Financial Benefits to a Solar Installation in Los Angeles

Having a solar installation at your home, home office or small business in Los Angeles makes perfect financial sense, irrespective of its benefits to the environment. Let’s crunch some figures just to see how much financial sense it really does make.

The Cost of Buying Your Solar Equipment

Let’s say you have a typical 5kw solar system installed at your home in L.A (solar panels in Los Angeles installation normally range between 3kW and 8kW). The cost of the installation is $20,000. That’s a lot of dough. But don’t panic. There’s savings to be made here.

Firstly, LADWP are going to provide you with a rebate. This is not quite as large as it was before, but at around mid- to late-2015, you should still expect a rebate of around $1,840, given that your installation is a 5kW system. Thus, you reduce that initial and rather sumptuous cost of $20,000 to a slightly more attractive price of $18,160.
Then, the federal government will provide you with a 30 percent tax credit once your installation has been in place for a year.

This equates to an even bigger cash back of $5,448. Things are looking up.

Next, if you subtract what you save in energy bills over the first year, which can be estimated to around $1,330 since that is the typical saving for an L.A. household, after the first 12-month period, your bill for installing solar power drops from $20,000 to $11,383.

Now, taking into account a modest estimate of a rise in electricity prices year-on-year of 3.5 percent, the new solar system you’ve had installed will pay for itself in around about nine years-time.

Given that your system lasts for 25 years, which it ought to, you should profit (save) to the tune of around $35,800.
And then, don’t forget that the value of your home has now increased by as much as $28,000, which is like saying this is going to be the price of your electricity savings over a 20-year period. And yet, you’ll not pay a single dime of tax on any of that saving.

Added to this, the amount of fossil-fuel produced power that you will not have to buy from LADWP is equivalent to planting 134 young trees each and every year. So the environment benefits at the same time that your bank account benefits.

Here’s a step-by-step process to having solar power installed at your L.A. home:

Step 1. Become familiar with incentives for solar installation.
Step 2. Get some quotes for solar installation from trusted installers.
Step 3. Become familiar with financing options available to you.
Step 4. Have solar installed.
Step 5. Make your LADWP incentive claim (providing you are not leasing).
Step 6. After the first year, submit a claim for federal investment tax.
Step 7. If you take out a loan, pay it down with your refund.
Step 8. Save/ profit.

It does seem very straightforward, and it is. But it’s not quite so simple, so let’s assess this further.

LADWP Solar Incentives

As you’re fully aware, you are provided with incentives from LAWDP for installing solar at your home. Right now, per panel, the incentive is $.40/watt.

The typical solar installation at a home in L.A. is around 3 to 8kW in size, thus 5 kW is a good estimate to use.

It’s wise to, at some point, check the LADWP solar program status page to assess what incentive amounts are since they do change from time to time.

Utility Prices in L.A.

In comparison to the rest of California, LAWDP’s cost of electricity is slightly lower. However, this is persistently on the rise. Which means that if you are currently on the tiered rate plan for electrical supply, your average payment will be around $0.18/kWh of electricity. Of course, as this figure rises, which it inevitably will, solar power installation becomes ever more attractive as a way to offset a sizable portion of your monthly expenses.

Net Metering Laws

Net metering is offered from LADWP for electrical power of up to 1 megawatt, which is plenty for all of us. They will be happy to coordinate interconnection for you given a ‘normal’ scenario. However, if yours is a ‘special’ situation which calls for specialized equipment, the cost of that will be on you, so do bear that in mind.