How Much Do Solar Panels Cost In Los Angeles?

The cost of installing solar panels in Los Angeles, California can vary greatly depending on the size of the system, types of panels, permitting fees, and installation costs. However, Los Angeles has abundant sunshine and high electricity rates that make solar a cost-effective home improvement for many homeowners.

In this article we will examine the average costs of solar panels in Los Angeles, factors that impact the price, upfront versus long-term costs, cost differences based on system size, financing options available, federal and state incentives that reduce costs, the return on investment over the lifespan of the system, and recent trends showing decreasing prices for solar panels in the LA area.

Understanding these key aspects will allow Los Angeles residents to evaluate if solar panels make financial sense for their home and budget. We will provide objective, well-researched information to inform this decision, utilizing data and insights from leading installers and experts in the Los Angeles solar market. The goal is to empower homeowners to make the choice that is right for their unique situation.

Average Cost of Solar Panels in LA

The average cost of solar panels in Los Angeles is approximately $2.89 per watt as of February 2024, according to EnergySage. This means that for a typical 5 kW residential solar system, the total cost would be around $14,450 before incentives.

Compared to the national average cost of $2.77 per watt, Los Angeles is slightly higher. This could be attributed to higher labor and permitting costs in the LA market. However, costs can vary significantly depending on the specific solar company, system size, roof type, and other factors. It’s recommended to get multiple quotes to find the best solar panel price for your home.

Factors Affecting Solar Panel Cost

There are several key factors that impact the cost of installing solar panels in Los Angeles:

Panel efficiency – More efficient panels produce more energy but generally have a higher per watt cost. Typical residential panels are around 15-22% efficient. Higher efficiency panels like SunPower at 22% are more expensive but require fewer panels for the same output. According to Energysage.com, high efficiency SunPower systems cost around 10-20% more than average systems in Los Angeles [1].

Roof type/angle/shade – Panels produce the most energy when pointed directly at the sun. Panels on flat roofs or shaded areas will produce less and may require additional panels or mounting equipment, increasing costs. According to SolarReviews.com, complex roofs in Los Angeles with multiple angles/orientations can add $2,000-$4,000 in extra costs [3].

Permitting fees – Most solar installations in Los Angeles require building permits from the city. Permit costs are based on system size and can range from $200 for small systems up to $1,000+ for large systems, adding to the overall cost [2].

Upfront vs Long-Term Costs

The upfront cost of solar panels includes the price of the solar equipment and installation fees which can range from $2.50-$4.50 per watt in Los Angeles^[1]. For example, a 5kW solar system would initially cost approximately $12,500-$22,500 in upfront costs. However, over the 25+ year lifetime of a solar system, homeowners can save $15,000-$30,000 in electricity costs^[2].

When accounting for the lifetime electricity savings, solar panels in LA provide a return on investment between 150-200%^[3]. While solar requires significant upfront costs, the investment pays for itself through decades of drastically reduced electricity bills.

^[1] https://www.energysage.com/local-data/solar-panel-cost/ca/los-angeles-county/los-angeles/
^[2] https://www.ecowatch.com/solar/panel-cost/ca/los-angeles
^[3] https://www.forbes.com/home-improvement/solar/solar-panel-costs-california/

Cost by System Size

The size of the solar panel system has a significant impact on the overall cost. Here’s a breakdown of estimated costs for common system sizes in Los Angeles:

5 kW system: $10,000 – $15,000 (Source)

7 kW system: $14,000 – $20,000 (Source)

10 kW system: $25,000 – $35,000 (Source)

As you can see, larger solar systems come with a higher upfront cost. However, the cost per watt often decreases for larger systems. Larger systems will also produce more energy and potentially maximize your long-term savings.

Financing Options

There are several financing options available to Los Angeles homeowners looking to go solar, including:

Cash Purchase

Paying the full upfront cost is the most straightforward option. While expensive initially, purchasing solar panels with cash means you immediately own the system and get all the long-term savings.[1]

Loans

Banks and credit unions offer solar loans with interest rates as low as 3-4%. Loans allow you to pay over time while immediately benefiting from lower energy bills. However, you also pay interest costs.[1]

PACE Financing

With PACE financing, you pay an assessment on your property tax bill over 15-20 years. It allows for $0 down and spreads costs over a long term. But it also comes with higher interest rates.[1]

Leasing

Leasing involves low or no upfront costs and a fixed monthly payment. However, you don’t own the system so you miss out on incentives and full savings. Leasing is less common than purchasing.[1]

Federal and State Incentives

There are several incentives at the federal and state level that can reduce the cost of going solar in California. The main incentives are federal and state tax credits, rebates, and net metering savings.

The federal solar tax credit allows homeowners to deduct 26% of the cost of installing a solar energy system from their federal taxes through 2032. There is no cap on the amount that can be claimed. California also has a state tax credit equal to 15% of the cost, up to $2,000 [1].

California offers rebates through the California Solar Initiative (CSI) program, which provides cash back per watt of solar capacity installed. Rebates vary by utility provider and region. The CSI program has paid out over $3 billion in rebates since 2007 [2].

Net metering in California also helps lower the effective cost of solar. Net metering allows solar customers to get credit for excess electricity sent back to the grid. This credit offsets the cost of electricity drawn from the grid when solar isn’t producing.

Return on Investment

When calculating return on investment for solar panels in Los Angeles, the most important factor is how long it takes for the energy savings to pay back the upfront cost of the system. This is known as the ‘payback period’ or ‘break-even point’.

According to research, the average payback period for residential solar panels in LA is around 7-8 years (source). However, this can vary greatly based on system size, electricity costs, and available incentives.

For example, smaller systems of 3-5 kW may take 10+ years to break even, while larger 10 kW+ systems could pay back in under 5 years. Households with high electricity bills will also recoup their investment faster.

Federal and state tax credits can shave 1-4 years off the payback period as well. Overall, most solar panel systems in LA provide a good return on investment over their 25-30 year lifespan.

Recent Cost Trends

Solar panel prices have dropped significantly over the past decade. According to a 2021 report from the National Renewable Energy Laboratory (NREL), median installed prices for residential solar systems in Los Angeles fell by 51% from 2010 to 2020 ^[1]. This downward trend is driven by improvements in solar panel technology, manufacturing efficiency, and market competition.

In 2010, the median price for a residential solar system in LA was $8.10 per watt. By 2020, that figure had dropped to $3.99 per watt. For a typical 5 kW system, that’s a difference of over $20,000 between 2010 and 2020. Experts predict solar prices will continue to decrease gradually in the years ahead as adoption spreads and technology advances further ^[2].

Falling prices combined with federal tax credits, state rebates, and net metering policies have made going solar much more affordable for Los Angeles homeowners and businesses over the past decade. This trend has enabled wider adoption of solar power across the region.

Conclusion

In summary, installing solar panels in Los Angeles can cost anywhere from $15,000 to $35,000 depending on system size, roof type, and other factors. While the upfront cost may seem high, federal tax credits, state rebates, and long-term energy savings make solar a wise investment for many LA homeowners. As technology improves and demand rises, solar costs are projected to continue falling. With abundant sunshine and policy support, LA remains one of the best markets for solar energy. The decision to go solar is a major one, but can pay off for decades through lower utility bills and energy independence.