Why 2015 is the Best Year to Go Solar in California

distributed-energy-genration

California: the solar state.

You’ve probably noticed that more and more of your neighbors are going solar. It seems like there’s a climate or solar related article in the paper every week. Why?

If you live in California, you’ve probably a couple of things:

  1. It’s sunny all the time, and that’s one of the reasons we all love California (if you’re from San Francisco, sorry, it’s sunny most other places)
  2. Electricity prices are going up, and given the population boom, they’ll continue to go up
  3. You’ve probably started seeing more and more solar panels around town

Well, as it turns out, California is one of the best, if not the absolute best state in the country for solar – and 2015 might be the best year ever to get started.

Is California really the best state in the US for solar?

First let’s tackle the claim that solar is the best state in the country to go solar. It may be a bold claim, but hey, it’s California. In fact Governor Schwarzenegger had a few choice comments, and I paraphrase: If Germany has a 100,000 Solar Roofs program, we can do better. I want a million solar roofs! Now…

I’m pretty sure there was a comment about solar and choppers too.

Apart from the casual observations and amusing Arnold quotes, there are some solid studies and numbers to validate this. California cities claim 5 of the top 10 ‘Best Value for Solar’ in America’s largest cities, and resale value for homes with solar in California is about 30% higher than the national average.

A recent study by a research group in North Carolina, funded by the Department of Energy and supported by local government organizations compared the benefits of solar in the 50 largest US cities, called “Going Solar in America: Ranking Solar’s Value to Consumers in America’s Largest Cities.”

Their conclusion is astounding:

“Most Americans are unaware of the true financial value of solar today. Seen

by many as a technological luxury, solar energy is not seriously considered

as an option by most homeowners in the U.S. However, our analysis shows

that, in 46 of America’s 50 largest cities, a fully-financed, typically-sized

solar PV system is a better investment than the stock market, and in 42 of

these cities, the same system already costs less than energy from a

residential customer’s local utility.” (Full Report Here)

 

In case you missed that:

  • Better investment than the stock market
  • Solar electricity is already cheaper than power from the local utility

In the report, they rank each city on a number of calculated values:

  • The immediate (first months) savings that you can expect
  • The relative value of investing in solar vs. a long-term investment in the S&P 500
  • The long term cost of energy from the solar system vs. buying power from the utility

The top ten cities for solar in the USA

1 New York, NY

2 Boston, MA

3 Albuquerque, NM

4 San Jose, CA

5 Las Vegas, NV

6 Washington, DC

7 Los Angeles, CA

8 San Diego, CA

9 Oakland, CA

10 San Francisco, CA

If you take a further look, there are 8 California cities in the study, 5 are in the top 10, 7 are in the top-15 (Long Beach and Freson round out the 7 CA cities). Only Sacramento falls way down to #37.

But what is most impressive is the average savings and value of solar in California:

  • Significant savings immediately (average of $148/mo before loan/lease payment)
  • The net present value of the system averages $17,535 

If you think about where these cities are California, you get that this covers just about all the major urban areas. So a simple way of thinking about this, is if you live in the same electric utility as those cities, these findings probably apply to you. Simply put, if you live in PG&E, SCE or SDG&E territory, then you are essentially in one of the top-10 markets for solar in the entire country.

Add on top of this a recent study about the effect of solar on home valuation, also by a major national research institution, and we see that solar is also a safe investment for your home. The basic point of the article is that in addition to the energy savings benefit of solar, adding solar to your home increases the resale value.

An average solar system in California increases average home sale price by roughly $15,000. Specifically, an average solar system is about 3.6kW and the average additional resale value is calculated to be roughly $4.10/W (3.6kW = 3600 W x $4.10/W = $14,760). This assertion of increased home value is supported by Wells Fargo Bank and the national Appraisal Institute. 

Well why is 2015 such a good year?

OK, so now the question is, will this get better anytime soon? Should I wait for a couple of years for prices to change or the technology to improve?

The quick and dirty answer is no.

2015 might be the best year to go solar for the foreseeable future, and there are two simple reasons why:

  1. At the end of 2016, the major federal tax incentives are set to expire. This policy (Investment Tax Credit of 30%) is the engine that is driving solar adoption.
  2. Net-metering is capped in California at 5%, and with each day we inch closer to the cap. Net-metering is what allows you to displace expensive electricity from the utility with cheaper electricity from your solar.

There is of course still the price/technology question, but we have recently experienced a massive drop in equipment prices (literally a 80% price decrease in the last 10 years). It’s unlikely prices will drop again, at least this dramatically, any time soon. In fact, over the past year or two, there have been slight increases in California solar prices at specific times. These price increases are caused by either trade disputes and tariffs, or increased demand (read second half of 2016).

So if you wait:

  • You could miss out on major tax incentives
  • You could miss out on the massive benefit of net-metering
  • You might be in a period of increased demand and higher prices

If you still have room for another New Years resolution, it should definitely be: “Find out if solar is right for me.”

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