California is among the best states in the United States of America to have solar panels installed. It can be attributed to the abundant sunshine all year round, the expensive electricity rates, the 30% federal solar credit, and the State’s net metering (NEM).
Are Solar Panels Worthy Investments?
The installation of solar panels offers homeowners excellent returns on their homes and results in monthly electricity bills and environmental savings. Regrettably, most homeowners, particularly those on a tight budget, do not have the substantial upfront money needed to reap the benefits of solar panels.
Although the cost of installing solar panels and the labor involved is considered expensive in California, compared to other states across the country, switching to solar energy remains a worthwhile investment.
Benefits of Solar Panels Installation
For most homeowners, investing in solar panels is not very profitable given the benefits they provide, especially in the long term. Below are some of the benefits of installing solar panels;
Cheaper Power Supply
For most homeowners, this is the main reason to opt for a solar installation. Solar panels cut the amount of money going to utility companies, increasing monthly savings on electricity bills.
Enormous Environmental Savings
Solar panels produce clean power from natural energy. The availability of high levels of sunshine almost year-round makes California the ideal place for homeowners to take advantage of solar panels to produce their own clean energy.
High Return On Investment (ROI)
In addition to the fact that solar panels have a long lifespan and often require minimal maintenance, they offer a massive return on investment.
For example, if your electricity bills savings every month amounts to $120, it will take you about 12 years to reach the break-even point for your investment in solar panels, but since utility rates are still rising, your monthly savings will continue to increase over time. This ensures an even shorter payback period before you begin to take full advantage of the benefits of pure and free power supply throughout the lifetime of your solar panel system.
The Cost of Solar Panels In California
Currently, the average cost of solar panels per watt in California ranges from $3.42 to $4.42, depending on the size of the system, which ranges from 12 kW to 4 kW, respectively. A typical 6,000-watt (6 kW) solar panel system, the average size of a system in the United States, will cost $24,394 before any local incentive or the federal solar credit of 30% of costs, and $17,076 after the repayment of the solar loan.
However, when installing a solar panel, the size of the system you may need will be different from that of other homes, just as your electricity consumption will be different from that of others.
This difference is the reason why the first step for solar installers is to calculate the size of the solar system that is right for your home using a solar cost calculator. The calculator adapts the data on the cost of the solar energy system to your home by taking your home address and the value of your electricity expenses in the previous month and then calculates the number of kilowatt-hours of electricity you spend per month. So, by eliminating the stress of manually reviewing your last energy consumption bills to calculate how much energy you consume each month.
Once the size of the system is determined by the solar calculator, it then uses its solar irradiation database to find out how many solar panels are needed to power your home. Having the size of the solar system allows you to compare the prices of the solar system, on the exact size of the system, from the different costs of the solar system presented by solar suppliers in your locality.
Options for Financing Solar Panels in California
There are three different ways to pay for solar panels in California. These are:
Pay Cash For Solar Energy
This is an excellent option if you have the money and are not ready to take on the obligations of a new tax credit. Paying cash for solar power cuts allows you to solve problems that may arise as a result of a loan or power purchase agreement (PPA) that is currently being executed. It also gives you full ownership of your system, allowing you to receive all the returns on your investment, such as the 25-year warranty on your solar panels and the federal solar tax credit, which is 30% of your system costs.
Using Loans To Pay For Solar Energy
This solar panel financing option is best suited if you have good credit and a stable income that allows you to claim the full federal solar credit for 30% of the costs.
In this case, your solar installer may offer to finance your system. If you choose the larger installers, you will receive a direct loan from them, while the smaller installers will probably work with a third party to finance your solar system.
These loans are tailored to solar energy buyers; their payments are kept low by requiring early repayment of your tax credit amount. Usually, loans are divided into two; one part is interest-free and covers 15-30% of the cost of your system.
Full payment is due at the end of the first year of ownership, and the other party covers the remaining 70 to 85% of the costs, with interest rates consistent with your credit and spread over the next 10 to 15 years from the date of installation.
PACE (Property Assessed Clean Energy) loans are a much more recent way of financing solar energy systems. They are perfect for those who have equity but imperfect credit. However, interest rates on PACE loans are generally higher than those on other loans, but they are most often tax-deductible.
Power Purchase Agreement (PPA):
This is the best option for those who do not owe federal taxes, such as retirees and people on low fixed incomes.
Under a PPA, the solar company installs the solar system on your house, but you do not own it. You only agree to buy the energy from the panels at a lower price than your current rate. The big problem with the APA is the difficulty of transferring the contract if you decide to move or sell your home before it expires.
Without a doubt, California is the ideal place to install solar panels on your home. The high cost of electricity and abundant sunshine throughout most of the year allow you to realize a return on your investment quickly.