Orange County, California registers more than 280 sunny days a year, so you probably want to know whether solar panels are worth it in the third-largest county in California.
Specifically, you want to know just how much savings you will see on your utility bills over time, so you can judge how quickly you can recoup the cost of installing a solar panel system.
We know that the shorter the payback period, the better (and the higher return on investment), and solar panels in this area pay themselves off in as little as four years. So, what else should you know before you go solar in Orange County?
Key takeaways
- Solar panels generate lots of electricity in Santa Ana - around 1,418 kWh a year per 1 kilowatt of installed system capacity.
- Generous solar incentives are available in Orange County, including the 30% tax credit and net metering.
- We’ve found that payback periods for solar installations in Orange County can be as low as four years.
- You can see your projected costs and energy savings by using our advanced solar calculator.
Check your solar payback period in Orange County
The ROI you get from a solar system is a function of the amount of power it produces annually and the money you would have paid to the utility to purchase the equivalent amount of power.
To determine a typical payback period and investment return in Orange County, you need to consider both the costs of installing solar panels in the area and also the revenue the system would earn.
You can use the costs and savings calculator below to get a tailored estimate for your address.
Going solar in Orange County
The U.S. Energy Information Administration shows California households paying 23.76 cents a kilowatt-hour, on average. Indeed, Southern California Edison and San Diego Gas & Electric have some of the highest rates in the nation.
Luckily, California gets lots of sun, making solar panels an attractive option. If you live in, say, Santa Ana, the county seat, the sun shines three out of every four days. The calculation of the area's weather conditions and climate makes for a high rate of solar radiation (direct sunlight) and insolation (a function of atmospheric cover, angle toward the sunlight, etc.).
On average, a 1 kW solar panel system on a Santa Ana home could generate approximately 1,418 kWh a year. (Keep in mind, most people install systems well over 1 kW in size - more on that later.) This is a high level of solar power output - better than can be achieved in most parts of the country.
But plentiful sunshine isn’t enough on its own to make solar panels worth it. The financial incentives available for residential solar energy systems are critical. The most important of these is the federal solar investment tax credit, which has boosted residential solar in many states.
The other crucial incentive is net metering. In California, Net Energy Metering (the state is currently in phase two; NEM 2.0) rules allow residential and commercial customers with less than 1 MW of installed solar capacity to get credits on their bill on a 1:1 basis for electricity they generate.
So, for those 1,418 kWh a year the Santa Ana home generated, NEM 2.0 would offer credits equal to the cost of 1,418 kWh of electricity (or around $337 a year based on an 23.76 cents per kWh charge) less non-bypassable charges (which are around 2.4 cents per kWh).
Of course, most homes in California install systems that are much larger than 1 kW, so their electric bill savings will be much higher than that.
Solar panel costs & payback period in Orange County
According to our data, the average cost of solar panel installation in California is $2.68 per watt, before the federal tax credit, net metering, and other incentives. Since the average system size in the U.S. is 6 kW, that means the average price of a solar system in Orange County is $16,080.
Let’s now look at the costs and payback period for a typical home in Orange County. We’ll take the example of a home with a monthly bill of $284.
By our calculations, a 6.2 kW system would be needed to cover the electric bill. This system would produce about 8,791 kWh of electricity per year. The net cost for the system would be $10,100-$12,350 - after deducting the 26% federal solar tax credit.
The total savings generated by the system - that is, the total electric bill savings over 25 years minus the upfront cost - will amount to $68,120-$83,258.
The payback period would be between 4 years and 4 years and 11 months, assuming the system was paid for in cash. Solar panels are warrantied to last 25 to 30 years, so if your payback period is less than 10 years, that's a great result.
You can run your own numbers for your house based on your usage via our solar estimate tool.
Solar financing options
Solar financing companies offer solar loans on easy terms, including zero-down.
The easiest way to get a solar loan is usually by requesting one through a local solar company. Solar installation companies have partnerships with solar financing companies that allow them to offer you financing with quick approval times.
If you're installing solar as part of a renovation, Orange County has a property assessed clean energy program - the Home Energy Renovation Opportunity (HERO) Financing Program. This is a loan that becomes part of property taxes, and is transferable.
Final thoughts
In Orange County, the high cost of utility power, combined with abundant sunshine, means that solar panels can offer an excellent return on investment.
With that said, the payback period that you are likely to see can vary based on several factors, including the utility company you’re with, your energy usage, whether you’re buying with cash or with a loan - even your roof layout can affect your exact costs and savings.
Our customized solar calculator takes all these factors into account when generating an estimate. Use it to see whether getting solar panels for your home is an idea worth pursuing.
Teddy Theil
Solar Industry Expert
Andy is arguably the most qualified rooftop solar expert in America. He is in a unique position, having founded a large solar company but now being independent of any particular company. He has appeared on CNBC, has been referenced in public hearings concerning the rooftop solar industry ( such as the recent CPUC NEM 3 decision) and has been referenced by many major publications such as the Wall Street Journal, Business Week and many others.