So, like many homeowners across the U.S., you’ve been thinking of installing solar panels on the roof of your home. You’ve probably heard mostly good things, but you still have questions. How much will it cost to install a system? How much money will you save monthly on your utility bill? Should you lease or buy? How long will it take for the panels to pay themselves off? Fortunately, as a Southern California resident, this investment is one you’re not going to regret any time soon. Let’s go over the basics.
There are more residential solar energy systems currently in use in California than in any other state in the U.S. A June 2018 study conducted by Solar Energy Industries Association found that 16.68% of the state’s total energy comes from solar power. For Orange County, this is no big surprise; we are privileged to 279 sunny days per year, making solar panels a super effective method of energy.
The cost of buying and installing solar panels is one of the primary concerns for homeowners, and for good reason. The price of solar installation is slightly higher in Orange County than the state average because homeowners tend to choose premium manufacturers such as Panasonic over smaller, lesser-known companies. On a positive note, the cost of going solar has fallen approximately 53% in the last five years, making it affordable for a much larger demographic.
But tariff panic has spooked a lot of potential buyers away from the market in the last couple of months. President Trump’s 30% tariff on imported solar panels has severely crippled the industry in terms of big utility projects, leaving $2.5 billion in large installations in limbo. Fortunately this dramatic freeze has barely affected residential projects; before the tariff, the average cost of equipment and installation for a 6kW residential system in Orange County was an estimated $19,020. Since the imposition of the tariff, it has raised $660 to a total of $19,680, an almost negligible 3.5% increase. That increase will be even more irrelevant if you decide to go with a smaller system; a 5kW system costs an estimated $15,900, and the prices are obviously even lower for 4kW and 3kW systems for small residences.
Not to be forgotten are the massive rebates and incentives that come along with residential renewable energy systems. The 30% Federal ITC discount brings the total cost of solar installation for a 6kW system down to $13,776, and that’s before any state incentives. Net metering from large utility companies such as Southern California Edison, offers bill credits for homeowners’ extra solar power at the retail rate. The Single-Family Affordable Solar Housing (SASH) program also provides incentives to homeowners whose income is 80% of the Area Median Income. Check online for more details on rebates and incentives.
Some homeowners may choose to lease a solar panel system instead of buy it outright. This approach has its own benefits and disadvantages. It’s ideal for homeowners who are more concerned about their environmental impact than they are about the financial pluses, or who are not confident that they will remain in the same house for more than a few years. Nobody wants to invest close to $20,000 dollars in something that will not pay dividends for an extended period of time. Additionally, some homeowners do not have the upfront cash at all, completely eliminating the possibility of buying and installing a system. However, leasing a solar system excludes homeowners from eligibility for tax credits and incentives, and will only get them between 10 and 30 percent off of their monthly utility bill. Leasing is certainly a good short-term option, but is far less cost-effective in the long run for homeowners who plan to stay put for a while.
Choosing a solar installation company can be a challenge in and of itself, as there are 2,880 companies statewide. As a Yelp for the solar industry, SolarReviews invites homeowners to rate and review Orange County installers. And for homeowners truly concerned about getting the best possible price for their system, remember that the biggest installers usually do not offer the best prices; they often charge $2,000 to $5,000 more than smaller companies. Quote aggregators such as EnergySage can help buyers compare competitors and narrow down their options.
As might be expected, it takes some time for solar panels to pay themselves off, but when they do, the results are fantastic. Energy costs are high in Southern California without solar systems; Orange County residents paid 15.98 cents per kilowatt-hour for electricity in 2017, well above the national average of 13.15 cents. The average Orange County household uses 573 kWh of electricity each month, which comes out to $75.34 per month in electricity bills.
It’s difficult to determine an exact number for savings, due to the highly subjective nature of the systems. The amount of power a solar roof can generate varies greatly depending on its location on the house; south, southwest, or southeast orientation is preferable for maximum sunshine. Weather conditions and shadows from nearby trees or tall buildings can also obviously affect a system’s performance. But EnergySage predicts that, based on the California market average cost of installation (before incentives) and the current usage and cost of public utilities, a residential solar power system will pay itself off in a little over six years, and will save the homeowner almost $55,000 over 20 years.
Again, these are only estimates. Savings could be higher or lower depending on location. Of course, the best way to determine exact costs, benefits, and payback would be to discuss your options with a qualified residential solar expert. They are the only ones who have the tools to narrow in on very specific numbers for your unique situation.
The bottom line: residential solar panel systems can provide massive long-term benefits for your wallet and for the environment, and they start paying back quicker than most investments, thanks to incentives and rebates. With our sunny climate and high energy costs, solar panels are almost a no-brainer. In fact, they have so many perks that, according to the mandate approved by the California Energy Commission in May, all new homes built in California starting in 2020 must have rooftop solar panels. This massive shift towards renewable energy benefits homeowners and the planet alike and is poised to soon become the norm.