alifornia is an outstanding example of the sharp and massive uptake of renewables and the only U.S. state achieving over 100% energy from clean sources, even though only for a couple of hours. California solar energy immensely benefits from a series of climate-related bills enacted over the last few years, which spin up a strong pipeline of green power projects.
California – the nation’s leading solar state
The world’s fifth-largest economy, the state recognizes its essential role in tackling climate change on both national and global scales. It has some of the country’s most stringent policies to promote renewables and transition from fossil fuels. In 2022, California passed a series of climate bills that allocated a record $54 billion budget to redouble efforts to combat the environmental crisis and deliver on its climate goals. They also imposed limits on oil and gas drilling and adopted a target to cut carbon dioxide emissions by 85% by 2045.
Additionally, the new legislation sets a clean electricity target of 90% by 2035 and 95% by 2040, intending to achieve 100% by 2045. It is pretty evident that solar power will play a crucial part in hitting these ambitious goals, given California’s abundant sunshine (the state sees 284 sunny days per year on average).
How much power do California solar panels produce cumulatively?
California is the U.S.’s top producer of electricity from solar. Most of its largest photovoltaic facilities are located in the Mojave desert and the Colorado desert; however, there are many PV plants throughout the state as well.
In 2021, solar power in California accounted for 25% of the state's total power generation and 17% of its utility-scale electricity net generation, the Department of Energy's Energy Information Administration (EIA) reports. The Golden State was responsible for 32% of the country's total photovoltaic electricity generation.
Today California has over 37,000 megawatts (MW) of solar power capacity, more than any other state, from which the largest share falls on photovoltaics. The bullish trend for California solar energy is far from over - the number of PV systems continues to grow at a rapid pace. The NREL research shows that in 2021 California accounted for 16% of all new U.S. PV capacities – the second result after Texas with 26%. At the same time, it ranked first regarding residential PV capacity installed. According to some estimates, the state is expected to add about 25,000 MW over the next five years.
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How much can a homeowner save by installing solar panels in California?
As the data above shows, California solar energy is clearly gaining momentum. PV power systems are particularly popular with homeowners - the state now has 1.3 million solar rooftops. One of the main reasons is their willingness to contribute to the global fight against climate change. A PV panel produces about 20 times less carbon dioxide than any coal-powered electricity source and can offset the carbon emissions of 10 trees.
But another thing that motivates CA residents to install PV systems is an opportunity to save money by significantly reducing energy bills. California has one of the nation’s highest electricity rates at 27.3 cents per kilowatt hour, which is almost 60% higher than the national average. Energy prices went up dramatically over the last decade, and today Californians pay roughly 46% more than they did ten years ago. And everything indicates that CA electricity costs will grow further, driven by higher natural gas prices.
California residential solar systems, on the other hand, offer clean and free power generated by collecting sunlight. But how much exactly can a homeowner save by installing solar panels in California?
Given the average domestic monthly consumption of 886 kWh per month, the typical monthly electric bill in the Golden State is around $225 per month or $2,700 per year. Although the total amount of savings depends on many factors, such as PV system size and the incentives a homeowner is eligible for, they can generally expect to save around $60,000 over the lifespan of the photovoltaic system.
Cost of California solar panels
Hopefully, by now you're convinced that with California solar panels, you can save a bundle on your electricity bill. However, the initial outlay to install a photovoltaic system may seem a considerable obstacle.
The average cost of Californian PV panel systems is approximately $2.8 per watt installed, meaning a 6kW system would cost only around $16,800 before tax credits or incentives. By comparison, the average U.S. cost for a home system is currently $3-5 per watt, according to the Center for Sustainable Energy.
Overall, the price of a 6kW CA solar system ranges from $14,400 to $19,500. Indeed, the cost might be too steep for some budgets, but it can be significantly reduced through incentives, which we'll cover later.
The payback period for solar panels in California
Apart from the cost, you may also wonder how long it will take for California solar panels to pay for themselves. The good news is that the state enjoys a very short solar system payback period of around six years, which is pretty much the lower bound of the U.S. range of 6 to 12 years. But remember that the number of years it takes to recover the funds invested depends on various factors, such as the cost of a PV panel system, the amount of electricity you consume monthly, and the power output of your system.
What incentives are available for solar systems in California?
While the upfront cost of installing a PV system here is lower than in most U.S. states, it may still be too high for many. Luckily, incentives and rebates can significantly reduce the cost of setting up solar panels in California. Even though the state isn’t particularly generous when it comes to programs encouraging solar uptake, PV system owners can still benefit from some.
Householders from all over the United States can take advantage of the investment tax credit (ITC), also known as the federal solar tax credit. It allows individuals with solar to deduct 30% of the cost of installing a photovoltaic system from their federal taxes. Additionally, they can apply for 30% ITC when buying energy storage.
DAC-SASH program for low-income CA solar customers
The Single-Family Affordable Solar Homes (DAC-SASH) program offers upfront rebates to qualifying single-family low-income homeowners installing solar systems in California. The performance-based program makes California solar energy systems affordable for people from the state’s most disadvantaged communities, offering a rebate of up to $3 per watt.
The property tax exclusion for PV systems
Under this incentive, new California solar panels are exempt from state property tax. Property tax exclusion was initially set to expire at the end of 2024 but was extended until the end of 2026.
Net energy metering
Net energy metering (NEM) is a billing arrangement that credits homeowners for the excess solar power they send to the grid. These credits can be used later to offset any electricity they may need from the grid when their systems don’t produce enough power to meet their demand.
NEM has been the subject of much controversy among Californians over the last few years. Some believe it creates a so-called “cost shift” when the cost of maintaining the grid infrastructure is fully passed from wealthier residents with PV systems to low-income homes. Meanwhile, NEM supporters argue that limiting the policy would crash the PV market and undermine the state’s net-zero goals.
As we step into 2024, solar-panel systems in California continue to be a focal point of the state's commitment to clean energy. The California Public Utilities Commission, a key player in the regulatory landscape, plays a pivotal role in shaping the solar market. With a surge in solar installations, homeowners are finding it increasingly feasible to have a solar-panel system installed, backed by various incentives and supportive policies.
California's robust solar industry, buoyed by advancements in technology and favorable policies, showcases the state's unwavering commitment to a sustainable future. As solar installers continue to thrive in this environment, homeowners have the opportunity to participate in the clean energy revolution. In 2024, the solar-panel systems in California signify not only a shift towards renewable energy but also a collective stride towards a greener and more environmentally conscious future.