Solar is more affordable than ever, and with electricity rates continuing to climb in California, investing in solar now can save you a lot of money down the line.
But residential solar panels are still an investment, and your costs can vary depending on many factors.
Here’s what you need to know about solar panel costs in California and what you can do to save.
Average Cost of Solar Panels in California for 2025
The average solar panel installation cost for 2025 is about $3.30 per watt. Most homes need between 5 kW and 10 kW of solar power, which translates to about $16,500-$33,000 before factoring in incentives like the 30% federal solar tax credit.
|
System Size |
Estimated Cost |
Estimated Cost with 30% Tax Credit |
|
5 kW |
$16,500 |
$11,550 |
|
8 kW |
$26,400 |
$18,480 |
|
10 kW |
$33,000 |
$23,100 |
Save on Solar Panel Costs with Tax Credits & Incentives
Solar panels are an investment. But you can bring the price down quite a bit by taking advantage of incentives.
Solar Tax Credit
Residential solar panels are eligible for a 30% federal income tax credit. With the tax credit, you’ll get 30% of your installation costs back in tax savings as soon as you file your taxes for the year you install your solar panels. This brings down your costs, which means you’ll break even faster.
Congress May End the Solar Tax Credit By the End of This Year
A new bill proposed by the House Ways and Means Committee threatens to kill the federal solar tax credit for residential solar panels. If it passes, solar panels and battery storage systems will become significantly more expensive. Don’t miss your chance—find a contractor and start your solar installation today.
Solar Energy Property Tax Exclusion
When you install solar panels in California, it won’t affect your property taxes thanks to the Active Solar Energy System Exclusion. But this incentive is going away soon! It will sunset on January 1, 2027.
How to Pay for Solar Panels: Financing Options
There are three ways to pay for a home solar installation:
1. Cash Payment
Paying for your solar system upfront delivers the highest long-term savings and fastest return on investment. You won’t have to pay interest or fees, and you’ll qualify for the 30% solar tax credit. This is the best option if you have the funds and want to maximize value.
2. Solar Loan
A solar loan allows you to finance your system with little or no money down. You’ll still own the system and qualify for the tax credit, but you’ll make monthly payments over time, similar to a car loan. Many homeowners find that their loan payments are lower than their previous electric bills, making solar cash-flow positive from the start.
3. Solar Lease / Power Purchase Agreement
With a lease or PPA, a third party owns the system, and you pay a monthly fee to use the solar energy it produces. There’s usually no upfront cost, but you won’t own the system or be eligible for tax credits, and the long-term savings are usually lower.
What Affects the Cost of Solar Panels?
Researching average solar panel installation costs is a good place to start when you’re thinking about going solar. It gives you an idea of what you can expect, but take these estimates with a grain of salt. Solar installation costs can vary significantly from one home to another depending on many factors, including:
- Electricity Usage - Bigger houses that use more electricity will need a larger system, increasing the cost.
- Equipment Type - Solar panels, inverters, and racking systems vary in quality depending on the brand and model. Higher-quality equipment will cost more but is also likely to perform better and last longer.
- Electrical System - Older homes may need panel upgrades or electrical work to support solar, which can add to installation costs.
- Installation - Complex roof designs, steep pitches, or ground-mount systems typically require more labor and materials, increasing the price.
- Incentives - Rebates, tax credits, and local utility incentives can significantly reduce your upfront costs and improve your return on investment.
The best way to find out how much solar panels will cost for your home is with a personalized estimate from a reputable contractor.
Find a Solar Installer You Can Trust in California
The Clean Energy Connection makes it easy to find trustworthy solar contractors near you in California. Our free directory connects California homeowners with the best clean energy contractors in the state. Every contractor listed has passed our rigorous verification process, which includes regular license checks and customer satisfaction surveys.
The Clean Energy Connection is funded by the non-profit, Efficiency First California. Contractors can’t pay to be listed; they must pass our vetting process, and we have no financial stake in who you choose.