California's Solar Reality: Free or Fee?

If you’re thinking about going solar in California, a state that’s a perfect place to harness the bright golden sun, there are a few questions you might be asking. Before purchasing some panels and placing them on your roof, it’s important to consider your options, such as the Power Purchase Agreement (PPA). With a PPA, you can get a home solar system installed at no cost, and you pay the solar provider for the electricity that you use instead of your local electric utility. I know what you’re thinking: “Is solar free in California?” Let’s break down your options below for getting solar.

Power Purchase Agreement

With a Power Purchase Agreement or PPA, solar companies will install a solar system on your roof for zero $0 out of pocket in exchange for you buying power from them at a fixed rate for the next 20 to 25 years. Even though you’re in a long-term contract and the company still owns your system, there’s plenty of good news. You don’t have to drop tens of thousands of dollars on solar panels; your energy rates are typically lower than a utility company’s, and the solar company handles all the maintenance needs for the solar panels.

Here are some pros and cons of choosing a Power Purchase Agreement:

Pros

There are no upfront costs when you choose a Purchase Power Agreement, which allows you to go solar without a significant financial investment. This partially answers the question, "Is solar free in California?" The answer would be that entering into a Purchase Power Agreement contract is free, as there are no upfront costs.

PPA agreements typically come with fixed rates that are lower than what you are paying now to your local electric utility, which leads to immediate savings on your electricity bills. With the rising cost of electricity, having a fixed rate helps your household budget.

Cons

You don’t own the system installed on your roof, which means you don’t benefit when your property values rise from solar. You also don’t get federal tax credits or rebates for owning a solar system.

Even though you may enjoy lower energy rates, your PPA contract may include a clause allowing rate increases over time, which are typically lower that the 7-15% annual rate increases imposed by your local electric utility.

Purchasing Outright

If you’re the type who wants to own something and have something in your name, buying your solar power system is probably more your speed. You’ll have to pay for the system upfront or take out a loan, but you own the system outright. By owning the system, you get all the tax credits and rebates, your energy rates can be locked in for life, and you’re in control.

However, one of the downsides is that you’re responsible for maintenance and repairs, which means if anything breaks, it’s on you to get it fixed. How much you save will depend on how much you pay for the system, but when you pay off your system in 10 to 15 years, the electricity from solar energy is free. Below are the pros and cons of purchasing your solar system outright.

Pros

When you purchase a solar system, you have complete ownership and control of the system, which allows you to take advantage of any increase in your property value from adding solar.

Purchasing a solar system also means you can claim any available incentives and tax credits, which help reduce the overall cost of the system.

With complete ownership, you are not subject to any potential rate increases, and you can enjoy the benefits of consistent, low-cost solar energy for the lifetime of your system.

Cons

One of the main drawbacks of purchasing a solar system outright is the initial investment it requires. It’s important to remember that this type of investment leads to long-term savings and should be one of the main areas to focus on when considering whether you want to purchase or choose a Power Purchase Agreement.

Another downside of purchasing a solar power system outright is that you are responsible for the maintenance and repair needs of the system as the owner. While they are generally low-maintenance, it is something to remember when factoring in potential costs associated with upkeep.

As an owner of solar panels, you may experience technology obsolescence over time as newer and more efficient panels become available since solar technology continues to advance. If you enter into a contract with a Power Purchase Agreement, the solar provider is responsible for any upgrades or replacements.

Comparison

At the end of the day, you need to weigh the pros and cons of your situation. If cost is a concern, then a PPA could save you thousands. It’s also crucial to consider long-term savings and whether you will live in the same house 20 to 25 years from now. If you prioritize immediate savings without the burden of ownership and maintenance responsibilities, a Power Purchase Agreement may be your ideal choice. On the other hand, purchasing a solar power system is likely the better option if you have the financial means to make an upfront investment and seek long-term benefits.

Regardless of your choice, you'll be joining the over 5 million solar pioneers in California, and the future is looking bright for solar in the state. Policymakers want to expand rooftop solar and are working to improve incentives. As the technology improves, solar will only get more affordable and efficient. The endless sunshine in California is here for the taking, so take your time and go solar in the way that suits you best.

How Rooftop Solar Technology Has Changed

Rooftop solar technology has changed rapidly in the past couple of years. Solar panels have become more affordable, efficient, and powerful. The latest solar panels can convert over 20% of the sunlight that hits them into electricity, a remarkable improvement from just a few years ago. Combined with lower manufacturing costs, these higher-efficiency panels have helped drive down the price of going solar by over 70% since 2010.

Some of the latest innovations in rooftop solar include integrated solar rooftop shingles with solar cells built right in, giving homeowners an attractive and seamless solar option. Some companies are now also offering affordable solar battery storage for homes. These batteries allow homeowners to store the excess solar energy generated during the day and use it at night or during power outages.

The Future of Rooftop Solar in California

California has been a leader in rooftop solar adoption for years, but the future looks even brighter for homeowners who want to go solar. California’s ambitious renewable energy goals, combined with innovative programs and incentives, are driving the continued growth of rooftop solar. California has recently established a target of reaching 90% clean electricity by 2030 and 95% by 2040. Rooftop solar will play an important role in achieving these targets, and the state already has over 1 million solar rooftops installed. Still, only a fraction of the homes in the state have gone solar, leaving significant room for growth.

Homeowners are incentivized to adopt solar for their homes, such as the Net Energy Metering 3.0 (NEM) program. Under NEM 3.0, utility companies must provide bill credits for excess solar energy exported to the electricity grid. This requirement saves homeowners energy and makes going solar more affordable.

Suppose someone rents or a homeowner has a roof unsuitable for solar. In that case, they can subscribe to a shared solar installation from a community solar program and receive credits on their electricity bills. The expansion of community solar will open rooftop solar to many more people in California.

Moreover, community solar promotes a sense of community engagement and collaboration. Participants contribute to the collective effort to advance sustainable energy practices by pooling resources and working together. Community solar programs also foster education and awareness about renewable energy, inspiring others to adopt clean energy solutions.

From an environmental perspective, community solar helps reduce greenhouse gas emissions and dependence on fossil fuels. By supporting local renewable energy projects, participants contribute to a cleaner and greener future for their communities.

As solar and battery costs continue to decline, solar-plus-storage systems are becoming more popular in California. Batteries provide backup power during grid outages and allow homeowners to maximize their solar savings. With wildfires and power shutoffs due to the load on the system during the summer becoming more frequent in the state, solar-plus-storage offers energy security and independence.

Looking Ahead

Looking ahead, innovations like integrated solar roofs, peer-to-peer solar energy trading, and time-of-use rates will further drive rooftop solar adoption in California. The state's leadership, forward-thinking policies, and ideal climate for solar mean rooftop solar will likely continue its impressive growth for decades to come in California. The future is bright for rooftop solar in the Golden State.

Whether you opt to purchase a solar power system outright or go with a Power Purchase Agreement, going solar in California is a beneficial step toward reducing your carbon footprint and gaining control over your energy costs. By carefully evaluating the pros and cons of each option based on your circumstances, you can make an informed decision that aligns with your commitment level, goals, and finances. Then when someone asks you, "Is solar really free in California?", you can tell them about the Power Purchase Agreement option available.

To embrace the sun's power and enjoy the benefits of clean, renewable energy for years to come, contact Ivan the Solar Guy to schedule a call or a visit.