With well over one million solar installations throughout the state, California has long been a leader in the U.S. solar industry. Recent legislation mandating that all new homes in the state must be built with solar panels likely leaves residents wondering about the cost of solar panels in California.

With ample sunshine, unnaturally high energy costs, ambitious climate goals and progressive leadership, California is ripe with solar potential. The preexisting availability of local solar providers in California allows solar customers the valuable opportunity to gather a large number of competing quotes, sometimes generating several thousand dollars worth of savings in the process.

You can start getting free, no-obligation quotes from top solar companies in your area by filling out the form below.

How Much Do Solar Panels Cost in California?

As of 2021, our market research and data from top brands shows the average cost of solar panels in California is around $2.73 per watt. This means a 5-kW system would cost around $10,101 after the federal solar tax credit is applied.

Here's how that price looks when applied to other system sizes:

It may surprise some readers that the cost of solar in California isn't as low as in many other states, but keep in mind that the real value of solar comes relative to the price of energy in the state (and California's is the highest in the country). All in all, solar energy provides excellent value to California residents.

Knowing the average solar panel cost in California is $2.73 per watt, a savvy solar customer can compare quotes against this figure to ensure they receive the best value possible. You may find that popular national brands don't have the lowest prices.

What Determines Solar Panel Prices?

The cost of solar panel installations in California largely depends on a homeowner's location and energy needs. In most cases, areas with higher local electricity rates offer more value from solar panels. Here are other factors that influence installation costs.

Solar Equipment Costs

Similar to most modern technology, solar products and system costs vary greatly based on their quality, scale and included features. Some customers may be satisfied with a modest array of affordable solar panels and inverters, while others may prefer a system with premium panels, full-home backup power and an electric vehicle charger.

Solar Financing

The overall cost of solar depends significantly on whether a customer chooses to finance or purchase their system in cash. Paying upfront provides the best return on investment and fastest solar panel payback period, as there are no fees or interest charges associated with it.

The two most common solar financing options include taking out a loan and leasing solar panels. If paying with a solar loan, be careful of high interest rates and early repayment penalties and other fees. Homeowners who lease their panels or sign power purchase agreements (PPAs) enjoy little to no upfront costs, but solar leases provide the least amount of overall value.

Solar Installation Costs

With nearly 2,500 solar companies throughout California, prices can range significantly based on the installer. Larger solar providers like Sunrun offer the advantage of solar leases and quick installations. Local providers looking to get a leg up on their competition may offer lower prices to undercut the biggest names in the industry.

Solar Panel Cost After Incentives, Rebates and Tax Credits

California's progressive leadership has done good work in spurring investment in renewable energy. All homeowners are eligible for the federal solar tax credit, and the state offers several incentive programs and solar rebates aimed at further increasing access to reliable, affordable solar panels. However, given the state's ambitious climate targets and the energy burden on most of its population, it could probably do more.

Let's take a closer look at the solar incentives available to California residents.

Federal Solar Tax Credit

All California residents are eligible for the federal solar investment tax credit, or ITC, for installing PV solar panels and any other eligible solar equipment. Any reputable solar installer will assist in the process of claiming the ITC on your federal tax returns. Claiming the ITC deducts 26% of the total cost of your solar installation from the taxes you owe.

To be eligible for the solar tax credit, homeowners must own the solar energy system, either having paid for it in cash or by taking out a solar loan. Homeowners who lease solar panels are not eligible to claim the ITC.

California Net Metering Programs

Net energy metering (NEM), or net metering, allows customers to feed the surplus energy generated by their solar panels back to their local power grid in exchange for energy credits from their utility company. As most solar energy systems generate more energy than can be used during the day, this incentive provides homeowners additional savings on their electricity bills and lowers the demand for grid-supplied electricity in the region.

California currently offers a statewide net metering incentive for residents generating electricity with solar panels. Exact credit values will vary based on your utility company.

California Solar Tax Incentives and Rebate Programs

There are also a handful of California solar incentives to help lower the cost of solar for residents. Some of these include rebates, loans and property tax exemptions. Though any quality solar company will be knowledgeable about the local incentives in your area, it's always worth doing some independent research. We recommend using the DSIRE solar incentive database to find money-saving opportunities in your area.

FAQ: Average Cost of Solar Panels in California

Is it worth going solar in California?

One of the sunniest climates in the country makes California one of the best states in the U.S. for generating energy with solar power. The ample sunshine, generous net metering policies and pre-existing availability of solar installers provide a great deal of value for solar customers in California.

How much does it cost to install solar panels in California?

As of 2021, the average cost of solar panels in California is $2.73 per watt. This means a 5-kW system would cost around $10,100 after the solar tax credit. Heavy investment in renewable energy has lowered the cost of solar in the state significantly, and this cost offers great value relative to high local energy prices. The best way to assess how much solar would cost you is to consult local providers near you for free estimates.

Do solar panels increase home value in California?

Solar panels increase home value everywhere, but mostly in areas with generous net metering policies and solar rebates. As such, the areas in California where solar panels increase home value the most correspond with the areas that have the most solar-friendly policies. It's worth noting that even if your home's value increases, California has laws in place to ensure your property taxes don't rise as the result of a solar installation.

How much do solar panels cost for a 2,500-square-foot house?

Though knowing the size of a house is helpful in determining how many solar panels could fit on its roof, the energy use of the house is a more important factor in determining solar panel cost in California. The higher the energy costs in your home, the greater your cost of solar will be.

Karsten Neumeister is a writer and renewable energy specialist with a background in writing and the humanities. Before joining EcoWatch, Karsten worked in the energy sector of New Orleans, focusing on renewable energy policy and technology. A lover of music and the outdoors, Karsten might be found rock climbing, canoeing or writing songs when away from the workplace.