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Sacramento, California Solar Power for Your Home – Leases, Loans, Rebates, and Incentives

Ah, Sactown—the capital of the most populous state in the nation. Sacramento deserves that honor, with a rich and storied history that stands above any other city in the country. Sacramento is vital and bustling, and its culture has a flair all its own. As for weather—we’re pretty sure there’s no better place in the country. Summer evenings here are one of the best things in the world.

Yes, people love living in Sacramento, and everyone has their own favorite thing about the city. But whether your time is spent along the American River bike trail or enjoying one of the city’s seven orchestras, there’s one great thing about Sacramento we hope everyone loves: clean, money-saving solar power.

We know, we know—talking about solar power in California is like talking about rain in Seattle—it’s so ubiquitous you might not even think about it much any more, but if you haven’t yet put panels on your roof to grab a little Sacramento Valley Sunshine, you should know that you’re missing out on a huge financial opportunity. Solar prices have dropped by huge amounts over the last few years, and there are new ways to finance it, too.

Your Solar Strategy in Sacramento

Figuring out the best way to go solar can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best for you, we’ve created the handy decision tool below.

We’ll ask you a few simple questions about you and your home. Once you’re done, we’ll recommend the option that we think will work best for you. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:



Compare the Return of Different Solar Investments in Sacramento, CA

The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time for a lease. As you can see, the purchase option leads to the highest dollar-amount returns over time, but it also requires a big up-front investment. If you take a home equity line of credit (HELOC), though, your payments over 20 years will be offset with the electric bill savings and SREC sales. You’ll still get the 30% federal tax credit for solar—and SMUD’s $500 rebate—just like if you purchased a system. That means you won’t have to put any of your own money down to get solar, and although you’ll see less profit, you’ll still save a ton.

The final option represented is a lease, and it’s definitely the simplest. Instead of dealing with loans and investment rates of return, you can sign a $0-down lease and start saving money immediately. In the first year, the savings are already $50 per month, and as electricity prices rise, so do the savings. It means less money over time than the other methods, but it does save a lot of complications and still saves you over $18,000 in 20 years.

Let’s walk you through how each option could work for you:

 Option 1: Solar Lease or Power-Purchase Agreement

Solar leases and Power-Purchase Agreements (PPAs) can be really great for people who don’t qualify for a tax break or who want to incur less risk (with less reward). The company that installs your system will own the panels and collect the tax credits and SREC sales to make it worth their while. You’ll get cheaper energy bills and a happy feeling from the environmental benefits you’re bringing to the world.

Here are some of the advantages of a solar lease in California:

  • No money down
  • A monthly payment that rises by a smaller increment than electricity prices do
  • The lease is transferable if you decide to sell your house.
  • You just have to find an installer, sign on the dotted line, and then save money
  • The installer takes care of everything, including maintenance and repair

With a lease, you sign an agreement to pay a low monthly price for 20 years. The installation company owns the system, but you get all the electricity it provides, which reduces your electric bill by about the same as your lease payment. Over time, your lease payment rises by a small amount (usually 1%-2.5%), while the cost of electricity historically goes up by about 3.5% per year. That means by the last year of a 20-year lease, you’ll be saving about $1,350 on electricity, just for having a roof!

A PPA is similar to a lease in that the installer puts panels on your roof that they own, but instead of a fixed monthly payment, you agree to buy all the electricity the system generates for a somewhat cheaper-than-retail price. You pay a little less now, and, just like with the lease, you save more in the future as your costs rise slower than utility rate increases, again somewhere between 1% and 2.5% per year.

Here’s the other major benefit of leases and PPAs: because the installation company owns the system, they insure it, and they do all the maintenance and repairs as needed. That takes away a ton of responsibility for you. All you have to do is get quotes from installers in your area, sign up for a lease or PPA through them, and get solar for no money down! You can sign a 20-year agreement with a low monthly payment that will lock in your savings long into the future.

Our example assumes your agreement will run for 20 years with a 2.5% annual increase in payments. You put no money down. And though the savings aren’t major in year 1, they add up over the term of the lease, and each year, the savings get a little bit bigger as electricity rates climb. By the end of the lease, over $18,000 of your money will stay in your pocket. Talk about a sweet deal!

 Option 2: Solar Purchase

Okay, so you’ve got some cash and you’re ready to buy. An outright purchase is the option that returns the most money over time, because you own the system from day one and reap all the benefits. You’ll get the 30% Federal tax credit, California’s rebate, and great electricity savings, all of which add up to a quick payback time and really nice investment return.

In our example, you’re paying the $19,000 cost of a system up front, but at the end of year 1, you’ll get that federal tax credit, energy savings, and SMUD rebate to reduce that cost. When all is said and done, this is one of the best investments you can make, with tens of thousands in possible returns. That being said, even if you have the money, you should look into option 3 below. The advantages of taking a loan to pay for an income-generating asset cannot be overstated; it’s just a really amazing investment.

If you’re the kind of person who can afford a purchase and you don’t like paying interest (even if it makes you more than you pay), read on:

Here’s how the numbers work for a solar purchase in Sacramento:

  • Installing a typical 5-kW solar system should start at about $19,050. Don’t worry – that number is going to get way smaller in a hurry.
  • The SMUD rebate will take an immediate $500 off the cost, meaning your out-of-pocket payment is $18,550.
  • At the end of the year, the federal government will give you a 30% tax credit based on the cost of your system after the rebate. That’s $5,565 off. You can take the credit over two years if you don’t owe $5,565 in federal taxes this year.
  • The electricity you’ll save in the first year of operation would have cost $1,334. That’s enough to pay for a really nice date night once a month.
  • All those savings and incentives mean the first-year cost of your 5-kW system is just $11,651.
  • With a conservative estimate of 3.5% per year for the future rise of electricity prices, your investment will be fully paid off after 9 years, and you’ll be making a big profit until 2039 or later.
  • Your total profit in our 25-year estimate will be a stupendous $38,966! The rate of return on your investment will be 14.2%, which is almost two times as good as an investment in an S&P 500 index fund.
  • And don’t forget… your home’s value just increased by close to $27,000, too (your expected annual electricity savings over 20 years), and thanks to California’s property tax exemption for solar, you won’t pay taxes on any of it!

Remember: these figures are estimates. Your home is unique, and how much money solar will save you depends on that uniqueness. Thankfully, we know some experts in New Jersey. Just sign up for personalized savings estimates and one of them will be more than happy to go over all those details and help you craft a plan to get the maximum savings from a solar power system in your home. Your quote is 100% free, so go ahead and shop around… grab two or three, or five, and compare all your possible options.

 Option 3: Solar Purchase with HELOC

This is without a doubt the best option when it comes to percentage return on investment. That’s because it relies on using someone else’s money for the purchase price, which is paid back over time for less than your yearly electricity savings and SREC sales. This assumes a few things about you and your current situation:

  • You can get a home-equity line of credit (HELOC) for $18,550, with a fixed rate of 5% or lower and a 15-year repayment period.
  • You love making money without much risk

The reason this works so well is that you don’t have to put any money down, and your loan payments are almost entirely covered by electricity savings. Those savings will add up to about $111/month to start, while your loan payments will only be about $146/month, so you’ll actually be spending $35/month right away, which isn’t so bad, considering you’ll get the federal tax credit of $5,565 at the end of year 1.

As electricity rates rise over time, your loan payments will stay the same, and the income your system generates will begin to outpace you payments in year 10. Just a few years after that, loan payments cease, and your system will produce profit for a decade or more after. It’s like investing in a business you know will succeed.

Here’s how the numbers pencil out for a California solar purchase with a HELOC:

  • Installing a typical 5-kW solar system should start at about $19,050. Don’t worry – that number is going to get way smaller in a hurry.
  • The SMUD rebate will take an immediate $500 off the cost, meaning you’ll take out a HELOC for $18,550.
  • At the end of the year, the federal government will give you a 30% tax credit based on the cost of your system after the rebate. That’s $5,565. You can take the credit over two years if you don’t owe $5,565 in federal taxes this year.
  • The electricity you’ll save in the first year of operation would have cost $1,334. Again, that’s enough to almost cover the loan payments.
  • All those savings and incentives mean you’ll actually come out way ahead after the first year. You’ll have solar on your roof and an extra $5,638 in your pocket.
  • You’ll continue seeing electricity savings for the life of you system, and your total profit in our 25-year estimate will be a stupendous $31,612! All without investing a single cent of your own money.
  • And don’t forget… your home’s value just increased by close to $27,000, too (your expected annual electricity savings over 20 years), and thanks to California’s property tax exemption for solar, you won’t pay taxes on any of it!

Remember: these figures are estimates. Your home is unique, and how much money solar will save you depends on that uniqueness. Thankfully, we know some experts in New Jersey. Just sign up for personalized savings estimates and one of them will be more than happy to go over all those details and help you craft a plan to get the maximum savings from a solar power system in your home. Your quote is 100% free, so go ahead and shop around… grab two or three, or five, and compare all your possible options.

Additional Information about Solar Power in Sacramento

Single-Family Affordable Solar Homes Program (SASH)

This unique incentive is only available for lower-income families (you need to earn 80% or below of the median family income in Sacramento), and you also need to live in a home that’s classified as affordable housing. If you qualify, you’re in luck—you may be able to get a rebate that covers the entire cost of your new solar system! The size of the solar rebate is based on your income level. Learn more at the Grid Alternatives website.

Property Tax Exemptions for Solar in Sacramento

The state of California exempts solar installations from property tax. That’s great news, since the value of your home will go up by several thousand dollars when you add solar panels—if you reduce your electricity bill by about $1,000 per year, you can estimate that you’ve increased the value of your home by $20,000. All of that new value won’t be taxed.

Sacramento Electricity Prices

Electricity from SMUD starts at “expensive” and goes up to “insane” depending on how much you use. Even households who do their best to conserve energy often end up spending $0.19 per kWh or more. That’s about 30% higher than the national average. Good news though: your rooftop solar system will be feeding energy back onto the grid and bringing your bill down to earth. The more they charge, the more you’ll save.

Remember that these figures are estimates. Your home is unique, and how much money solar will save you depends on that uniqueness. Thankfully, we know some experts in Sacramento. Just sign up for personalized savings estimates and one of then will be more than happy to go over all those details and help you craft a plan to get the maximum savings from a solar power system in your home. Your quote is 100% free, so go ahead and shop around… grab two or three, or five, and compare all your possible options.

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