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Solar in Los Angeles

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Weighing the options of solar in Los Angeles

Going solar in Los Angeles makes more sense than not going solar. Here, we’ll explain the numbers – including the costs of getting electricity from a utilities provider and what it may cost to install a system on your home – plus go over the rewards you could collect through tax incentives and selling your power back to the grid.

Electricity rates are high – and complicated

If you live in Los Angeles, your electricity providers are either the Los Angeles Department of Water and Power (LADWP) or Southern California Edison (SCE).

Both LADWP and SCE have standard residential rate plans, which are ‘tiered’ systems where a baseline amount of electricity is provided to each household at a rate lower than the amount of electricity consumed above the baseline. Tier 1 is below the baseline, and each subsequent tier reflects increases in usage; Tier 2 is 101% to 200% over baseline and Tier 3 starts at 200% over baseline. If you are a SCE customer, there are different baselines in different regions: Los Angeles is in zones 6, 8, and 9.

Los Angeles electric rates are higher than the national average

The average cost of electricity per kilowatt hour in California is around 17.74¢, which is nearly 5¢ higher than the average cost of 12.80¢ in all of the United States. Considering that usage can stretch past the baseline when energy is in demand, Los Angeles comes in well above the national average.

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The facts

Based on data from 2016, here are the main figures:

  • $17,916        Average Total System Cost post-incentives
  • 5.0 kw          Average system size
  • $3,583         Average cost per kW post incentives
  • 4.8 %            More expensive per kW for a 9% smaller system in size                       comparing to rest of state

What factors should you consider when installing solar in Los Angeles?

Sunshine in Los Angeles is abundant

Los Angeles is an above-average sunny place with 5.5 to 6 hours of sunlight per day on average. That’s around 5.5 to 6 hours per day that you can expect solar panels to absorb the energy of the sun. This is higher than much of the country and means that you can produce more energy in Los Angeles than in other areas where there’s more cloud cover.

Solar in Los Angeles is slightly more expensive to install – by a relatively low 4% – but so are electricity rates, especially compared to the rest of the nation.

The Federal Government and California give tax incentives for solar installations

Both the Federal Government and California have programs that allow homeowners with solar installations incredible tax breaks and incentives.

The Federal Renewable Investment Tax Credit lets taxpayers claim a 30% tax credit on approved expenses associated with the installation of solar panels. The program is currently provisioned until December 31, 2021 (whereas other renewable energy technologies face an expiration date of December 31, 2016). There is no maximum amount on the incentive and in the event that the tax credit is greater than your tax liability, the credit can be carried over into the next year.

California’s Property Tax Exclusion for solar energy systems is available for 100% of the value of the solar panel installation. In effect until December 31, 2024, equipment that produces solar energy cannot be considered an added value to your property. However, a solar energy installation can still be considered extra value to your property – it just won’t increase your current property taxes. The exclusion remains until your property changes ownership and cannot be passed on to a new owner.

The Los Angeles Department of Water and Power (LADWP) offers a Feed-in Tariff Program, which is designed to encourage renewable energy development and effectively purchases energy from solar panels connected to LADWP’s system at a fixed price for a term of up to 20 years. The program does not currently have an end date.

The LADWP also offers a rebate program that runs until December 31, 2017 or until the total installed MW goal has been reached. The program will offer 30¢ per W CEC-AC for residential solar energy installations.

Los Angeles is an above-average sunny place with

25.5 to 6 hours

of sunlight per day on average.

The average cost of electricity per kilowatt hour in California is around

17.74¢

which is  higher than the average cost  in all of the United States.

Average Total System Cost 

$17,916

post-incentives.

Net Metering sells excess power back to the grid

The Los Angeles Department of Water and Power offers credits to residential users’ future bills for excess kilowatt hours generated by a solar panel installation.

For example, a home that uses 500 kWh per month but only produces 300 kWh per month will be billed for 200 kWh. Similarly, a house that uses 300 kWh per month but produces 500 kWh per month would be credited for 200 kWh on its next billing cycle. Homes with solar energy in Los Angeles have a prime opportunity to cancel out their energy bills by producing more energy than they consume.

Solar in Los Angeles makes sense

Solar in Los Angeles makes sense for homeowners and the benefits are available for many years to come. While everyone’s situation is different, Los Angeles is an overall great place to install solar panels to save money and ease environmental impact.

Between combatting high electric rates, high availability of sunshine, and the incentives and breaks offered by going solar, you could save big on solar in Los Angeles.

Our calculator can help you decide how to approach installing solar in Los Angeles.

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