If you’re looking to lower your Los Angeles cost of living, you might take a look at your electric bills. With home solar panels you can reduce the amount of electricity you buy from the grid and, in Los Angeles, earn credits back on your bill.
Curious if solar panels make sense for your LA home? Read on to learn what you need to know before going solar.
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Does Solar Make Sense in Los Angeles?
The important question here is whether solar makes sense for you in Los Angeles. To get at that answer, you’ll need to look at how much you currently pay for electricity, how much it’ll cost to go solar, and whether non-monetary matters, like reliability, are important to you.
Price of electricity
California has some of the most expensive electricity in the country, though if you live in LA, you might pay less than other Californians, since the Los Angeles Department of Water and Power (LADWP) generally has lower electricity rates than the state’s big investor-owned utilities.
The state average in 2023, according to the US Energy Information Administration, was 29.51 cents per kilowatt-hour, though the LADWP average rate was 22.99 cents. If you live in the greater Los Angeles area, you might be a customer of Southern California Edison, where the average rate was 32.33 cents per kilowatt-hour.
Average electricity rates aren’t necessarily what you’ll pay year round. Depending on your specific rate, like a time-of-use rate, you might pay more or less throughout the year or day.
Price of solar
The cost of solar panels varies for many reasons. The only way to know the cost of a solar system that fits your needs at your home is to reach out to a reputable solar installer.
Solar panel cost will differ depending on the system’s size, the equipment that makes it up (including any optional batteries), the complexity of your roof, and the local cost of labor and permitting. The Solar Energy Industries Association estimates the average cost of residential solar in the first half of 2024 was $3.24 per watt.
Credit: SEIA
Available sunlight
While available sunlight isn’t the only factor that impacts the value of solar, it’s safe to say LA has enough of it. With an average of 5.25-5.5 peak sun hours per day, solar panels in Los Angeles will generate plenty of electricity.
More important is the sunlight available on your rooftop. If your roof is heavily shaded by trees or nearby buildings, solar panels might not be a good fit (unless you have room for mounting them on a sunny patch of ground).
Outages
While most people have solar installed to save on their electricity bills, there are non-financial reasons to go solar. When paired with a battery, solar panels can keep the lights on during a power outage, by “islanding” your home, or separating it from the grid. (Typically, solar panels are designed to shut down with the grid to protect repair workers.)
According to 2022 data collected by the Energy Information Administration, Californians experienced about 350 minutes of outages. (Some may have experienced more, some less or none at all.) If outages are more than an inconvenience for you or a frequent occurrence, going solar with a battery might be a worthwhile investment.
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Solar Incentives in California
While solar panel prices have been declining for years, they can still be a significant cost. Luckily, there are plenty of incentives to help control that cost and boost savings.
Federal tax credit
Angelenos who pay federal taxes can claim 30% of the cost of an eligible solar panel system as a credit against their tax liability, thanks to the Residential Clean Energy Credit. While you need to pay taxes to take advantage of the credit, if your tax liability is too small, you can roll the unused credit forward to future years. The solar system must be on a house you live in and don’t rent out full time.
The credit is slated to stay at 30% through 2032, before dropping to 26% in 2033 and 22% in 2034.
Credit: SEIA
Net metering
Solar panels generate electricity when the sun shines, whether or not you’re at home to use it. Any electricity you don’t use will go to charge a battery (if you have one) or be sent back to the grid. In Los Angeles, the electricity you send back to the grid will be credited to your LADWP bill under 1-to-1 net metering. Every kilowatt-hour you send to the grid will offset one kilowatt-hour you buy from it.
California’s investor-owned utilities (including Southern California Edison, which serves the area surrounding Los Angeles) provide bill credits at a lower rate, under net billing.
Property tax exemption
Home solar panels typically boost the value of the home they’re attached to. That can come with increased taxes, unless there’s a property tax exemption for solar in place. California has a property tax exemption, so you won’t pay higher property taxes just because you installed solar.
Solar Payback Period in Los Angeles
A solar payback period is the time it takes for the savings from your solar panels to match their cost. While the exact calculation will depend on the specifics of your electric bill and the cost of going solar, here’s how you can estimate your solar payback period.
( total solar costs - incentives ) / annual savings = solar payback period in years
Let’s say you pay $3.24 per watt for a 5.5 kilowatt system for a total price of $17,820. You claim the full federal tax credit available to you, $5,184, and arrive at a cost of $12,636 after incentives. If you save $120 each month ($1440 each year), you’d have a payback period of 8.78 years.
($17,820 - $5,184) / $1440 per year = 8.78 years
Of course, a lot can happen over those almost nine years, especially to electricity prices. California’s average electricity rate in 2023 was 29.51 cents per kilowatt-hour, but nine years earlier in 2014 it was 16.25 cents/kWh, an increase of nearly 82%. If electricity prices go up during the lifetime of your panels, you stand to save more and your payback period will be shorter.
Credit: US EIA
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Los Angeles Utilities and Rooftop Solar Panels
Your utility plays a role in your decision to go solar. It has a hand in setting electricity rates and must sign off at key steps in the solar installation process. The net metering or net billing plan you get from the utility helps determine how much you can save.
If you live in Los Angeles, you’re likely a customer of LADWP. If you live nearby, you might be a customer of Southern California Edison.
| Utility | Fixed monthly charges | Average electricity rate (cents per kWh) | Net metering type | Average export credit (cents/kWh) | Maximum offset |
|---|---|---|---|---|---|
| LADWP | Varies with usage. $10 minimum bill | $22.90 | 1-to-1 net metering | 21.5 | N/A |
| Southern California Edison | $14 with certain rates | $32.33 | Net billing | 7.6 | 150% |
Electricity rates, fixed fees, and export credits are averages and can change throughout the year and day. Your experience may vary.
Gas utilities and home electrification
If you use natural gas to cook, heat your home, or heat water, you’ll get two energy bills. You can eliminate your gas bill from Southern California Gas Company by electrifying your home and replacing your gas appliances with electric ones. Increasing your home’s demand for electricity can increase your electric bill, though, which makes home electrification and solar a good fit for some homes.
Leasing Solar Panels in Los Angeles
Across California, including in Los Angeles, you don’t need to buy solar panels to take advantage of their benefits. Instead, you can swap the upfront cost for manageable and predictable monthly payments for the solar panels (solar lease) or the power they generate (solar PPA).
When your monthly payment is smaller than the amount you save on your electric bill, you save money overall. Both types of third party ownership typically come with an escalator which increases your payment each year. If electricity prices increase faster than your agreement’s escalator, your savings will increase over time.
Palmetto’s LightReach Energy Plan offers you a way to go solar without the upfront cost. LightReach includes a performance guarantee and proactive monitoring for any performance and maintenance issues.
Solar Panel Maintenance in Los Angeles
Luckily, solar panel systems are typically low maintenance, though issues can arise over your system’s lifespan of multiple decades. When they do, they’ll likely need to be handled by a professional.
Palmetto’s monitoring and maintenance plan, Palmetto Protect, includes proactive monitoring, real time insight into your system’s power generation, and, in some plans, a performance guarantee.
One bit of routine maintenance you may want to take on yourself is cleaning your solar panels. Since dirt, leaves, and other debris can keep sunlight from reaching the panels, clearing it away can boost their production. Follow the manufacturer’s recommendations and don’t do anything that would scratch or damage your solar panels.
Finding the Best Solar Company in Los Angeles
Like most other major home improvement projects, choosing the right company to carry it out is one of the most important decisions. But how do you choose from the multitude of companies that want your business?
- Read reviews — both positive and negative — that can give you an idea of what sorts of issues or successes a given company regularly has.
- If possible, talk to friends and neighbors who have had experience with the solar company. If they live nearby, your experience may have some overlap.
- See who answers your questions and lets you make a decision with all the time and information you need.
- Weigh a company’s promises for after installation. What happens if something goes wrong? Are all your warranties and protections clearly laid out for you?
If you’re interested in seeing if solar is a fit for you, check out Palmetto’s solar savings calculator or contact a Palmetto solar advisor today.
See how much you can save by going solar with Palmetto
Palmetto Reviews
“Palmetto Solar installed my solar panels and I have seen a significant energy cost decrease. To add to the review, the personnel I have worked with were amazing. They were informative, responsive, truly concerned about my experience, and answered all my questions throughout the entire process. If you are looking for solar, I highly recommend Palmetto Solar.” Darrell M., Google Review
“I got solar installed through Palmetto and it was fantastic. They made it painless and took care of all the paperwork for me. I'm very happy with the results. I haven't had an electric bill since it was turned on at the beginning of this year.” Russ G., Google Review (early October 2024)
“Right from the time we had our solar installed to downloading the Palmetto Solar app. Palmetto have been an excellent company upfront with their billing and everything is clearly understandable on the app. Would recommend them to anyone that wants to listen.” Craig H., Google Review
Frequently Asked Questions
Does solar make sense in Los Angeles?
Sun isn’t always the most important factor in deciding whether or not solar makes sense, but LA has a lot of it. Angelenos can also benefit from policies that lower the installation cost of solar and increase the long-term savings.
Are solar panels worth it in Los Angeles?
Most people in Los Angeles can benefit from 1-to-1 net metering, which provides a credit at the retail rate for each kilowatt-hour of solar electricity you send to the grid. How much you can save is dependent on your specific circumstances. Find out by reaching out to Palmetto today.
Does solar increase your home value in Los Angeles?
Like they do across the country, solar panels will likely increase your property value. California’s property tax exclusion for active solar panels means you won’t pay taxes for the added property value.
How much does it cost to go solar in Los Angeles?
Home solar panel installations vary in cost by state, city, and home. One national estimate says residential solar panels cost $3.25 per watt to install, but the size of your system, the complexity of your roof, and local costs of labor and permitting will all affect that number.
Does Los Angeles have net metering?
The Los Angeles Department of Water and Power offers 1-to-1 net metering. Southern California Edison offers net billing, which credits you for the electricity you send to the grid at a lower rate.
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Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.
Andrew BlokWriter and EditorAndrew has worked as a journalist and writer for four years, over half of those dedicated to covering solar. He currently lives in Tucson, AZ, where you might run into him walking his dog and birding while dodging the heat. He has degrees in English education and journalism.
