How Much Do Solar Panels Cost in California? (2023)

An average solar panel system costs $2.51 per watt in California, less than the national average of $2.85 per watt. Using this number, the price of a 5 kW system is around $12,550. However, you can lower the upfront price with incentives such as the 30% federal solar tax credit. You can also use our solar cost calculator to estimate how much a solar system costs.

Here is a breakdown of what to expect regarding solar panel costs in California:

Several factors can increase or decrease the cost of solar panels in California, including:

• System size: The primary factor that decides how much solar panels will cost is the size of your system. A larger system will have more solar panels, a bigger inverter, more cables, etc.— which leads to higher costs. But the size of a system depends on your home energy consumption and electricity bills. The average home in California consumes over 7,000 kilowatt-hours (kWh) of energy every year. Based on this number, a 5 kW system could fulfill an average home’s energy needs, which costs around $8,785 after the federal tax credit.

• Solar incentives: California offers a robust set of solar rebates and incentives to help lower the cost of solar. Homeowners can enjoy benefits such as direct rebates, tax credits, state tax exemptions and net metering. When combined, multiple solar incentives result in a lower initial expenditure and higher savings over the lifetime of your system.

• Type of solar equipment: The type and quality of equipment you choose can impact the price of your system. Today’s solar panels come in various types, offering different efficiencies and features. For instance, you can choose between monocrystalline and polycrystalline solar panels. Since solar panels make up a significant portion of a system’s cost, cheaper solar panels will result in a cheaper system. This is also true for other system components — for example, systems with microinverters, power optimizers and batteries will be slightly more expensive.

• Net metering: Net metering uses a bidirectional meter to allow customers to earn billing credits for any excess energy their panels generate and send back into the grid. Net metering offers homeowners flexibility with energy usage while eliminating the need for solar batteries. However, California recently passed a new version of net metering, called NEM 3.0, that reduces the financial benefits of the state’s net-metered system.

• Payment option: Many solar companies offer a variety of payment options, including solar financing. Homeowners unable to pay system costs upfront can opt for a solar loan with monthly repayments at a certain interest rate. Other options include solar leases and power purchase agreements (PPA), in which you rent a system from a provider for a monthly payment. The total cost of a system differs depending on the payment model you select. A cash purchase is the most expensive upfront but results in the most savings over time. Solar leases and PPAs cost the most over time, even though they require no initial investment.

California has an ambitious renewable portfolio standard (RPS) that requires utility companies to supply at least 60% of the state’s energy using renewable sources by 2030. With California’s solar potential, it is not surprising that several authorities and utilities offer a plethora of solar incentives. Here’s an overview of the incentives currently available in California:

• Federal solar tax credit: Also known as the solar Investment Tax Credit (ITC), this incentive allows homeowners to deduct up to 30% of their total system cost from their federal income tax burden. You can claim the credit for the year you install solar panels, and if the amount exceeds what you owe in taxes, you can roll over the remainder for up to five years. Considering California’s average solar panel cost of $12,550, homeowners could see around $3,765 in savings by claiming the federal credit. 
• Active Solar Energy Property Tax Exclusion: California homeowners who install a solar power system do not have to pay additional property taxes if the value of their home increases. The California State Board of Equalization notes that this is not a property tax exemption but only an exclusion on the addition in property taxes.
• Disadvantaged Communities – Single-family Solar Homes (DAC-SASH): California has an ambitious renewable portfolio standard (RPS) that requires utility companies to supply at least 60% of the state’s energy using renewable sources by 2030. With California’s solar potential, it is not surprising that several authorities and utilities offer a plethora of solar incentives. Here’s an overview of the incentives currently available in California:
• Federal solar tax credit: Also known as the solar Investment Tax Credit (ITC), this incentive allows homeowners to deduct up to 30% of their total system cost from their federal income tax burden. You can claim the credit for the year you install solar panels, and if the amount exceeds what you owe in taxes, you can roll over the remainder for up to five years. Considering California’s average solar panel cost of $12,550, homeowners could see around $3,765 in savings by claiming the federal credit.
• Active Solar Energy Property Tax Exclusion: California homeowners who install a solar power system do not have to pay additional property taxes if the value of their home increases. The California State Board of Equalization notes that this is not a property tax exemption but only an exclusion on the addition in property taxes.
• Disadvantaged Communities – Single-family Solar Homes (DAC-SASH): Californians living on tribal lands or those who are among one of the 25% most disadvantaged communities in the state can receive a rebate that covers up to 100% of solar system costs. The incentive is only available to customers of Pacific Gas and Electric (PG&E), Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E).
• Self-Generation Incentive Program (SGIP): Though not directly meant for solar panels, the SGIP is offered by the California Public Utilities Commission (CPUC) to homeowners and businesses that install battery storage systems. The incentive is in the form of a direct rebate and the value depends on the battery size and time of application.
• Equity Resilience Incentives: California offers the equity resilience incentive in conjunction with the SGIP. The incentive provides a rebate of up to $1,000 per kilowatt-hour to low-income households, homes in high-risk fire areas or homes that have experienced two or more Public Safety Power Shutoffs (PSPS) events.
• Rancho Mirage Energy Authority (RMEA) Residential Solar Rebate Program: RMEA offers a one-time solar rebate of $500 to customers who install a new residential solar system or expand an existing solar array with a permit issuance date on or after May 1, 2018.
• GreenFinanceSF (commercial PACE financing): Commercial entities in San Fransisco can apply for a solar loan of up to 100% financing and repayments through installments added to their property taxes.
• San Diego Green Building Program: San Diego’s Planning and Services Department offers to reduce the city’s planning and building permit fees by 7.5% if you include solar panel installation or other energy efficiency upgrades in a home renovation
• Self-Generation Incentive Program (SGIP): Though not directly meant for solar panels, the SGIP is offered by the California Public Utilities Commission (CPUC) to homeowners and businesses that install battery storage systems. The incentive is in the form of a direct rebate and the value depends on the battery size and time of application.
• Equity Resilience Incentives: California offers the equity resilience incentive in conjunction with the SGIP. The incentive provides a rebate of up to $1,000 per kilowatt-hour to low-income households, homes in high-risk fire areas or homes that have experienced two or more Public Safety Power Shutoffs (PSPS) events.
• Rancho Mirage Energy Authority (RMEA) Residential Solar Rebate Program: RMEA offers a one-time solar rebate of $500 to customers who install a new residential solar system or expand an existing solar array with a permit issuance date on or after May 1, 2018.
• GreenFinanceSF (commercial PACE financing): Commercial entities in San Fransisco can apply for a solar loan of up to 100% financing and repayments through installments added to their property taxes.
• San Diego Green Building Program: San Diego’s Planning and Services Department offers to reduce the city’s planning and building permit fees by 7.5% if you include solar panel installation or other energy efficiency upgrades in a home renovation.

California residents have a staggering 2,380 solar companies to choose from when going solar. Such a high number can make it difficult to find the right solar installer for your home. Based on our in-depth research, detailed consumer surveys and analysis of customer reviews, we selected the following providers as California’s best solar companies.

Before making a final decision, we recommend requesting solar quotes from at least three installers and comparing features such as price, equipment, warranties and company reputation.

California’s ample sunshine, growing solar potential and pro-solar policies make investing in solar worth it in most cases. At $2.51 per watt, Californians also enjoy a lower average cost of solar compared to the national average. Moreover, California electricity rates are nearly double the national average — allowing homeowners to save money on energy bills by going solar.

Homeowners can typically save tens of thousands on electricity costs over the average system lifespan of 25 to 30 years. Plus, Californians have access to some of the best solar companies — such as SunPower, ADT and Sunrun — that install leading residential solar panels with lengthy system warranties. California solar buyers can also enjoy other benefits such as solar incentives, increased property value, a lower carbon footprint through clean energy generation and resilience against power outages.

We conducted in-depth research and analyzed several factors when determining our cost data, including:

• Conducting surveys: In March 2023, we polled 1,000 homeowners with a photovoltaic system on the cost of their residential solar panels, then compared the average price by system size and installer.
• Researching reliable sources: We gathered information from reliable solar sources like the Solar Energy Industries Administration (SEIA), the National Renewable Energy Laboratory (NREL) and Energy Information Administration (EIA) to assess the national average cost of solar panels, as well as the cost of electricity and solar power systems by state.
• Consulting experts: We spoke with experts like Jesse Solomon, the co-founder of NCSolarNow, to understand the costs of going solar for both customers and installation companies.

Aniket Bhor is a solar engineer who has spent nearly a decade studying and working in the solar power sector in the European, Asian and North American markets. He is a climate enthusiast and avid cyclist, and he also loves to lose himself in books and cooking.

Tori Addison is an editor who has worked in the digital marketing industry for over five years. Her experience includes communications and marketing work in the nonprofit, governmental and academic sectors. A journalist by trade, she started her career covering politics and news in New York’s Hudson Valley. Her work included coverage of local and state budgets, federal financial regulations and health care legislation.