Is residential solar financially feasible in California?

​The state California (37.0000° N 120.0000° W) is located on the western side of United States of America. This state receives the good amount of the solar radiations averaging 5.73 KWHr/m²/day, making it a favorable place for generating electricity from solar power.

I will discuss the financial feasibility of solar by calculating the break-even cost of the 5KW (without battery) residential solar power system in the state. Let us look at the solar radiations falling in this region throughout the year:

• You can see that June and July are the months with highest solar radiations while Jan and December having lowest solar radiations.
• The months from April to September receives above 6 KWHr/m²/day, making it an excellent place for the solar power installation.

As we all know that solar system works on solar energy, better is the sunlight, more is the energy produced, making it an economical alternative energy option. Let us see the energy produced by the 5 KW solar system in the different month of the year.

Few things about the state

• The average per unit rate of residential grid electricity is USD 0.13
•  It is increasing at an average rate of 2.64% per year.
• The government bond yield in California is 2.2% (This should be your least expected return from your solar power system. If your system is unable to offer you this minimum return then the project is not feasible otherwise it is Yes)
• The homeowners in the USA are paying an average of $ 3.5 per watt for the solar power system.
• The average cost of installation of 5 KW system is $ 17,500 without any tax credits.

On the basis of the above figures, I conclude the break-even cost of the 5 KW solar power system (without battery backup) in California is $ 22,365. It means that if you buy the solar system at this cost then it will offer you an average of 2.2% return per year for the next 25 years.

Conclusion

​If you notice the table above, the actual cost of the 5 KW solar in California is around $ 17,500 without any tax credits or incentives. This cost is well below the breakeven cost of $ 22,365 as calculated by me on the basis of the financial parameters given. The actual return offered by the system will be 5% per year as compared to the breakeven return of 2.2%.
I can very easily say that the residential solar power system in the state California is FEASIBLE.

USA Residents: Use my spreadsheet and know the feasibility in your state

Related Articles:

• Are solar panels attractive investment or big expense?
  
• How to beat the rising electricity prices?
• How to know the profitability of your solar system?