The first question almost every homeowner wants to know when they’re thinking about going solar is – how much are solar panels? A solar power system is a big investment, and cost can be a deciding factor for many homeowners.
Solar power system costs will depend on a number of aspects, including the size of the system, the solar panel brand, and where you live. Why does location matter? Which states are the cheapest to go solar, and which are the most expensive? Let’s take a look at how state policies affect solar costs and where California lands on the solar cost spectrum.
How Much Are Solar Panels in California?
California is known as “The Golden State,” but it could just as easily be dubbed “The Solar Panel State.” California is the number one solar state in the country, producing enough solar energy in 2016 to power almost five million homes. Since California loves solar so much, you’d think that the cost of a solar system in the state would be among the lowest in the country.
You’d be wrong.
According to SolarReviews.com, the average cost of a 5kw (kilowatt) system in the United States is $10,800 after taking the federal tax incentive into consideration. (In this article, we’ll stick with the 5kw size in order to maintain consistency when comparing costs.)
How does California stack up against the average?
The average cost of a 5kw system in California with the tax incentive is $11,130. That places California above average for solar costs when compared to other states. Not exactly something California homeowners want to see!
In contrast, the three cheapest solar states are:
- Georgia: $9,730 for a 5kw system
- Arkansas: $9,940 for a 5kw system
- Alabama: $10,150 for a 5kw system
Of course, things could be worse for California residents. The two most expensive solar states are:
- Hawaii: $11,970 for a 5kw system
- Connecticut: $11,830 for a 5kw system
What is behind these big pricing disparities in solar power system costs? Why does it cost almost $1,500 MORE to install the same sized system in California than it does in Georgia?
The answer, it turns out, has to do with wages, living standards, and the specific rules and regulations in each state.
If you or a close friend or family member owns a business, then you know that one of the most significant costs for almost every company is employee salaries and hourly wages. Solar panel installation companies are no different.
A successful solar panel installation company relies on a big team of people, including installation specialists, site survey technicians, warehouse technicians, customer service representatives, office managers, and more. Each of these people represents a big investment by the company. And throughout the United States wages vary greatly.
For example, California’s statewide minimum wage in 2018 is $11.00 an hour, one of the highest state minimum wages in the country. Additionally, local cities can set their own minimum wage. Two of the top five cities with the highest minimum wage in the country are in California: Oakland at $12 an hour and San Francisco at $15 an hour.
Unsurprisingly, the minimum wage in Hawaii and Connecticut is also relatively high at $10.10 an hour for both states.
How about the three cheapest solar states: Georgia, Arkansas, and Alabama? Of the three, only Arkansas has a state minimum wage above the federal minimum wage at $8.50 an hour. Employees in Georgia and Alabama must rely on the federal minimum wage of $7.25 an hour.
Average Household Income
Minimum wage is only one factor to take into consideration in understanding solar cost differences between states. Many of the workers employed at solar installation companies have specialized skills. When the job market is incredibly tight, as it is right now (the unemployment rate in April 2018 was 3.9%), employers have to pay more to keep good employees. These employees expect to be paid a salary that is in line with norms for their area. Median salaries, like minimum wages, are drastically different across the country.
Anyone who has lived in California for any length of time knows that the cost of living is high in our state. As a result, incomes also tend to be higher than average. The median income in California is $64,500. It’s even higher in the most expensive solar states. In both Hawaii and Connecticut, the median income is over $70,000. Contrast that with our cheapest solar states. In Georgia, the median income is just over $50,000. It’s less than $45,000 in both Arkansas and Alabama.
In high cost-of-living states, like California, Hawaii, and Connecticut, employers have to pay their employees more in order to stay competitive and build a great team. These costs and are often passed, in part, onto customers.
While this may mean more money out of your pocket if you invest in solar panels in California, Hawaii, or Connecticut, here’s a better way of thinking about it. The extra money you’re paying goes into the paychecks of the people installing the solar panels on your roof so that they can afford to live and raise their families in your town. This is why we always encourage homeowners to work with a local installation company. Keep your dollars in your community!
Licensing requirements also vary from state to state and can affect how much solar panels are in your state. In some states, solar installers must get a separate, specialized solar contractor’s license, which requires additional costs. In other states, solar installers must have certain voluntary certifications in order to qualify for local incentive programs.
California requires solar installation companies to have a contractor’s license, such as the C-46 Solar Contractors License as well as specialty licenses for PV and solar thermal installation. Contractors must also maintain their license by investing in ongoing training and education, which requires time and money.
Not every state demands such strict requirements. For example, Georgia does not require solar contractors to hold any state licenses, and solar companies are not regulated by the state licensing board. This means that anyone in Georgia can call themselves a solar installation company and install panels on your roof.
Sure, the cost of solar panels in California may be higher than in Georgia, but at Semper Solaris, we think our customers appreciate the fact that fully trained and licensed contractors are working on their roof!
Solar Panels Are an Investment
Some California homeowners get a bad case of sticker shock when they find out how much solar panels are, especially compared to other states. Our hope is that this article explains where those extra costs come from. The extra costs you pay go, in large part, right into the paychecks of the company’s workers so that they can earn a fair wage. Additionally, some costs are used to maintain the contractor’s training and education so that they can remain fully licensed.
We think those are good investments and hope you do too.
At Semper Solaris, we recognize that solar panels are a significant investment for many of our customers. We do our best to mitigate these costs by offering special discounts, including savings for veterans and first responders. We also offer multiple finance options, including zero-down financing.
Don’t let the cost of a solar panel system scare you away from solar. Solar panels will save you money in the long run by cutting your energy bill costs. Ready to learn more about your options? Schedule a free energy analysis of your home today!