Top Market for Solar Energy
When it comes to solar energy, California is leading the charge.
According to SolarNation, California is the top market in the U.S. for solar energy with over 240,000 solar projects launched within the state in recent times, generating a total of 2,339 megawatts of electricity.
So, what is the secret to the Golden State’s success?
#1 – Local Government Incentives
California residents are eligible for a number of tax credits and rebates for installing a solar power system on their home. One of the biggest benefits is that the total value of the system is not counted on the homeowner’s property tax assessment each year.
Different cities within the state offer different rebate programs and all California homeowners also benefit from the Renewables Portfolio Standard (RPS), the most aggressive renewable energy standard in the US. Under RPS, utilities must source 33% of the energy they distribute from renewable sources by 2020.
#2 – Flexible Financing Options
When investing in a residential solar energy system, the two primary expenses are the cost of the panels themselves and the installation. There are many different options when it comes to paying for the system.
In California, consumers have the option to lease a solar power system for zero money down through a pre-paid solar lease or Power Purchase Agreement (PPA), which makes it easy to get started without a lot of upfront costs. Solar PPAs allow developers to install a solar panel system on your roof. The agreement typically lasts between 15 and 18 years.
As the homeowner, you don’t own the system outright, so you won’t benefit from any potential rebates or tax credits, but you will be directly purchasing energy from the owner of the system at a cheaper rate than what you could get through the utility company.
Other solar leases usually last 20-25 years and enable consumers to start reducing their monthly bill immediately while paying a fixed lease payment each month. At the end of the lease, you have the option to purchase the system.
#3 – Big Savings
According to a recent study by the Clean Energy Technology Center at NC State University, five of the top 10 “best cities to go solar” in terms of value are found in California with San Jose leading the pack at #4. (Los Angeles #7, San Diego #8, Oakland #9 and San Francisco #10.)
See the top 50 cities here.
According to the study, the average utility savings per month in California with a solar energy system is around $148.
#4 – Net Metering
California participates in net metering, which can also offer homeowners big savings with their home’s solar energy system.
Through net metering, any surplus electricity that the solar power system generates can be sold back to the energy grid each month to earn a credit from the utility provider. The utility company is required to pay the full retail price for the surplus energy.
Homeowners are awarded the credit once a year or can apply the credit to their city or county tax bill.
California has given residents many incentives to “go solar.” According to SolarNation, the average homeowner switching to solar power in the greater Los Angeles area, for example, could use the various rebates, tax breaks and incentives to pay about $11,000 – or half of the original $20,000 quote – for a 5KW solar system.
The initial retail cost of a residential system is about $20,000. The local Los Angeles rebate on the system is about $4,000. The federal solar tax credit is currently 30%, enabling homeowners to deduct almost $5,000.
The total return on investment is estimated at around nine years. During that time, the property value increases, but the homeowner is not taxed for the increase in home value due to the new solar system.
For a state burdened with some of the highest electricity prices in the country, California is making it easier for residents to make the switch to solar energy.