The average cost for home solar in California was around $25,000 in 2021/22. The average system size though, was 6.59 kW. For many California homeowners, a smaller system can easily meet 100 percent of household electricity needs. If your California home is energy efficient, going solar could cost as little as $16,000 gross or just under $10,000 with rebates and tax incentives! And thanks to the very high cost of electricity in California, your solar payback period could be less than 5 years!
California accounted for more than half of the 2.8 million home solar systems installed in the U.S. in 2021. Solar is big business here, and for good reason. Residents have faced high electricity costs, blackouts, and brownouts for many years, with many homeowners looking to secure energy independence and avoid further rate hikes.
As in other states in the U.S., the cost of solar (per Watt installed) is higher than online quote marketplaces would have you believe. The good news for the Golden State, though, is that homeowners may be just fine installing smaller rooftop arrays than the 5 kW model used for most online quotes.
To figure out that true cost of solar in California, I dug into the data for real-life installations in 2021 and 2022, courtesy of California Distributed Generation Statistics. I also factored in data from the Lawrence Berkeley National Laboratory (LBNL) Tracking the Sun report, which offers data for 2021.
To help homeowners figure out if home solar makes sense for them, I also look at how big an array most Californians will need and what the solar payback period might look like depending on inflation, rebates, tax incentives, and other factors.
Looking for information about the cost of solar in your California town or city? Check out the guides below:
The cost of home solar in California
As in most other states, California utilities provide data on interconnected residential solar systems to the Lawrence Berkeley National Laboratory (LBNL). Unlike in most other states, however, California also offers a wealth of data through its California Distributed Generation Statistics portal.
Using the data from these sources, along with the National Renewable Energy Laboratories estimated cost of solar in the U.S., we predict that Californian homeowners will pay around $3.84 per Watt for home solar in 2023. For a 4.24 kW array, this works out to just over $16,288 to go solar in the Golden State.
| Cost per Watt | Cost for 5 kW system | Cost for 6.56 kW system | Cost for 4.24 kW system | |
| Online quote marketplaces | $ 2.86 | $14,300.00 | $18,761.60 | $12,126.40 |
| LBNL mean average 2021 | $ 3.62 | $18,100.00 | $23,747.20 | $15,348.80 |
| CDGS 2021 average | $ 3.94 | $19,700.00 | $25,846.40 | $16,705.60 |
| CDGS 2022 average | $ 4.15 | $20,750.00 | $27,224.00 | $17,596.00 |
| Weighted average and Leafscore prediction for 2023 | $ 3.84 | $19,208.22 | $25,201.19 | $16,288.57 |
Interestingly, the true cost of interconnected solar energy systems in California is a lot higher than online quote marketplace estimates. This is both a result of a higher average cost per Watt and a larger average system size. Most online quote marketplaces use a 5 kW model to estimate solar costs but massively underestimate the cost of installing solar.
Why is our predicted total cost of going solar in California lower than the online marketplace quotes and the actual average price of installed systems? That’s because by our calculations most Californian households don’t need to install more than a 4.24 kW system to meet electricity needs.
The cost of solar in California – differences based on utility service area
After digging into the data from CDGS, we noticed some significant differences in the cost of interconnected residential rooftop solar energy systems by utility. For folks whose systems connected to South California Edison (SCE) in 2021, the average cost per Watt was just $3.78 ($3.85 in early 2022). Compare that to Folks serviced by Pacific Gas and Electric, where the cost per Watt was $4.23 in 2021 and $4.48 in early 2022.
For households serviced by San Diego Gas & Electric (SDGE), the average cost was in the middle of PGE and SCE. In 2021, the cost per Watt was $3.80 and in early 2022 this had risen to $4.11 per Watt installed.
| PGE 2022 | $ 4.48 | $22,400.00 | $29,388.80 | $18,995.20 |
| PGE 2021 | $ 4.23 | $21,173.35 | $27,779.43 | $17,955.00 |
| SCE 2022 | $ 3.85 | $19,250.00 | $25,256.00 | $16,324.00 |
| SCE 2021 | $ 3.78 | $18,900.00 | $24,796.80 | $16,027.20 |
| SDGE 2022 | $ 4.11 | $20,550.00 | $26,961.60 | $17,426.40 |
| SDGE 2021 | $ 3.80 | $19,000.00 | $24,928.00 | $16,112.00 |
It’s hard to tell why there are these price difference between utility service areas. Chances are that customers simply pay more to go solar in some Californian cities and towns than elsewhere in the state. Thanks to all this lovely data from CDGS and LBNL, we can actually dig into the differences in cost for solar according to city. That’s why we’ve put together the following city guides to help homeowners feel more informed when choosing solar at home:
- The cost of solar in San Diego
- The cost of solar in San Francisco
- The cost of solar in San Luis Obispo
- The cost of solar in Oakland
- The cost of solar in Santa Barbara County
- The cost of solar in San Jose.
Watch for more city guides coming soon!
How big a solar array do you need in California?
While Californians pay some of the highest costs per kWh in the U.S., they rank around 15th for household spending on electricity. This is because Californians use a lot less energy to heat and cool their homes than in many other places in the U.S.
According to the Energy Information Administration (EIA), the average California household consumes 572 kWh monthly. This works out to just 6,864 kWh of electricity a year (the 2021 average). In contrast, the average household across the U.S. consumes around 11,000 kWh annually.
To produce those 6,864 kWh from a solar array, homeowners in California are looking at a rooftop system sized at just 4.24 kW (according to the SunWatts calculator). This is significantly smaller than is needed in most other states, meaning the cost of home solar in California is also a lot lower here than elsewhere. This size of system would, all being well, meet 100 percent of a household’s electricity demand.
The true size of home solar systems in California
According to data from CDGS and LBNL , the average size of home solar systems installed in California is about 50 percent larger than the SunWatts calculator suggests is necessary. In 2021, the mean average size of interconnected systems was 6.59 kW, according to the LBNL dataset.
We can see the same in the CDGS data: in 2021, customers installed systems averaging 6.55 kW; in 2022, systems average 7.06 kW in size. The data for 2022 installation interconnected with Pacific Gas and Electric (PGE) shows an average installation size of 8.01 kW.
All of this suggests that Californians are not only embracing solar energy with enthusiasm, they’re also sizing their home solar arrays quite generously. This may be because homeowners going solar have higher electricity demands due to larger than average homes, energy-hungry appliances, and luxury items like hot tubs or home cinemas.
Interestingly, however, the LBNL’s Residential Solar-Adopter Income and Demographic Trends report found that of the nearly 1.5 million California households that installed solar in 2021, a good third were were working- and middle-class families. This means the household annual income ranged from $50,000 to $100,000. Just 12% of the households that went solar in 2021 in California had annual incomes above $250,000.
Given this analysis, it seems more likely that homeowners who are going solar in California may be doing so to offset high utility bills resulting from less energy efficient homes that use more energy for heating and cooling. Indeed, thanks to the DAC-SASH program, low-income families can get free or low-cost solar installed in California. If energy efficiency upgrades aren’t being done first, this would explain why many systems are larger than seems necessary at first glance.
Lowering the cost of solar in California – tax credits, incentives, and tax exemptions
California has gone solar in a big way, and the state offers several financial incentives to make solar more affordable. This includes a state tax credit up to $1,000 that can be applied to solar battery storage. There are additional solar storage rebates available, giving homeowners potentially thousands of dollars back on battery storage.
Californians can also help reduce ongoing costs thanks to a state property tax exemption and net metering (though this is less generous than previously).
Finally, there’s the 30 percent federal solar tax credit. This applies after all other rebates and incentives and can reduce the total cost of the solar energy system, including battery storage.
Find out more about California solar incentives.
How much does electricity cost in California?
Californians pay some of the highest prices for electricity in the country. The Energy Information Administration cites an average cost of 26.14 cents per kilowatt hour for residential electricity in California in November 2022. This is up from an average 22.82 c/kWh in 2021 – a 5% increase.
The good news is that Californian households tend to use less electricity than elsewhere in the U.S. – quite a bit less, in fact! While the average U.S. household consumes around 11,000 kWh annually, Californians average about 6,500-7,000 kWh each year.
Assuming a homeowner uses 6,864 kWh of electricity a year (the 2021 average), they might expect to pay an annual electric utility bill of $1,794.25.
How much could you save by going solar in California?
If we assume an average annual electricity bill of around $1,800, a California homeowner who goes solar in 2023 might expect to save about $45,000 in electricity costs over the 25-year warranty of their panels.
Of course, with rising electricity prices each year, the actual cost savings are likely to be much higher. And we have to account for the fact that some home solar systems won’t exactly meet all the electricity demands of a household.
Assuming a solar array is properly sized and meets 100 percent of a household’s electricity needs, and assuming a 2.4% rate of inflation (the historic average for the U.S.), Californian homeowners could see savings more in line with the following:
- $9,412 over 5 years
- $20,010 over 10 years
- $31,941 over 15 years
- $60,527 over 25 years.
The actual inflation rate in February 2023, however, is 6.5%. And the price of electricity in California increased 5% between 2021 and 2022. Assuming a 6.5% rate of inflation sticks around, homeowners who go solar might stand to save:
- $10,216 over five years
- $24,212 over 10 years
- $43,389 over 15 years
- $100,855 over 25 years.
With savings potential of more than $100,000, going solar in California seems like an easy choice. And with the option of installing a smaller than average system, thanks to a good amount of sun in the state, homeowners in California can enjoy a very short solar payback period indeed.
Find a Solar Energy partner near you.
Putting it all together – Your solar payback period in California
Californias, like Texans, pay a lot for electricity. Unlike Texans, however, Californians use very little electricity. On the face of it, this suggest the solar payback period would be longer for most Californians than most Texans. However, because California gets so much sun, homeowners here can install much smaller systems at a lower cost.
The upshot, then, is that California homeowners are likely to have a very short solar payback period, meaning many more years of free electricity!
We crunch some numbers below to offer a snapshot of what the solar payback period in California might look like based on different array sizes, inflation rates, and eligibility for the federal solar tax credit and other solar incentives.
Assuming a 2.4% inflation rate, an average sized array and average energy use and costs
Gross cost of a 6.56 kW solar array = $3.86/Watt x 5,000 = $25,201
State rebates (average): $2,500
Subtotal: $22,690
Federal tax credit of 30% = $6,807
Net cost of solar = $15,883
Cost of electricity = $0.2614 per kWh
Average electricity use= 6,864 kWh per year
Estimated cost of electricity for first 8 years = $15,619
Eight-year savings (assuming array meets 100% of electricity needs) = $15,619
Solar payback period = Just over 8 years.
Assuming a 6.5% increase in electricity costs each year and average electricity use
Gross cost of a 6.56 kW solar array = $3.86/Watt x 5,000 = $25,201
State rebates (average): $2,500
Subtotal: $22,690
Federal tax credit of 30% = $6,807
Net cost of solar = $15,883
Cost of electricity = $0.2614 per kWh
Average electricity use= 6,864 kWh per year
Estimated cost of electricity for first 7 years = $15,292
Seven-year savings (assuming array meets 100% of electricity needs) = $15,292
Solar payback period = Just over 7 years.
Assuming a 2.4% inflation rate and average energy use and costs but a smaller array
Gross cost of a 4.24 kW solar array = $3.84/Watt x 4,240 kW = $16,282
Utility rebate (average): $2,000
Subtotal: $14,282
Federal tax credit of 30% = $4,284
Net cost of solar = $9,997
Cost of electricity = $0.2614 per kWh
Average electricity use= 6,864 kWh per year
Estimated cost of electricity for first 5 years = $9,412
Five-year savings (assuming array meets 100% of electricity needs) = $9,412
Solar payback period = just over 5 years!
Assuming a 6.5% inflation rate and average energy use and costs but a smaller array
Gross cost of a 4.24 kW solar array = $3.84/Watt x 4,240 kW = $16,282
Utility rebate (average): $2,000
Subtotal: $14,282
Federal tax credit of 30% = $4,284
Net cost of solar = $9,997
Cost of electricity = $0.2614 per kWh
Average electricity use= 6,864 kWh per year
Estimated cost of electricity for first 5 years = $10,216
Five-year savings (assuming array meets 100% of electricity needs) = $10,216
Solar payback period = less than 5 years!
Assuming a 2.4% inflation rate, average energy use and costs, a smaller array, but no rebates or tax credits
Gross cost of a 4.24 kW solar array = $3.84/Watt x 4,240 kW = $16,282
Net cost of solar = $16,282
Cost of electricity = $0.2614 per kWh
Average electricity use= 6,864 kWh per year
Estimated cost of electricity for first 8 years = $15,619
Eight-year savings (assuming array meets 100% of electricity needs) = $15,619
Solar payback period = just over 8 years.
Assuming a 6.5% inflation rate, average energy use and costs, no rebates, and a smaller array
Gross cost of a 4.24 kW solar array = $3.84/Watt x 4,240 kW = $16,282
Net cost of solar = $16,282
Cost of electricity = $0.2614 per kWh
Average electricity use= 6,864 kWh per year
Estimated cost of electricity for first 7 years = $15,292
Seven-year savings (assuming array meets 100% of electricity needs) = $15,292
Solar payback period = just over 7 years!
There we have it – even without the federal tax credit and other rebates, most California homeowners can expect to pay back the cost of their solar installation in just over 8 years thanks to savings on their utility bills! Install a smaller array than average, qualify for rebates and tax credits, and your solar payback period in California could be under 5 years!
Final thoughts on the cost of going solar in California
California is the Golden State and there’s certainly plenty of sun to be had here. That, coupled with a high price for residential electricity, makes going solar at home a smart move for most Californians. The state boasts some good financial incentives for home solar and there are thousands of solar installation professionals ready and waiting to help get those panels up on the roof.
Having run the numbers for the cost of solar and required array size, California is a very inexpensive place to install a rooftop system and battery storage. And with high utility bills, Californian households can expect to balance out savings with the initial cost of installation in less than five years in some cases. Even without rebates and tax credits, most homeowners have a solar payback period of eight years or less.
This means Californians who go solar in 2023 could be generating truly free electricity on their rooftop by 2027. With a 25-year warranty fairly standard for solar these days, this gives homeowners more than 20 years of free electricity and massive savings on utility bills.
Home solar also helps protect against rate hikes and brownouts and blackouts, depending on the system design. By generating clean, green energy, rooftop arrays also help make the California air cleaner for everyone.
* We use the LBNL’s Tracking the Sun report for 2021 along with data from CDGS. We also factor in the National Renewable Energy Laboratory (NREL) forecasts for the price of solar in 2023. Note, though, that the NREL gave a figure of $2.95 per Watt (DC) as the modeled market price (MMP) for the U.S. as a whole in 2022. This has worked out to be significantly lower than the cost of real-life installations in early 2022, despite being higher than most online solar quotes.