Solar Panels San Diego Cost: 6 Determining Factors

It’s the most common question San Diego homeowners have when researching solar: “How much will my solar panels cost?” The answer is, as it always has been, that there really is no “average” cost of solar, no number that we can throw out that will provide an accurate projection of what it will cost for any given homeowner. The reason for this, of course, is that there are too many factors at play in any given installation that determine the price.

What we can do is talk about those factors, and how they will affect the cost of your solar panels in San Diego. In general, the cost of your system is determined mainly by the size of the system (number of solar panels) because larger systems (in watts) produce more electricity.

That said, the most important five factors that affect the cost of your solar energy system are as follows:

The most important factor determining the size, and therefore cost of your solar system is your home’s energy needs. The point of installing solar is to completely eliminate your power bill, or at least reduce it as much as possible. So then, logically, the more energy you use, the more panels you will need.

So how big your home is, and your home’s energy usage, will directly correlate with the cost of your installation. If you have a small home, and are energy conscious, then you may be able to zero out your bill with a small system. If you have a huge home and use tons of energy, you're going to need a large, expensive system. It seems obvious, but it’s the main reason why it’s hard to provide an accurate “average” cost of solar.

In order to figure out your usage, typically solar installers will look at your yearly power bill to understand just how much power will need to be produced every day and month. Due to varying amounts of light based on the season, they will make sure that the home produces enough power, and therefore credits in the Summer to offset the slightly lower production in the off months.

This factor is a little less obvious. When your installer is calculating how many panels you will need to zero out your bill, they make take into account any future increases in energy usage you may anticipate. So if you have an additional person moving into your home, if you’re adding a heated pool, or if you’re planning on making a home addition, you should let your installer know so that they can size your system accordingly. If they know your usage is going to go up, they will add panels to the system in anticipation of that increase.

The other part of anticipating future energy usage is that you can assume that electric rates are going to go up, so having enough panels to offset those increases is key. In San Diego, rates are already high, and recently, SDGE requested a 28 percent rate increase over the next four years with the California Public Utilities Commission. So with that in mind, the solar installer will add enough panels to your system such that it will be able to zero out your bill for years to come.

Of course, if you want solar panels, you have to have a place to install them. There are two main options: roof mount, or ground mount. The majority of installations happen on rooftops, as most homeowners have the space on their roof to fit a system, but many homeowners who have the property or don’t want to penetrate their roof will go with a ground mount.

While there are certain roof styles that are more costly than others, typically, ground mounts cost more as there is more labor involved. The trenching, conduit run, and mounting of a ground mount all makes it cost a bit more, which is why homeowners who have to resort to a ground mount will spend a bit more than a roof mounted installation. So if you’re one of those homeowners who doesn’t want panels on your roof, you should expect to pay a bit more.

While not the biggest factor, your roof type can affect the price of your solar installation. That’s because different types of roofs require different amounts of labor, and different racking based on the slope of the roof. For example, flat roofs do not use the typical invisimount racking that would be used on a typical sloped roof. For flat roofs, we sometimes use a ballast system that is held down by concrete blocks, and the panels don’t sit on any type of rail. For some tile installations, all the tiles have to be removed, and an underlay has to be laid down and then the tile has to be reinstalled. These are just examples of how roof type can affect the amount of labor, installation time, etc. which can all affect the cost.

This is perhaps the biggest factor that will determine the cost of your solar, as how you pay for it directly determines what the total cost will be. There are three main ways to pay for solar: cash, loan, or lease. Each have their pros and cons, and each payment method will cost a lot different than the other.

Similar to how you pay for a car, if you fully pay for your solar up front, as in the full amount, you are going to pay the least amount of money to own the solar. With no loan comes no interest, and therefore, the total amount paid is less to own the solar. Most homeowners do not have the cash upfront to do this, so this method is not frequently used, but if the homeowner has the option, this is the cheapest way.

With a solar loan, the homeowner can take out a loan, and like a car loan, pay a monthly payment for the solar with interest. The good thing about this method is that the monthly payment is typically less than the the power bill was previous to installing solar, so you will still be saving money every month off the get-go. While this method is more expensive than paying for the system upfront, you will still be saving every month, and at the end of the payment period, you will own your solar and will no longer have to pay the solar company or the power company.

With a solar lease, you pay a monthly payment to the solar company for the use of the panels. They install them on your home, and you save on your power bills every month, as the solar will zero out your bill, and the lease payment will be less than you were paying for power. The downside though, is that at the end of the lease period, you do not own the solar panels. So all that money you were paying to the solar company was essentially just to save on monthly electric bills during the lease period. While you may spend less money overall on this, ultimately, the ROI is much less because the real return on solar comes when you own your panels, you’ve paid them off, and you are no longer paying the power company or the solar company.

Based on how you pay for your solar, if you pay cash or loan for it, you are eligible for the 30% Federal Solar Tax Credit. The Federal Solar Tax Credit is a government incentive that will give homeowners who own their solar a credit on their income taxes that is worth 30% of the cost of their solar installation. So, assuming you owe on your taxes and can take the credit, the government will essentially pay for 30% of your solar installation. This can greatly affect the overall cost of the solar installation, so it has to been considered when calculating the overall costs.

A good example of how this works is say you install a $20,000 solar system and pay for it up front. In this situation, assume that you owe the federal government $5,000 in taxes. In this case, 30% of the solar system, or $6,000, would be credited to you. So you would no longer owe anything on your taxes, and would even maintain a $1,000 credit to be used the next year. So the government is literally paying you $6,000 to go solar. Sounds like a sweet deal, right?

Something to keep in mind is that this incentive is being phased out after this year. 2019 is the last year that you can get the full 30% Tax Credit, it will decrease to 26% in 2020, 22% in 2021, and then 10%, and only for commercial installations from 2022 on. So if you’ve been considering solar, this year is the year to install to get the most money back from the government.

So as you can see, there are a couple of huge factors that determine the price of any solar panel system in San Diego. For these reasons, it is difficult for us to estimate the cost of an average system, as there really is no such thing as an average system. If you know going into your research that these factors will determine the cost, you will be able to get a better idea of what your costs will be. If you want to know an exact cost for your solar panels in San Diego, contact us today to request a quote, and we will be able to work up your estimate quickly and accurately.