California solar panels: The complete guide in 2024

Data updated Jul 9, 2024

Written by: Emily Walker

Interested in going solar? You'll need to install a 8.26 kW solar panel system to cover the average electric bill in California, which will cost you about $14,061 after the federal tax credit.

Cost for an average system in California


Out of pocket cost, cash
$20,087
Federal tax credit (30%)
- $6,026
Price post tax credit
$14,061

20-year savings $69,336
Payback period 5 Years
Electricity offset 107%
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As long as your federal tax bill is high enough, you can take advantage of the federal investment tax credit (ITC).

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Going solar in California

Did you know California has more solar panels installed than any other state? According to the Solar Energy Industries Association, as of 2024, there's enough solar in California to power almost 14 million homes. 

With year-round sunshine, some of the highest electricity prices in the U.S., and pretty favorable solar policies, it makes sense why so many Californians have switched to solar energy. But California has also recently faced some major blows to solar–especially with its shift from net metering to net billing (more on this later). Now, you must pair new systems with a battery to maximize your solar savings.

Here's everything you need to know about going solar in the Golden State.

Cost

How much do solar panels cost in California?

Solar panels will save you a lot of money over time, but the upfront costs aren't cheap. The average California homeowner needs a 8.26 kW solar panel system to cover their electricity needs, which comes out to $20,087 before incentives. Prices range from $17,074 to $23,100, but after the federal tax credit, that drops by 30%. 

While this may sound high, it will pay off in California. That's why over 208,000 California homeowners have used EnergySage to receive and compare quotes for solar installations. You can expect to earn back your initial solar investment through electricity savings in about 5.44 years, while most systems last at least 25 years. You'll often see this number referenced as your solar payback period.

There are a few ways to finance your solar panel system so you don't have to provide all that money upfront. 

  • Cash purchase: You'll own the system and pay for it upfront. This provides the best long-term savings. 

  • Solar loan: This allows you to retain ownership of your system while owing little to no money upfront. Solar loans aren't all created equal. If you have access to subsidized clean energy loans through local incentive programs, that's usually your best bet. A home equity loan or a personal loan are often your next best options—private solar loans typically come with higher interest rates or upfront fees.

  • Solar lease or power purchase agreement (PPA): A third-party company owns your system and either leases you the solar panels (solar lease) or allows you to purchase the electricity they generate (PPA). These generally provide the lowest savings and generate the most negative press about solar. If you choose this financing option, read the fine print: You can get trapped in them for longer than you'd like.

Solar panels on a house

Incentives

What are the best solar rebates and incentives in California?

Incentives help bring solar's price tag down considerably in California. Here are the major ones to know about:

Incentive
Average savings in California
Description

Residential Clean Energy Tax Credit, formerly the federal investment tax credit (ITC)

$6,026

Lowers your solar panel system's cost by 30%

Disadvantaged Communities - Single-family Affordable Solar Housing (DAC-SASH)

$15,000

Provides $3/W for systems up to 5 kW if you're a low-income customer in a disadvantaged community

PACE Financing

Varies depending on the loan

Allows you to finance your system typically with no money upfront and usually includes a low-interest rate

Local rebates

$500

Depending on your utility company, additional rebates may lower your system's cost

Active Solar Energy System Exclusion

0.74% of your system's value, annually on average

If you use solar energy as a source of power, you won't need to pay a tax on the value your solar panels add to your property.

Is net metering available in California?

In some states, you'll earn bill credits from your utility company when your solar panel system generates excess electricity and sends it to the grid. This incentive is known as net metering—basically a solar buyback program—and makes it so you will owe very little, or even nothing, on your electric bills with solar panels. 

California no longer offers net metering, but if you're a customer of one of the three Investor Owned Utilities (IOUs)–Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E)–and you connect your solar panel system to the grid, you can benefit from net billing, also referred to as NEM 3

Net billing works similarly to net metering, but the value of solar energy you send to the grid is worth much less: Your utility company will only pay you about 25% of what they otherwise would've under net metering. 

Due to high electricity costs in California, solar is still worth it with net billing. But to really benefit from solar and maximize your savings, you should add a battery to new systems. 

There's a lot to understand about California's net billing program. Get an in-depth explanation or learn more about the individual programs:

A house with rooftop solar panels connected to the grid

Equipment

Equipment quality

Each year, solar panels get more and more efficient—that is, they produce more power per square foot. As of 2024, the most popular solar panels can produce about 400 watts of electricity when they’re in full sunlight. If you want to make the most of your roof’s solar potential, get panels with at least that much power output.  

You should also make sure to select a solar inverter setup that makes sense for your roof’s layout. 

And if you want or need a solar battery, be sure to pick one that can integrate cleanly with that inverter. 

Premium equipment can come with a high price tag, but it will often save you more money in the long run. The best equipment tends to have the best warranty terms, often guaranteed to 25 years (sometimes even 40!), so you’re covered in case you need repairs or replacements. The highest-quality panels also degrade more slowly, so they’ll maintain more of their power output further into the future. 

See our list of the best solar panels

Companies

Who are the best solar installers in California?

We pre-screen all of the solar companies on EnergySage to ensure they'll provide you with a high-quality installation. We then rate them based on their results, reputation, and responsiveness. Here are the highest-rated EnergySage installers in California:

resources

Top solar resources for California

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