Solar panel payback in California

7.7 years for a typical home solar system in California to pay for itself, with no federal tax credit.

A 3.5 kW system sized for the average home here, which uses 464 kWh a month, costs about $9,800 at $2.80 per watt. It saves about $1,172 in its first year, and after 25 years it is $28,299 ahead. That is fast: the system has paid for itself with most of its 25 to 30 year life still to run.

Prices updated October 2026 from EIA, AAA and BLS data.

Your state

Electricity price

¢/kWh

Monthly electricity use

kWh

System size

Installed cost

$/W

2026 quotes average $2.60 to $3.00.

State and local incentives

Rebates or state tax credits.

Export credit

% of retail

Output, rate increases and upkeep

Yearly output per kW

kWh/kW

Output used as it is made

The rest goes to the grid. Higher if you are home by day.

Yearly electricity price rise

U.S. prices rose 5% in the past year.

Panel output loss per year

Inverter replacement in year 12

Set to 0 if your inverter warranty runs 25 years.

How California compares

California ranks 3rd of 51 for solar payback, fastest first. The fastest is Hawaii at 5.9 years. At U.S. average figures, payback is 12.3 years.

Two things set payback: what each kWh is worth and how many the panels make. California ranks 2nd for electricity price, most expensive first, at 33.61¢/kWh, and 4th for sunshine, at an estimated 1,600 kWh a year per kW of panels. Both work in its favor: power above the U.S. average price and more sun than average.

Power sent to the grid in California is credited well below the retail price, so the calculator assumes 25% of retail instead of the 75% it uses for most states. That slows payback, and using more of your own power as it is made, or adding a battery, matters more here.

Solar pays back faster here than in any neighboring state; next is Arizona at 10.8 years.

State	Electricity	Sun, kWh/kW	Payback
California	33.61¢	1,600	7.7 yrs
Arizona	15.38¢	1,700	10.8 yrs
Nevada	12.77¢	1,700	14.0 yrs
Oregon	15.97¢	1,250	14.6 yrs

More for California

EV charging cost in California vs gas: an EV saves $559 a year on fuel.
Heat pump vs gas in California: a heat pump costs $157 a year more.

What these numbers assume

A 3.5 kW system, sized to cover about 100% of a typical home's yearly use.
$2.80 per watt installed, paid in cash, with no state or local incentives entered.
No federal tax credit: Section 25D ended for systems placed in service after December 31, 2025.
Half the output used in the home as it is made; the rest credited at 25% of the retail price.
Electricity prices rising 3% a year, panels losing 0.5% of output a year, and a $2,000 inverter replacement in year 12.

Change any of them in the calculator above to match your own bills. The formulas are on the main solar payback calculator.

Sources

Electricity price: EIA Electric Power Monthly, Table 5.6.A (July 2026 data).
Household use: EIA 2025 retail sales divided by customers.
Installed cost: 2026 residential marketplace averages.
Output per kW: MeterMath estimate for a south-facing fixed roof system, rounded.
Export credit: California Public Utilities Commission net billing tariff (NEM 3.0), in effect for new customers since April 2023.
Tax credit status: Public Law 119-21.