California solar prices remain steady but poised to grow

The number of solar power installations in the U.S. saw a dramatic increase in 2016 over 2015, as more regions of the country began drawing power from the sun, thanks in part to tax incentives and installation rates that have leveled off, but that could change in a few weeks.

Trade officials are recommending that the U.S. impose restrictions on solar power equipment purchased from China and Mexico, a measure that is awaiting a decision from President Trump.

The potential impact of solar panel tariffs could raise prices 15 percent–20 percent, said Chet Stromberg, director of residential sales at SolarCraft a 35-year old company that installs systems in Marin, Sonoma and Napa counties.

Also being reconsidered is a 30 percent tax break homeowners currently receive for installing solar.

If that happens, prices will climb, Stromberg said. Nearly 40 percent of new power generation projects added last year were solar, and for the first time, solar installations formed the largest group of electricity generating capacity of any energy source, according to Greentech Media, a clean energy news and market analysis platform.

As of February 2017, there were 1.3 million solar installations across the United States, with a cumulative capacity of over 40 gigawatts. The Solar Energy Industries Association (SEIA) estimates that 1 megawatt of electricity can power 164 homes, so 40 gigawatts is enough capacity to power 6.56 million U.S. households.

“It took us 40 years to get to 1 million installations, and it will take us only two years to get to 2 million,” Dan Whitten, vice president of communications at SEIA, told Greentech.

While residential solar has continued to grow across the U.S., California has maintained its position as the largest home solar market in the country, according to a recent study by Solar to the People, a solar information platform that provides analysis and information on the solar industry to homeowners, solar installers and policymakers.

The cost for California homeowners to install solar systems has remained relatively steady over the past three years, the study said, although larger installations keep the cost higher than the national average.

In the state, the average cost to install the most common size - 6 kilowatts (6,000 watts) - system is $13,700–$17,500, and for a 10-kilowatt system, $18,100–$27,100, after the 30 percent federal tax incentive.

That brings the overall average cost of home solar across the state in the first six months of 2017 to $18,860, including the tax incentives.

The average U.S. cost for home solar installation is $10,045–$13,475 for 5-kilowatt systems, after tax incentives.

That's nine percent lower than it was a year ago, according to Energysage, an online marketplace that connects solar shoppers with multiple solar installers who compete for their business.

Many factors go in to what someone pays for solar installation including size of the system and amount of kilowatts, typically 5, 6 or 10.

While the national average is 5 kilowatts, residential installations in California have increased in size to a state average of 6.1 kilowatts, a 4 percent increase from 2016 and 10 percent over 2015.

Across the U.S., Florida sees the lowest rates for 6 kilowatts at $10,800–$15,200, and Washington sees the highest at $15,100–$19,700.

In California, the San Francisco Bay Area, including Sonoma, Napa, and Solano counties, paid the highest rates per watt of installed solar in the state at $18,000.

The lowest price paid for solar installations in the state overall was in the Central Coast, where installations averaged $15,900.

The highest cost area was Redding, Shasta and Cascades, where homeowners saw average installation costs of $20,800 for the largest installations, 7.2 kilowatts.

The smallest installations were seen in the San Francisco Bay area, at 5.1 kilowatts.

Overall, the state's average installation costs have been stable over the past three years, increasing 1.0 percent in 2015–2017 and just 0.2 percent in 2016–2017.

The average cost of solar on a per-watt basis, was $3.09, including federal incentives. This level represented a 3.3 percent drop from 2016 and an 8.3 percent drop from 2015, so homeowners are paying less per unit of solar generating capacity each year.

Cynthia Sweeney covers health care, hospitality, residential real estate, education, employment and business insurance. Reach her at Cynthia.Sweeney@busjrnl.com or call 707-521-4259.