Wondering whether you can install solar panels in your California home? The answer is a resounding yes! This article is your go-to resource for everything you need to know about solar installation in the Golden State.
In California, not only is installing solar panels possible, it’s actively encouraged. The state is a national leader in renewable energy, thanks to its abundant sunshine and progressive solar policies.
Now, let’s delve into the nitty-gritty details.
With over 300 sunny days per year, California is ideal for harnessing the power of the sun.
The state’s solar industry has grown exponentially, making solar installations more accessible and affordable for homeowners.
How much does it cost to install solar panels in California
One of the first questions prospective solar adopters in California often ask is about the cost.
The average cost of solar panels in California ranges from $12,000 to $25,000, after federal tax credits. The final price depends on the size and type of the system, your energy needs, and the solar company you choose.
However, don’t let these figures intimidate you. California offers several incentive programs, such as the California Solar Initiative, Self-Generation Incentive Program (SGIP), and local utility-based incentives, which can significantly offset the upfront costs.
Additionally, the Federal Investment Tax Credit (ITC) can deduct 26% of the installation costs from your federal taxes.
Because of these state-wide incentives and rebates and solar-friendly legislation, California has built a robust framework that promotes solar energy adoption.
The primary incentive driving solar adoption in California is the Net Energy Metering (NEM) policy.
Net Metering In California: Everything You Need To Know
Now that you know installing solar panels in California is encouraged let’s dig into California’s net metering policy and see how much you can actually benefit from it.
But first, you may be asking what is net metering.
Net metering is a billing arrangement that allows homeowners with solar panels to sell the excess electricity they generate back to the grid.
California’s net metering 2.0 program is one of the most advantageous in the United States. It ensures solar panel owners receive a full retail rate for the excess energy they supply to the grid, credited to their utility bill.
Diving into the specifics, under California’s Net Energy Metering (NEM) 2.0 policy, when your solar panels produce more electricity than your home consumes, this excess power is sent back to the utility grid.
In return, your utility company provides credit to your account. Later, during periods when your solar panels don’t generate enough electricity (at night or on cloudy days), you can use these credits to draw power from the grid without additional charges.
One of the primary benefits of this policy is that it allows you to offset your energy costs further and decrease your utility bills. It also provides a reasonable return on your solar panel investment.
Let’s illustrate this with an example to see how much money you could potentially save.
This is what California’s net metering policy looks like in real terms
Let’s take an example of a household that consumes 10,000 kilowatt-hours (kWh) of electricity per year, with an average monthly bill of $200.
Now, let’s say you’ve installed a solar panel system that generates 12,000 kWh annually, meaning your system is producing more electricity than your house consumes.
Under the California Net Energy Metering policy, the extra 2,000 kWh of electricity your system generates is fed back into the grid.
Depending on your utility company and the specifics of your NEM agreement, you could get a credit of around $0.25 per kWh for this excess energy.
Over the course of a year, this amounts to a $500 credit ($0.25 x 2,000) on your electricity bill.
This $500 credit, combined with the electricity bill savings from using solar energy, can result in substantial annual savings.
If your solar panels are covering your energy needs most of the time, your electricity bills could be minimal or even zero in some months.
Thus, the original $200 per month ($2,400 annually) you were spending on electricity could be significantly reduced, or even completely offset.
The precise amount you save will depend on various factors such as your energy consumption, your solar system’s output, and the specific terms of your California Net Energy Metering agreement.
However, the example above clearly shows how the Net Metering policy can lead to substantial savings for homeowners with solar installations in California.
Now that we’ve looked at net metering in California, let’s focus on another significant solar incentive in California – the Self-Generation Incentive Program under the California Solar Initiative.
(Editor’s note: If you’d like to learn more about how net metering works you can read our extensive guide on net metering)
California Solar Initiative’s Self-Generation Incentive Program
Before digging into how you can benefit from California’s Self-Generation Incentive Program, let’s look at what it is.
California’s Self-Generation Incentive Program (SGIP) is a financial incentive program for consumers who install energy storage systems and certain other types of energy technologies. The aim of this program is to contribute to greenhouse gas reductions, demand reductions, and grid reliability. It offers significant rebates to homeowners who install solar batteries, making the pairing of solar panels with battery storage more affordable
That sounds great, but let’s dig into what that actually means…
California’s Renewable Portfolio Standard requires utilities to source at least 60% of their electricity from renewable sources by 2030, further boosting the state’s commitment to clean energy.
Additionally, the state’s “Million Solar Roofs” initiative aims to install solar energy systems on one million roofs in the state by 2030, solidifying its position as a frontrunner in the renewable energy sphere.
As for local incentives, they vary across the state. For instance, the Los Angeles Department of Water and Power offers a solar incentive program that provides rebates for residential solar systems.
Similarly, the San Francisco Bay Area’s SunShares program offers discounts on solar installations and electric vehicles.
There’s also financial assistance available at the federal level. The Federal Investment Tax Credit allows homeowners to deduct a portion of their solar costs from their taxes.
California’s Federal Investment Tax Credit: How Much Can You Save?
Before we dive into how much you can save, what is California’s Federal Tax Credit?
The Federal Investment Tax Credit, or ITC, is a significant solar incentive that allows you to deduct a portion of the cost of your solar system from your federal taxes. The ITC is currently set at 26% of the total cost of the system, including installation costs, through the end of 2022.
Now that you know what it is, let’s paint a picture with an example.
Suppose you install a solar system in your home in California, and it costs $20,000. With the Federal ITC, you would be eligible for a tax credit of 26% of that cost, or $5,200. This means you could potentially reduce your federal tax bill by that amount. Remember, a tax credit is a dollar-for-dollar reduction of the income tax you owe.
It’s important to note that the ITC does have a step-down schedule. It will decrease to 22% in 2023, and by 2024, the residential credit (unless Congress renews it) will drop to 0%, while the commercial and utility credit will drop to a permanent 10%. So, the sooner you install your system, the higher your tax credit will be.
The Federal ITC is a fantastic way to lower the overall cost of your solar system.
It’s one of the best incentives for Californians going solar, and can significantly enhance the affordability and appeal of solar energy.
By taking advantage of the ITC, you can harness the power of the sun, reduce your carbon footprint, and save on your energy bills.
Another landmark piece of legislation that California passed to ease the solar installation process is the Solar Rights Act.
This act limits the ability of homeowners associations (HOAs) and local governments to prevent solar installations.
Coupled with the Permit Streamlining Act, which simplifies the solar permit process, solar installation in California is more straightforward than ever.
What permits do you need to install solar in California
Installing solar panels in California generally requires a building permit and an electrical permit.
Building permits ensure that the solar installation adheres to local construction and safety standards, while electrical permits certify that the system complies with electrical codes.
The exact permits required can vary by municipality, so it’s important to check with your local city or county offices.
Additionally, some Homeowners Associations (HOAs) might require approval before installation.
California Solar Permitting Guidebook offers more detailed information on the permitting process.
In an effort to streamline the process, the state has instituted the California Permit Streamlining Act to set timelines for approval and reduce hurdles for residential solar installations.
The California Permit Streamlining Act and the Solar Permitting Guidebook work in tandem to simplify the solar installation process in California.
The Permit Streamlining Act sets firm timelines for project approvals, speeding up the permitting process while the Solar Permitting Guidebook offers a step-by-step guide to help local governments and installers navigate this process.
The combination of these tools provides a streamlined and efficient path for solar adoption in the state.
The Secret to Understanding the California Solar Permitting Guidebook
The process of installing solar panels goes beyond just choosing your system and the right installer.
It also involves navigating permits and regulations, and that’s where the California Solar Permitting Guidebook comes into play.
But what is the California Solar Permitting Guidebook, and how does it benefit you as a solar homeowner?
The California Solar Permitting Guidebook is a comprehensive resource created by the state of California to streamline the permitting process for small solar energy systems. It essentially lays out a standardized, straightforward approach to obtaining the necessary permits, reducing administrative burdens, and improving permit application processing times.
This guidebook is an invaluable tool for anyone considering solar installations in California.
It covers a range of topics, such as building codes, inspection processes, and equipment requirements, all broken down in an easy-to-understand format.
This wealth of information helps both solar professionals and homeowners understand the specific requirements for solar installations in different jurisdictions.
From a homeowner’s perspective, this streamlined process reduces the time and expense related to getting a permit, thus making the overall solar installation quicker and less cumbersome.
For instance, because of the standardized process, some areas have “over-the-counter” or “same-day” permit approval for simple, standard solar installations.
This can significantly reduce the waiting time which can sometimes extend to weeks or even months.
Moreover, a smoother permitting process can also translate to cost savings.
Faster processing times mean lower administrative costs, which can then be passed on to customers.
By providing clarity and transparency on regulations and requirements, it can also help avoid costly revisions or corrections during the installation process.
In short, the California Solar Permitting Guidebook is an innovative approach to simplifying solar installations.
By streamlining the permitting process, it helps remove barriers to solar deployment, ultimately making it easier and more affordable for California residents to go solar.
Let’s now look at some of the incentives offered by the local utilities in California….
California’s Local Utility-Based Incentives: A Powerful Way to Cut Upfront Costs
Utility companies in California are not to be overlooked when it comes to solar incentives.
They can provide substantial aid, significantly reducing the upfront cost of your solar installation.
But how exactly do they work?
Local utility companies in California often offer their own solar incentive programs, adding a generous layer of financial assistance on top of the state and federal incentives already available. These programs can take several forms, including performance-based incentives, upfront rebates, and net metering programs.
Performance-Based Incentives (PBIs) are typically paid out over a number of years based on the kilowatt-hours of solar energy your system produces.
These payments can add up over time and help offset the cost of your system.
For example, Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E) have all provided PBIs in the past.
Upfront rebates, much like the former CSI program, provide a one-time payment based on your system size and expected performance.
Though not as common as they once were due to the growth and affordability of the solar market, some utilities still offer these programs. Always check with your local utility to see if they’re available.
Finally, as mentioned above, many utilities in California offer net metering programs, which can be another significant cost-saver.
How much can you earn from California’s Local Utility-Based Incentives?
These incentives vary greatly from one utility to another, but let’s use an example to illustrate how this might work.
Let’s assume your local utility offers an incentive of $0.12 per kilowatt-hour (kWh) for excess electricity fed back into the grid. If your solar system produces 600 kWh in a month but you only consume 500 kWh, you’d have an excess of 100 kWh.
Under this incentive program, your utility would pay you for this extra energy. At $0.12 per kWh, you’d receive $12 (100 kWh x $0.12) for that month. Over a year, if your excess generation was consistent, you would earn an extra $144 (12 months x $12) from your solar panels.
This is a simplified example and actual incentives vary based on numerous factors including your location, the size of your solar system, the time of day energy is generated, and the specific utility’s program rules.
It’s best to consult with your local utility or a solar professional to get accurate information on available incentives.
Choosing a Solar Installer in California
Picking the right solar installer is crucial to ensure the success of your solar project.
Look for experienced installers who have a proven track record, and excellent reviews, and are certified by the North American Board of Certified Energy Practitioners (NABCEP).
Also, ensure they understand the local permitting process and utility interconnection procedures in your area.
If you’d like to learn more, you can read our extensive guide on how to select a professional solar installer.