Solar panels in California: cost, savings and payback

Estimated monthly production (4.0 kW system)

Is solar worth it in California?

Our model estimates a payback of about 5.2 years. Over 25 years the system would save about $49,054, or $38,774 after its cost. The price you are actually quoted has a big effect on payback, so compare several quotes.

Savings assume the panels' output replaces electricity you would otherwise buy at the average rate. Your utility's rules for exported power (net metering or a lower export rate) can change the real figure.

Federal tax credit and local incentives

The federal residential clean energy credit (Section 25D) does not apply to expenditures made after 31 December 2025, and for a solar system the expenditure is treated as made when installation is complete. That is why these estimates include no federal credit. State, utility and local programs may still be available: search the DSIRE incentives database (listed under Sources) for California, and ask installers which programs they use.

Buying vs leasing (or a PPA)

When you buy panels, you pay up front or with a loan and keep all the savings. With a lease or power purchase agreement (PPA), a solar company owns the system on your roof; you pay a monthly fee or a set price per kWh, usually with little or nothing up front. Leases and PPAs need less cash but typically save less over time and can complicate selling your home, so read the contract carefully.

Assumptions

• Production: NREL PVWatts v8 for Los Angeles — fixed roof mount, 20° tilt, south-facing, standard modules, 14% system losses.
• Usage: 507 kWh/month, the average California residential customer (EIA).
• Electricity price: 32.34¢/kWh, 12-month average, rising 0% a year.
• Cost: $2.57 per watt installed; panels lose 0.5% output a year.
• No federal tax credit, state incentives, financing costs or battery storage.

Run the numbers for your home

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More for California

• Electricity rates in CaliforniaPrice per kWh, bills and trends.
• Solar calculator for CaliforniaUse your own bill and quote.