Everything you need to know about installing solar panels as a Californian PG&E customer.
If you’re one of the 16 million customers of Pacific Gas & Electric, also known as PG&E, you know two things: electricity is expensive, and the grid can sometimes be unreliable. The average homeowner on PG&E’s E-1 Residential rate pays an average of $200 per month for electricity. That rate has been rising at around 3% per year for years, with no signs of stopping (in fact, those increases will be larger in the coming years).
In addition to rate hikes, the savings homeowners in PG&E territory see from solar panels will be going down in 2023. The California Public Utilities Commission is finalizing its rules for a new version of Net Energy Metering (NEM), which include new monthly fixed charges and reductions in the value of energy credits paid to solar owners whose applications are received after April 13th, 2023. If you’re considering solar in PG&E territory, learn about NEM 3.0 and get prepared to find a solar installer soon.
Solar panels save you money by reducing your usage of electricity from the utility company. PG&E customers currently pay some of the highest rates for electricity in the country, and therefore have one of the best chances to save money with solar. Not only that, adding batteries with solar is an option that can protect you in the event of a grid outage in your area. Which—let’s face it— in California, happens all too often.
If you’re interested in seeing whether solar can work for you as a PG&E customer, read the guide below. We cover the cost, savings, and process of going solar to answer your questions.
The cost of solar in California
The average cost of solar in California is about $3 per watt of electricity generation for a typical home system.
To offset all their needs, a homeowner with an average monthly bill of $200 would need a solar installation capable of generating 5 kilowatts (kW) under full sun. Take 5,000 watts times $3 per watt, and the average 5 kW solar system for a home in California would cost $15,000 before the federal clean energy tax credit, and about $10,500 after the tax credit.
Here are the average costs for various system sizes:
| Average monthly bill | System size | Cost* |
|---|---|---|
| $200 | 5 kW | $15,000 |
| $250 | 6.15 kW | $18,100 |
| $300 | 7.11 kW | $19,900 |
*Cost per system before the federal solar tax credit.
California is a mature solar market with lots of companies competing for your dollars, so you can usually find a range of prices from multiple installers that each use different brands of solar panels and equipment. Going with the cheapest offer isn’t always the best choice, because installation companies differ in experience, product quality, and warranty offers.
Your best bet is to compare multiple offers from different local solar companies and make sure you ask the solar salesperson all the right questions before choosing.
Is solar worth it for PG&E customers?
The short, easy answer to the question above is YES. The average homeowner in PG&E territory can save an estimated $61,700 over 25 years, AFTER they pay back their initial cost.
The average 5 kW system we used as an example above would pay back its cost in about 4 years, 5 months. After it’s paid off, the solar panels would continue to make clean energy to power the home for 20 more years—under warranty—saving the homeowner an estimated $61,700 along the way.
That’s a great deal! And if your average bill is higher than $200, you use more energy than most people do in a month, and could stand to save even more with solar.
For more in-depth information on all-things solar in the Golden State, check out our California Solar Panel Guide.
The steps to go solar in PG&E territory
When you install solar panels on a home in PG&E territory, these are the steps you follow:
- Get an estimate of how many solar panels you’ll need based on your average bill
- Ask local solar installation companies for quotes for your home
- Evaluate the quotes, read reviews of solar companies, and pick the best one
- Your solar installer designs your system and applies for permits to construct it and connect it to the grid (also known as ‘interconnection’)
- The solar company receives permission to install the solar panels and completes the installation
- A local inspector and PG&E electrician come to your home to inspect the installation
- When everything passes inspection, PG&E grants permission to operate (PTO), and you can flip the switch on your system to begin generating electricity
The first thing to do is estimate how much solar you’ll need and get quotes from installers. SolarReviews makes that easy with our solar calculator below. The calculator can give you an idea of the size system you need and an estimate of the cost and savings for your specific home. Once you have those numbers, you can choose to request live quotes from installers in your area.
Length of the solar installation process
The whole process usually takes between 3-4 months to complete, as long as everything goes according to plan.
The actual installation will take 1-2 days with workers on your roof and installing other system components like the inverter and the main connection to your home’s electrical panel. Once you’ve gotten permission to operate, you turn your system on and start saving money!
Let’s discuss a bit about how that works:
How solar saves you money
Solar panels generate electricity during daylight hours. Some of the electricity is used to power the home, and some is sent to your neighbors via the grid. If you have a home solar battery, you could also store that excess power for use when the sun goes down or during a power outage.
Adding solar panels to your home can reduce that bill by a lot - in fact, they can bring it down to the minimum connection charge of around $10, plus a couple dollars a month for what PG&E calls 'non-bypassable charges'. These charges represent the portion of your electricity charge that goes to important environmental and low-income assistance programs.
In California, the electric company will buy back any solar energy that isn’t used to power the home at near the full-retail rate. This billing arrangement is called Net Energy Metering (NEM), and California is currently on its second version, NEM 2.0.
PG&E NEM 2.0 billing
NEM 2.0 is complicated, but it basically does 3 things:
- Switches you onto a Time of Use (TOU) rate plan
- Guarantees that you’ll get energy credits when your panels generate excess energy
- Tracks your net consumption or production of energy and charges you during one yearly period called the “True-Up” period
PG&E’s Time of Use rate plan is called E-TOU-C-NEM2. Under this plan, electricity is more expensive during “peak times”, from 4-9 pm when most people use the most electricity. Conversely, electricity is less expensive during all other “off-peak” times. Current peak prices are about $.39 per kilowatt-hour (kWh) during peak hours and $.30/kWh during off-peak hours.
People with solar panels are credited at the retail rate, minus non-bypassable charges discussed above, for the energy they send to the grid. The price they get credited depends on whether the energy was sent during peak or off-peak hours. This is why some homeowners install solar panels on their west-facing roofs, to capture more energy late in the day, in order to offset high peak prices.
Batteries can also be used to store solar energy during the day so you don’t have to use any energy during peak times.
Annual True-Up
PG&E net metering runs for a period of 12 months; after which you’ll be billed based on your total net usage of the grid, or paid a credit based on the excess energy your solar panels produced above your usage. This means you only pay for energy once a year! In all other months, you’ll only have to pay the $10 or so connection charge.
Every month, you’ll get a bill from PG&E that details how much energy you used from the grid, how much your solar panels generated, and how much you owe or how much credit you have. The monthly statement will also include a True-Up update, that gives you an estimate of how much you will owe at the end of your 12-month billing period, as well as the date it will come due.
This could be a good thing - or a bad thing - depending on how you budget. For example, if you end up using a small amount of energy more than your solar panels make every month, you could end up with a pretty big bill at the end of your 12-month period. Make sure to size your system to meet all your needs throughout the year! The best way to ensure your system is sized correctly for your specific home is by working with a reputable installer that will help you gauge your monthly electricity usage.
PG&E has a pretty good guide about how to read your monthly bill and how the True-Up statement works. And if you don’t love paying for energy once a year, you can request a monthly True-Up, but you won’t get full credit if you generate lots of extra energy in one month.
Important note: NEM 2.0 is going away soon! The California Public Utilities Commission (CPUC) has approved changes to the NEM program, including decreased compensation for solar energy and new fees for solar owners. Anyone who signs a contract for solar panels after April 13th, 2023 will end up with reduced savings thanks to NEM 3.0. Start the process of going solar NOW if you want to make sure to get on NEM 2.0 and avoid the new changes that could greatly reduce the financial benefits of going solar in California.
Should you buy solar batteries?
It’s important to note here that home solar batteries have not reached the point where they pay back their cost like solar panels do. The difference between on and off-peak energy prices is relatively small, so the savings you can get by using stored solar energy from 4-9 pm usually aren’t enough to make the battery worth it by itself.
What batteries are very good at is keeping important lights and appliances running in the event of a grid outage—something that’s been happening more often as PG&E tries to prevent forest fires. The peace of mind that comes with knowing you have backup power if the grid goes down is invaluable to a lot of people.
Read our guide to the best solar batteries to find out more about current solar batteries on the market.
California has recognized how important backup can be, and now offers millions of dollars in statewide battery incentives under the Self-Generation Incentive Program (SGIP). Homeowners in PG&E territory can now get rebates of between $.20 and $1.05 per watt-hour (Wh) of storage in a battery they buy for their home.
To put that in perspective, the Tesla Powerwall home battery stores 13.5 kWh and costs $10.500, before the rebate, to install. The standard rebate for the Powerwall would be $2,700. The state offers additional rebates for customers who are low income, have medical needs, or live in areas with high fire risk. These homeowners qualify for an “Equity Resiliency” rebate (which is part of SGIP) that would cover the whole cost of the battery. That’s worth it.
Thi Deremer
Solar Policy Analyst and Researcher
Ben Zientara is a writer, researcher, and solar policy analyst who has written about the residential solar industry, the electric grid, and state utility policy since 2013.