California
Solar in California
California homeowners are turning to solar in record numbers—and it’s easy to see why. The Golden State leads the nation in residential solar installations, while electricity rates have skyrocketed to 31.86 cents per kWh, nearly double the national average.
If you’re considering solar panels for your home, understanding the solar panel installation process is your first step toward energy independence. This comprehensive guide breaks down everything California homeowners need to know about solar installation, from permits to powering up your system.
Key Takeaways
- California leads the nation in solar adoption with over 1.9 million homes already powered by solar energy systems.
- Electricity rates have jumped 40% since 2021 to 31.9¢ per kWh, making solar savings more valuable than ever.
- Federal tax credits cover 30% of installation costs while California offers additional property tax exemptions and rebate programs.
Solar Cost in California
Our California solar cost calculator uses real installation data from thousands of homes across Los Angeles, San Diego, San Francisco, Sacramento, and beyond. Get personalized estimates based on actual local solar projects in your area.
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Looking for More Detailed California City Guides?
Explore our comprehensive solar guides for major cities across California to find location-specific information on incentives, installers, and solar potential.
California Electricity Prices
California’s electricity costs have surged dramatically, creating financial strain for homeowners across the state.
From 2021 to 2024, California electricity rates jumped from 22.8 to 31.9 cents per kWh—a 40% increase in just three years.
Solar panels generate electricity from sunlight, allowing homeowners to reduce their dependence on increasingly expensive grid power and stabilize monthly energy costs.
Over 25 years, solar systems can provide predictable energy costs while utility rates continue climbing, offering long-term financial protection for families.
Price of Energy: California vs National Average
California Area Utility Providers
California’s utility companies charge vastly different electricity rates. Based on 2023 data, rates range from SMUD’s 16.9¢ per kWh to SDG&E’s 45.5¢ per kWh—both well above the 16¢ national average.
Major investor-owned utilities like PG&E, SCE, and SDG&E charge significantly higher rates due to infrastructure costs, wildfire prevention measures, and regulatory requirements that smaller municipal utilities avoid.
With California’s average rate of 29.5¢ per kWh—nearly double the national average—solar panels can provide substantial long-term savings by reducing dependence on increasingly expensive grid electricity.
California Utilities Electricity Rates
California Solar Incentives
Installing solar panels in California comes with significant financial benefits through various solar incentives in California designed to reduce upfront costs.
Federal tax credits allow you to deduct a percentage of your solar installation costs from your taxes, while California offers state-specific programs targeting property tax exemptions and support for disadvantaged communities.
These programs can substantially lower your solar investment, though requirements and availability change frequently, making timely research essential.
$5,824
Average savings in California solar rebates
| Incentive | Type | Description | Source |
|---|---|---|---|
| Residential Clean Energy Credit | Federal tax credit | A federal tax credit worth 30% the cost of a solar panel system in the year it’s installed | Learn More |
| Property Tax Exemption | State tax exemption | Any increase in value to your home tied to installing solar panels will not be taxed. | Learn More |
| Disadvantaged Communities Single-Family Affordable Solar Homes (DAC-SASH) Program | State program | If you meet key criteria on being in a disadvantaged community you will receive a generous incentive to install solar of $3 per watt. This can add up to $15,000 for a small system of kW. | Learn More |
| Equity Fund | State program | If you meet certain criteria, California is offering rebates that help bring some of the original Net Metering benefits to lower income communities that missed out when CA switched to NEM3.0 | Learn More |
The Residential Clean Energy Credit lets people claim a tax credit worth 30% the cost of a solar panel system in the year it’s installed. The credit can only be used against taxes you owe or have already paid that year, but any excess credit can be rolled over to future years.
The credit is broadly available, though there are a few restrictions — you must own the panels and they must be on a house you live in — so be sure to consult a tax professional about your situation.
California’s Property Tax Exemption for solar energy systems protects homeowners from paying additional property taxes when they install solar panels. Under this state tax exemption, any increase in your home’s assessed value that results from adding a solar energy system will not be subject to property tax. This means you can enjoy the added home value that comes with solar panels without the burden of higher annual property tax bills.
The financial benefit varies based on your home’s increased value from the solar installation and your local property tax rate. For example, if your solar system adds $20,000 to your home’s value and your property tax rate is 1.2%, you would save $240 per year in property taxes. This exemption applies to both the solar panels and any battery storage systems installed with your solar array. The exemption remains in effect for the life of the solar system, providing ongoing savings year after year as long as the system is in place.
The Disadvantaged Communities Single-Family Affordable Solar Homes (DAC-SASH) Program is a California state initiative designed to make solar energy more accessible to low-income homeowners in disadvantaged communities. This program provides upfront cash incentives to help offset the cost of installing a solar energy system, making clean energy more affordable for families who need it most.
Eligible homeowners can receive up to $3 per watt in fixed, capacity-based incentives. For example, if you install a 6-kilowatt solar system, you could receive up to $18,000 in upfront incentives to help cover the installation costs. To qualify, you must own and live in your home, receive electricity service from PG&E, SCE, or SDG&E, be enrolled in or eligible for the CARE or FERA income-qualified utility programs, and live in a designated disadvantaged community area.
The program is administered through GRID Alternatives, and there are no specific deadlines mentioned, though funding may be limited. If you think you might qualify, it’s worth checking the GRID Alternatives website to see if your area is eligible and to learn more about the application process. This incentive can be combined with other solar incentives like the federal Residential Clean Energy Credit for even greater savings.
The Equity Fund is a California state program that provides battery storage rebates specifically for low-income residents and disadvantaged communities. Created in 2022 through Assembly Bill 209, this $630 million program operates under the Self-Generation Incentive Program (SGIP) to help make clean energy storage more affordable for those who need it most.
Eligible homeowners can receive rebates of $150, $850, or $1,000 per kilowatt-hour of battery capacity installed. The higher rebate amounts ($850-$1,000 per kWh) are available for customers enrolled in CARE or FERA utility assistance programs, those living in disadvantaged communities (DAC-SASH areas), California tribal communities, or areas with high fire risk or frequent power outages. To qualify, you must be enrolled in California’s CARE/FERA program, live in a designated disadvantaged community, or reside in a California tribal area. The program is available to customers of Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E). There are no specific deadlines mentioned, but funding is limited and available on a first-come, first-served basis until the $630 million is exhausted.
California’s Net Billing program, also known as NEM 3.0, is the current compensation system for homeowners who send excess solar energy back to the electric grid. Under this program, you receive credits for the solar power your system produces beyond what your home uses, but the credit rates are based on the time of day and utility company’s avoided costs rather than the full retail electricity rate.
The financial benefits vary significantly by utility company and time of export. For the three major investor-owned utilities (PG&E, SCE, and SDGE), export credits change hourly based on grid demand, typically ranging from 3-5 cents per kWh during annual true-up periods. Other utilities offer different rates: Imperial Irrigation District provides $0.0698 per kWh with monthly settlement, while Sacramento Municipal Utility District offers 7.4 cents per kWh. LADWP customers still enjoy 1:1 net metering, meaning they receive full retail credit for exported energy.
This program began on April 15, 2023, for new solar installations and major system modifications. However, customers who submitted complete interconnection applications by April 14, 2023, may qualify for the more favorable NEM 2.0 program if they don’t increase their system size or decrease it by more than 20%. Each utility manages credits differently – some settle monthly while others allow annual rollover, so it’s important to understand your specific utility’s policies when planning your solar investment.
Ready to start saving with solar?
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Get a Free QuoteCalifornia Solar Irradiance
Solar panel production varies throughout the year based on daylight hours, weather patterns, and sun intensity. California’s abundant sunshine and high solar irradiance create ideal conditions for solar energy production year-round, despite seasonal variations and occasional weather challenges.
What Can the Average California Solar System Power?
Summer Production (July)
In July, your 10 kW system could power:
- 3.6 average California homes (15 kWh/day per home)
- or Run central AC for 18 hours AND power all other appliances
- or Fully charge 5.4 Tesla Model 3 electric vehicles
Winter Production (December)
In December, your 10 kW system could power:
- 2 average California homes (15 kWh/day per home)
- or Keep your home heating system running for 15 hours
- or Fully charge 3 Tesla Model 3 electric vehicles
Annual Production
Over a year, your 10 kW system could:
- Offset 10 tons of carbon dioxide emissions
- or Equal the environmental benefit of planting 175 trees
- or Save approximately $4,234 in electricity costs
Want to know exactly how much solar can power your home?
Get a personalized solar analysis based on your actual home, energy usage, and roof characteristics.
Get My Custom EstimateSolar Installations in California
We’ve mapped every solar installation across the United States to show you something exciting: your California neighbors are embracing clean energy! Explore this interactive map to discover solar installations in your community and see how your area is joining the solar revolution.
Leasing Solar Panels
California homeowners have multiple solar financing options through Palmetto’s LightReach program. Depending on your utility company, you can access either Power Purchase Agreements (PPAs) or solar leases. PG&E, SCE, and SDG&E customers can choose PPAs, paying a set rate per kilowatt-hour for the power their system generates. IID and LADWP customers have solar lease options, offering fixed monthly payments regardless of production.
Unlike purchasing solar panels outright, these financing options eliminate upfront costs and maintenance responsibilities. Palmetto handles all system design, installation, and ongoing maintenance at no cost to you. Our 90% Production Guarantee ensures your system performs as expected, with credits for any shortfall.
The LightReach program centralizes everything into one inclusive price, providing a worry-free solar experience with comprehensive protection and professional management throughout your system’s life.
Go solar without the investment
With LightReach, there are no investment costs to recoup, loan payments to manage, or maintenance needs to take on. As soon as your panels are active, your solar savings are too!
Learn MoreFrequently Asked Questions
Yes, solar makes excellent financial sense in California. With electricity rates at 31.9¢ per kWh—nearly double the national average—California homeowners can save significantly with solar panels.
The combination of abundant sunshine, high electricity costs, federal tax credits, and state incentives creates ideal conditions for solar investment. Most California systems pay for themselves within 4-5 years while providing decades of energy savings.
Yes, California has net billing programs that credit homeowners for excess solar energy sent to the grid, though policies vary by utility company.
Most California utilities operate under NEM 3.0 (Net Billing), which provides hourly export credits based on avoided costs rather than full retail rates. However, LADWP customers still enjoy traditional 1:1 net metering with full retail credit for exported energy.
Yes, solar panels typically increase home value in California by approximately 4.1% according to research from Zillow. For the median California home, this translates to roughly $30,000 in added value.
California’s Property Tax Exemption ensures you won’t pay additional property taxes on this increased value, making solar panels a smart investment that enhances both your home’s worth and your monthly savings through reduced electricity bills.
The average cost to go solar in California is $13,590 after federal tax credits for a typical 6.72 kW system. Before credits, the system costs approximately $19,414.
With California’s high electricity rates of 31.9¢ per kWh, most homeowners save around $240 monthly and see payback periods of 4.5 years. Over 25 years, total savings average $105,292.
Yes, solar is financially worth it in California. With electricity rates at 31.9¢ per kWh and abundant sunshine, most California homeowners see strong returns on solar investments.
The typical California solar system costs $13,590 after federal tax credits, saves $240 monthly, and pays for itself in 4.5 years. Over 25 years, homeowners save an average of $105,292 while protecting against rising electricity costs.
We believe Palmetto Solar offers the best combination of quality, service, and value for California homeowners. Since 2020, we’ve completed 7,123 installations across California, establishing a strong track record in the state’s diverse markets.
We offer competitive financing options and work with trusted local installation partners to ensure professional service throughout California. Our comprehensive approach includes system design, permitting, installation, and ongoing support to make your solar experience smooth and worry-free.