Cost of Going Solar in California

The rate of solar adoption in California continues to grow thanks to its abundant sunshine, high electricity rates, and progressive energy policies. But with the federal Investment Tax Credit (ITC) set to expire at the end of 2025, homeowners intending to install solar systems should know how to maximize their solar expenditure before such incentives disappear.

In 2025, the average cost of a solar installation in California that meets the energy needs of a typical household (about 7.2 kW) is approximately $22,600 before incentives, and $15,820 after applying the 30% federal tax credit. This system size is designed to offset the electricity usage of a single-family home consuming roughly 800–1,000 kWh per month.

However, this pricing is time-sensitive. The ITC, which currently offers a 30% deduction on installation costs, is scheduled to expire on December 31, 2025, under the “One Big Beautiful Bill” signed in July 2025. If no new legislation is passed, homeowners may face a 30% increase in upfront solar power cost starting in 2026.

Solar Cost Basics

Understanding the total cost of a solar installation requires breaking down the components that contribute to the final price tag. These costs fall into two broad categories: hardware costs and solar soft costs. Hardware costs cover the prices of the physical equipment needed for a solar installation while solar soft costs cover labor and permitting fees and other indirect expenses.

Solar Hardware Costs (~40–45% of Total)

Hardware costs cover the amounts paid for the tangible elements of a solar energy system. These components vary in price depending on brand, efficiency, and installation complexity.

• Solar Panels (~21%): Panels are the most visible part of a solar installation. Their prices vary by type. For example, monocrystalline panels are more efficient and expensive than polycrystalline or thin-film options
• Inverters (~7–10%): These devices convert DC electricity from the panels into usable AC power for your home
• Solar Battery Bank (~20–25%): Optional but increasingly essential under California’s NEM 3.0 policy, batteries store excess energy for use during peak hours or outages
• Racking Equipment (~5%): Mounting systems that secure panels to your roof or ground
• Wiring and Electrical Components (~3–5%): Includes conduits, breakers, and other materials needed to safely connect the system

Solar Soft Costs (~55–60% of Total)

Soft costs are less visible but equally important. They reflect the human and administrative effort required to get your system up and running.

• Labor (~20–25%): Skilled technicians are needed for every part of solar adoption from site assessment to final installation
• Permitting and Inspection Fees (~10%): Local governments require permits and inspections to ensure safety and code compliance
• Marketing and Customer Acquisition (~15%): Installers spend heavily to attract customers, and these costs are baked into your quote
• System Design and Engineering (~5%): Custom plans are created based on your roof layout, shading, and energy needs

How Much Do Solar Panels Cost in California in 2025?

Solar panel pricing in California is influenced by panel type, system size, and regional labor rates. As of August 2025, the average cost per watt for the state is $3.14, making solar installations in California slightly more expensive than the national average due to higher labor and permitting costs.

To help homeowners understand what affects solar panel cost, here’s a breakdown by panel type and system size:

The total cost of solar panels also depends on the size of the system:

• Smaller systems (4–5 kW): Ideal for low-usage households; cost-effective but limited savings
• Mid-size systems (6–7.2 kW): Standard for average homes; balances cost and performance
• Large systems (8–10 kW): Suitable for high-consumption homes or those planning EV charging

Average Cost of Solar Batteries in California

Adding battery storage to your solar system is no longer optional in California. Solar energy storage is advised under California’s NEM 3.0 policy, which drastically reduces compensation for excess solar energy sent to the grid. Instead of exporting energy, homeowners now benefit more by storing it and using it during peak pricing hours.

In 2025, the average cost of solar batteries in California is $15,600 before incentives, and about $8,895 after applying the federal tax credit and SGIP rebates.

Several factors influence the cost of solar batteries:

• Battery Type: Lithium-ion batteries are more efficient, more expensive, and longer-lasting than lead-acid alternatives
• Capacity: Measured in kilowatt-hours (kWh), higher capacity means more backup power and higher cost
• Installation Complexity: Retrofitting batteries into existing systems may require additional wiring and labor
• Brand and Warranty: Premium brands offer longer warranties and smart features like app monitoring

How to Lower Solar Cost in California

California residents can take advantage of a mix of federal, state, and local incentives to help reduce the cost of solar panels and solar batteries. These programs can significantly shorten your payback period and increase your return on investment. Below are the most important incentives Californians can use to lower the cost of their solar installations:

• Federal Investment Tax Credit (ITC) – Offers 30% off the total system cost and can help reduce the cost of panels, inverters, and batteries. To enjoy this savings, the solar system must be installed by December 31, 2025
• Self-Generation Incentive Program (SGIP) – Provides rebates of $150–$1,000 per kWh of battery capacity, depending on location and income level
• Property Tax Exclusion – Solar installations are exempt from property tax reassessment until January 1, 2027
• DAC-SASH Program – Offers free or deeply discounted solar installations for income-qualified homeowners in disadvantaged communities
• Local Utility Rebates – Some utilities offer additional rebates or expedited permitting for solar installations (e.g., San Diego’s Green Building Program)

Paying for Solar Installation in California

Choosing the right payment method can make solar more accessible and financially viable. Each option has its own pros and trade-offs, depending on your financial situation and long-term goals. Here’s a breakdown of the most common payment options available to California homeowners:

• Cash Purchase – Best for maximizing long-term savings. You own the system outright, qualify for all incentives, and avoid interest payments. Ideal for homeowners with upfront capital
• Solar Loan – Allows you to finance with little or no down payment. You still own the solar energy system and qualify for tax credits. Monthly payments may be lower than your current utility bill, and terms range from 5 to 20 years
• Solar Lease – A third party owns the solar installation. You pay a fixed monthly fee to use the energy. No upfront cost, but you don’t qualify for tax credits and long-term savings are lower
• Power Purchase Agreement (PPA) – Similar to a lease, but you pay per kWh generated. No ownership or tax benefits, but predictable costs and maintenance are included
• PACE Financing – Property Assessed Clean Energy loans are repaid through your property taxes. Offers long terms (up to 20 years) and is transferable upon sale

How Much Money Can I Save by Going Solar in California?

Solar savings in California are among the highest in the country, thanks to elevated electricity rates (often exceeding $0.30/kWh) and generous incentives. However, under NEM 3.0, savings depend heavily on whether you include battery storage.

Here’s what homeowners can expect:

• Monthly savings: ~$160 for a 5 kW system
• 20-year savings: ~$26,000–$90,000 depending on system size and usage
• Payback period:
  • Without battery: ~9 years
  • With battery: ~8 years

Key factors that determine solar savings include:

• Solar installation size and efficiency
• Local utility rates and time-of-use billing
• Battery integration and discharge strategy
• Roof orientation and shading
• Eligibility for incentives and rebates