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Los Angeles Solar Power for your house – rebates, tax credits, savings

Avatar for Dave Llorens
Written by
Published on 04/10/2012
Updated 08/30/2019

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More than 9 million people call Los Angeles home. That many people in one place means L.A. needs lots and lots of electricity, especially in the summer when the A/C is blasting in homes from Lancaster to Long Beach. The electricity demand in L.A. County is so great that it needs a direct connection to power generated 850 miles away. So the local utility, the Los Angeles Department of Water and Power (LADWP for short), embraces all the extra energy it gets from solar installations on the roofs of homeowners within its service territory. They embrace it so much that they offer some pretty sweet incentives just for putting panels on your roof.

Just as it took the lead on air quality in the last twenty years, L.A. has now taken the lead on getting solar on roofs and cutting the need for additional generation from polluting energy sources! With so much sunshine and potential electricity falling into L.A.’s lap from the sky, there IS a better way, and homeowners all over the county are taking advantage of the available incentives and putting solar on their roofs now.

Investing in Home Solar in Los Angeles

Los Angeles Solar Leases, Solar Loans, and more!

What if you don’t have $20,000 lying around to pay for solar? Not many of us do, so let’s talk about other options! Because banks and third-party installer are recognizing what a good investment solar is, they offer leases and loans and other ways of paying for it. Let’s examine a couple of the most popular tools.

Solar Leases in Los Angeles

When you choose a solar installer in L.A., you’ll probably have the option of leasing your solar panels. It’s a great way to put no money down and get the benefits of solar starting right away. You sign an agreement to make a monthly payment for the panels on your house and your electricity bill is reduced by more than the cost of the lease. But you may be left wondering, “Is a solar lease a really a good deal”?

Well, if you can sign a long-term agreement with a small yearly rate increase, yes! As an example, a 25-year lease of a 3.5-kW system with a starting monthly payment of $66.67 ($800/year) will save you $1,334 on electricity this year, the same as buying the panels yourself but with no money down. And as the price of electricity goes up, you’ll save more and more every year until the end, because your yearly costs go up by less! By the end of our 25-year estimate, you’ll have saved $24,625, all without putting down a dime!

Solar Loans in Los Angeles

Many banks and credit unions now offer unsecured loans for installing solar. It can be a great way to install solar with nothing down, but beware the interest charges! If you agree to pay your system off over 20 years at 6.5%, you’ll actually end up paying more than your current energy bill for about 9 years, but you’ll still end up saving about $13,000 over the 25-year life of your system.

But! If you pay the loan down early with your LADWP rebate and the big federal tax credit at the end of year one, you’ll actually come out ahead of the lease and do pretty well compared to the cash purchase option. You’ll still pay slightly more than your current energy bill for 9 years, and after that, it’s all profit, baby! 30,000 smackeroos!

If you can get a lower interest rate, it becomes an even better deal. Anything around 4.75% and below will see you making a bigger profit than the people who buy outright, all without spending a cent up front. Take another look at how the different payment options stack up visually above in the chart.

Example 5-kW Solar Installation ROI in Los Angeles

What do all these numbers and all this policy amount to for your finances? Let’s take a look:

  • Installing a typical 5kW solar system in L.A. should start at about $20,000. Don’t worry – that’s going to drop quite a bit.
  • First off, LADWP will give you a sweet rebate. It’s not as big as the ones they used to dole out, but as of mid-2015, you can still expect $1,840 back on a typical 5-kW system, almost instantly reducing the cost of your system to just $18,160. Cha-ching!
  • The Feds will give you a 30% tax credit at the end of the first year, based on the post-rebate cost of your system. That means a big savings of $5,448. And you can take the credit over two years if you don’t owe $5,448 in taxes in one.
  • Next, subtract your first year’s energy savings, which we estimate to be about $1,334. That brings your final cost for solar power after the first year to $11,378. That’s over $8,500 less than the starting price!
  • With a conservative estimate of 3.5% per year for the future rise of electricity prices, you can expect your new solar power system to pay for itself in about 9 years.
  • Over the 25-year life of the system, you’ll profit to the tune of $35,917.
  • And don’t forget… your home value just increased by more than $28,000 (your expected annual electricity savings over 20 years) and you won’t pay taxes on any of it!
  • What’s that? Money green isn’t enough for you? Us either! The fossil-fuel produced electricity you’re not buying from LADWP is the same as planting 134 trees this year (and every year for the next 25 or so)!

Our Home Solar Strategy in Los Angeles

Step 1. Read about incentives available in LADWP territory.
Step 2. Get quotes form trusted expert solar installers in your area.
Step 3. Read about financing options in LA County.
Step 4. Get solar installed.
Step 5. Submit LADWP incentive claims (if you choose to buy—not lease—your system, either with a loan or without).
Step 6. Submit your federal Investment Tax Credit claim after year 1.
Step 7. Pay down your solar loan with your refund (if you took a loan).
Step 8. Profit.

Seems simple, right? Well, it’s straightforward, but not necessarily simple. Let’s break it down a bit:

LADWP Solar Incentives

LADWP offers incentives for installing solar on your home. As of this writing, the incentive amount is $.40/watt of installed panels. A typical home solar installation is between 3 and 8 kW in size, so we use 5 kW as a good middle-ground estimate. Here’s where it gets a little more complex: when we say “5-kW solar array” we mean a solar array rated to produce 5-kW of electricity under what’s called “Standard Test Conditions,” or STC. It’s one way to rate the performance of a solar panel, but it isn’t the most accurate way to rate the performance in the real world—for that, the industry uses a measurement called “Performance Test Conditions,” or PTC. PTC takes a more real-world approach, meaning it looks at the system’s output after the electricity passes through the wires and the inverter, so it results in a lower rating number. That’s important to know because LADWP bases the incentive amount off the PTC number, instead of the STC number.

You can always check the LADWP program status page to see what the current incentive amount is. Each step is on the basis of total megawatts installed in the utility, so it’s impossible to predict the timing for the customer; except for the fact that the best time is always NOW!

LADWP’s part of California’s Renewable Portfolio Standard

California has the most ambitious renewable portfolio standard (RPS) in the country. The state is required to source at least 33% of its power from renewables by 2020. If not, utilities get slapped with sizable fees. LADWP was up to 20% by 2010, and well ahead of schedule. Compared to the other three utilities it’s the furthest along. Southern California Edison (SCE) was up to 19% recently, so the competition is in hot pursuit.

One of the more common ways to meet the standard is to encourage renewable energy by purchasing their Renewable Energy Credits (REC). California allows utilities to achieve up to 25% of total compliance in this manner. You can bet that LADWP has its maximum 25% of various wind power RECs already stashed away.

One thing missing from the California RPS, as followed by the city of Los Angeles by LADWP, is a solar carve out in their RPS. I’m sure we’d see more funding for the incentive that LA offers PV owners if that were the case. Without a solar carve out, LA is content to let the solar incentive fizzle out to less than a fifth of the rebate it started out with.

California Solar Power Tax Credits

California has no particular state solar tax credits.

Tax Exemption

California will not reassess your property on the basis of the improvement you made to the property, with a shiny new PV system. So no new property taxes! However, the solar sales tax exemption applies to manufacturers, not purchasers. That’s a crying shame.

Utility Prices

LADWP has a slightly low electricity cost, compared to the rest of California, but it’s rising. If you’re on the tired rate plan, you’ll pay an average of around $0.18/kWh, and as it rises so will the attractiveness of getting solar panels to offset some of your monthly expenses.

Net Metering Laws

LADWP has net metering for up to 1 megawatt of electric power, plenty for you and me. They will coordinate the interconnection for you in most situations, but special situations requiring special equipment are most explicitly on you.

To find out how the numbers work out for you, click here and we’ll connect you to solar power experts that we trust in Los Angeles. They’ll happily calculate realistic estimates for you based on your unique energy usage, location, shading, roof orientation, and roof type. They’ll even do it for free!

Remember that these figures are estimates. Your home is unique, and how much money solar will save you depends on that uniqueness. Thankfully, we know some experts in Los Angeles. Just sign up for personalized savings estimates and one of then will be more than happy to go over all those details and help you craft a plan to get the maximum savings from a solar power system in your home. Your quote is 100% free, so go ahead and shop around… grab two or three, or five, and compare all your possible options.

Last modified: August 30, 2019

6 thoughts on “Los Angeles Solar Power for your house – rebates, tax credits, savings

  1. Avatar for La Green La Green says:

    LA Green Development Team of experts that support homeowners with quality and know-how such as expert planning, technical support, professional installation and finding reliable rebates and incentives for solar installation, tex coat painting, roofing, windows & doors, Air – Conditioning (HVAC systems), and water wise landscaping.

  2. Avatar for Anonymous Anonymous says:

    Where did you find the numbers for the yearly savingsand increase in electricity rates?

    1. Avatar for Ben Zientara Ben Zientara says:

      Hey there-

      We source information on average electric rates from the U.S. Energy Information Administration (EIA) and the utility companies themselves. Average usage numbers by state are also source from EIA, unless that data is available from the utility company.

  3. Avatar for Anonymous Anonymous says:

    It’s not all about the savings. I’m still waiting for one forward thinker to speak up. Installing solar allows you to loose your gas appliances. Buy an electric car and have it be truly 100% non-carbon fuel driven. Have a source of direct current, eliminating your transformers for your Low voltage lighting, Perhaps for recharging batteries. With Solar you can add lighting throughout your yard. Say safe with more lighting.

  4. Avatar for luis roldan luis roldan says:

    if I have a 7,500 square foot lot with out house can I put a solar panels to sale energy

  5. Avatar for anonymous anonymous says:

    I purchased a new home that came with solar panels already installed. Can I still take the solar home tax credit? And if so how do I calculate the cost of the solar panels?

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