It’s a great time to install a home solar system if you live in Los Angeles. The installer’s market is competitive, there are a number of financial incentives available, and the California climate makes many locations perfect for solar roof panel installation.

But how does a consumer evaluate the costs of a new system? There are so many factors involved – loans, buy-backs, kWh, ITC, ROI – how do you actually figure out how much money you’re saving?

Fortunately, there are a lot of good data sources and calculators out there that will help you make sense of all those numbers and letters.

Start with your current utility bill

Let’s begin, as they say, at the beginning: with your current electric bill. With California ranking in the top 5 of the country for utility costs, this is probably a sore subject.

However, you’ll need to figure out what your average monthly usage is. This will be expressed in kilowatt hours (kWh), and you’ll be able to see it on your utility bill. Some utility companies will be able to provide this information to you online, as well.

Once you’ve determined that, you’ll need to use this to determine your average annual usage. (Multiply by 12) Again, this may be an option available to you online, if you have access to your account information that way.

For example, the average U.S. household used 11,000 kilowatt-hours last year.

Now, you’ll need to factor in the costs per kilowatt-hour. This will also be available on your utility bill.

For example, the average CA May 2018 rate of 17.81 cents per kilowatt-hour.

Multiply your annual kilowatt per hour usage by the cost per kilowatt, and you’ll have your annual costs. In our example, that would be $1959.10.

Since installing solar electricity panels will be affecting your future energy use, you’ll also want to factor in rises in electricity costs, which are fairly predictable.

For example, California electricity rates rose by 2.8% from 2017 to 2018. 

Switching to solar energy sources means that you’re able to avoid future rate increases, however.

Look at the averages for your area

Looking at a general picture, you’ll be saving, no matter what. Let’s just look at the averages, and then we’ll give some sources for more calculations.

First, there’s the size of the system. In an average home in California that is converting to solar energy, we can figure that a 6-kilowatt system will work.

Then, the efficiency of the system. Optimally, your system will be able to provide 100% of your electricity needs and even sell off the overage to the grid. But, to be sensible, we’ll go with the national average – and that’s 93%, per EnergySage.

Over a 20-year span, that means that the solar system will provide $29,424 in savings.

You’ll be able to get an idea of what your personal situation would be by using some of the online calculators that are available, such as here and here.

Final calculations

To get the full picture of what your Return On Investment (That’s the ROI we mentioned above)

will be, you’ll, of course, have to get an estimate on what your system size and total panels will be, and the installation fees. This can vary – the good news is that the market is more affordable than ever in Los Angeles.

Then, you’ll want to know about the variety of financial incentives that are available to you at a local, state and federal level.

In brief, Solar Investments Tax Credits (SITC) are still available through the end of 2019 through a federal program. The ITC will be 30% of the total system cost, with no upper limit.

But that’s not all. There are also incentives just for LA residents. The statewide California Solar Initiative is a solar rebate program for customers of public-owned utilities, such as Southern California Edison. 

And, programs like the LA Department of Water & Power’s rebates for residential solar power customers, as well as the Solar Rooftops rebate program, provide even more savings.

The best plan is to utilize some of the abundant online sources to get the most fine-tuned estimates. You’ll be able to calculate how quickly your system will pay for itself, as well as check into financing costs and other factors.

The bottom line is that you will save an average of $1471 a year in an average LA home. That’s great news, and your results may show that you’ll save even more.