimate, California residents can expect to save more than $1,400 per year on power bills with a 5 kW solar system. Considering the 25-year lifespan of quality solar panels, you can expect to save over $35,000 in electric bills over two decades, our estimates show.
The solar system size required to power a home depends on two factors: energy consumption and local sunshine. The average California home uses 6,482 kilowatt-hours (kWh) of electricity per year, according to the U.S. Energy Information Administration’s Residential Energy Consumption Survey. A solar system with a capacity of 5 kW is more than enough to generate this energy output, thanks to the abundant sunshine available in the Golden State, according to Global Solar Atlas. However, if you own a larger home with additional equipment like a pool pump or electric vehicle (EV) charger, you will need a larger solar array.
The average cost of home solar systems in California is $2.51 per watt. This means you can expect to pay $12,550 for a 5 kW system and $25,100 for a 10 kW system before incentives. The following table provides the estimated cost of solar systems ranging from 5 kW to 10 kW in California, before and after the federal solar tax credit.
Several factors can increase or decrease the cost of solar panels in California, including:
There are several ways to reduce the cost of solar panel installations in California.
California used to offer more state incentives for solar panels, but most programs were phased out by 2023. However, you can still benefit from two major incentives: a property tax exclusion and the Self-Generation Incentive Program.
You can combine local incentives with the 30% federal tax credit, which you can claim for solar panels and battery systems. This nationwide program allows you to claim 30% of your total solar system cost as a credit toward your federal tax burden. So, if you install a 5 kW system and a 10 kWh battery for $25,000, you could claim a $7,500 tax credit.
In September 2023, we surveyed 1,000 homeowners with solar panels, including 120 participants from California. Here is a breakdown of which solar incentives California residents claimed:
*The availability of local rebates varies by area. You can check with your local government or utility company to see if you qualify for any additional incentives.
The MarketWatch Guides team usually recommends participating in net metering programs that allow you to sell the excess energy your panels generate to local electric companies for billing credits. But in the case of California, we recommend storing surplus production in a solar battery and only selling excess energy after you fully charge your battery.
California introduced NEM 3.0 in April 2023, which drastically reduced solar export tariffs for homeowners. Comparatively, you can save the full value of solar electricity stored in a battery to use later, but you would only make a few pennies by sending surplus energy to the grid.
You can still enroll in net metering despite the state’s low rates, but we do not recommend exporting all your surplus production at reduced prices. For example, there may be times when your battery is full and your solar panels still have excess production you can send to the grid. In this case, you benefit from using stored energy to offset grid power, rather than sending the majority to the grid at a reduced cost.
The largest utility companies in California also have the largest net metering programs. You can find detailed information on the PG&E, SDG&E or SCE websites.
To ensure you get the best possible offer, we recommend comparing quotes from several solar companies. As a reference, solar panels have an average cost of $2.51 per watt in California, but premium brands like SunPower can reach more than $4 per watt.
As you compare solar providers, ask for a detailed breakdown of each solar package instead of an overall price. With a breakdown, you will know exactly what components the provider includes in its offer.
Be suspicious of excessively low solar panel offers that could include buying low-quality equipment. On the other hand, if you receive an excessively high offer, ask the provider if it includes components like a home battery or EV charger.
Based on our industry research, we recommend the following solar companies in California:
There are many ways to pay for a home solar power system, each with pros and cons.
Our survey of 1,000 homeowners also analyzed the payment options chosen by solar system owners. In the case of California, we obtained the following results:
When you buy solar panels in cash, you get the highest possible savings over time. However, paying over $12,500 upfront may not be an attainable option for every homeowner. If you are trying to decide among several financing options, we recommend a solar loan as the next best choice.
Solar loans tend to have lower monthly payments than solar leases and PPAs. If you buy solar panels with a loan, you own the panel directly and qualify for tax incentives. When you sign a lease or PPA, the system provider will keep the incentives.
We recommend choosing a solar lease or PPA only if you cannot qualify for a solar loan with a low interest rate. Leases and PPAs are less demanding with respect to your credit record, but take away a much larger fraction of your solar savings.
It is also important to avoid any offers that mention “free solar panels.” Something listed as free usually means you pay nothing upfront but will sign a lease or PPA. These offers are not necessarily scams but are misleading. The best solar companies use clear language when describing available financing options.
California is one of the few states where you can get solar panels at zero cost, but only if you are in a disadvantaged community and below a specified household income. In this case, the Disadvantaged Communities – Single-Family Solar Homes (DAC-SASH) program offers $3 per watt, which is enough to cover the full cost of a solar panel installation.
You can purchase a 5 kW solar system in California for $12,550, which drops to $8,785 after the 30% federal tax credit. Thanks to the abundant sunshine available in the Golden State, a 5 kW solar system can often generate over 7,500 kWh of energy per year. To estimate annual solar savings, assume you are using 3,750 kWh directly and exporting 3,750 kWh under NEM 3.0 tariffs:
Based on the upfront system cost of $8,785, you would achieve a payback period of 6.2 years, which is short compared to the 25- to 30-year lifespan of solar panels. Also, considering electricity prices tend to increase each year, you can expect your solar savings to increase. Solar panels also make your home more attractive to potential buyers in case you decide to sell.
If you use a battery to store excess solar energy instead of sending it to the grid, you can save its full value. In California, a battery bank can boost the annual savings of a 5 kW solar system to more than $2,200 per year. Energy storage systems qualify for both the local SGIP incentive of $150 per kWh and the 30% federal tax credit.
If you choose a solar lease, you pay $0 upfront but commit to monthly payments for up to 25 years. For example, if you lease a 5 kW solar system for $90 per month, you would pay $1,080 per year for a system you do not own. If the solar system saves $1,425 in annual power bills, your net savings are only $345. Solar loans tend to have smaller monthly payments and shorter terms than leases and PPAs. You also own the solar system directly with a loan, which means you can claim the 30% tax credit and other incentives.
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