How much will it cost to install solar panels on my 2,000-sq.-ft. home in San Francisco?

Asked by Simon Marla, San Francisco, CA

I'm interested in adding solar panels to a 2,000-sq.-ft. home. What kind of investment should I expect to put in? I'm just looking for a ballpark approximation.


Christine and Robert Boles

Answered by Christine and Robert Boles

San Francisco, CA

Beausoleil Architects

January 23, 2009

This is a great time to consider solar power, as there are incentives available at the federal, state of California, and—in some cities like San Francisco—local level. (San Francisco's Department of Environment has produced a PDF summary of solar rebates, tax credits, and other incentives for residents.)

  • The federal government offers a tax credit for 30 percent of the cost of a solar system.
  • The State of California, through its California Solar Initiative, funds $2.50 per watt up to 100 kilowatts.
  • San Francisco homeowners may also qualify for up to $6,000 in incentive payments.

Grid-tied vs Battery

There are several types of solar panels, and the investment varies widely with the type of panel, its associated system components, and what you expect to get out of the system.

  • If you are interested in grid-tied photovoltaic panels to generate electricity, the cost can be as low as zero down for a leased system, or up to $10,000–$15,000 for a purchased system. Grid-tied means that the power generated goes directly into the grid, spinning the electric meter backwards.
  • There are also systems with battery storage, but they tend to be a lot more expensive and make sense only if you live in an area with an unstable power supply.

We just put a 2,800-watt, grid-tied photovoltaic system on our 2,000-square-foot home here in the foggy part of San Francisco. The panels cover about 200 square feet of our roof.

Leasing a system

Our system is leased from a vendor, SolarCity, that retains ownership and charges us a monthly fee, much like leasing a car. Our total up-front expense to date has been an amazingly low $29—though the same vendor has also offered zero-down lease programs. Our monthly lease is currently $29. The lease cost will rise 3.5 percent per year over the 15-year lease period, while energy costs are projected to rise an average of 6 percent per year (the current fall in energy prices notwithstanding).

A leased system typically makes financial sense if your electric bill is at least $100 per month—ours had been about $120 per month ($150 in the winter) due to heavy computer use in our home office. Our installation is about three months old now and our monthly electric bills have averaged about $20, so we have already saved around $300.

One caveat—we will be "1099-ed" for the $6,000 local incentive, so we will have to pay taxes on it. This will cost us a couple of thousand dollars in extra taxes, but the overall economics are still excellent. The complete details of our system, including monthly updates about power generation, cost, and CO2 savings, can be found on our website.

Purchasing a system

Purchasing instead of leasing the same system would have cost about $8,000 installed, after accounting for the various government subsidies. This is a pretty steep initial cost, but still makes sense if you consider the energy cost savings.

To reduce the price, you might want to look into buying a system through a terrific bargaining collective, 1BOG. Short for "One Block off the Grid," 1BOG was started here in San Francisco and is now going national. The organization researches system parameters with various vendors, then bargains for discount pricing on behalf of numerous buyers, gaining major cost reductions. The last round of negotiations resulted in agreements to sell 2,000-watt systems for a cost of about $4,000, a savings of about 43 percent. The collective is about to initiate a new round of photovoltaic installations.

Solar hot water

Solar water heating doesn't have quite the cache that photovoltaic does at the moment; it is eligible for the same 30-percent federal tax credit as a photovoltaic system, but a pilot State of California program only covers the San Diego area, and San Francisco's GoSolarSF incentives are offered for photovoltaic systems only.

Solar hot water is still a good idea and can be done with a much smaller roof area. Most of the hot water needed for an average household can be provided by 40 to 60 square feet of panels.

With current federal tax credits, the typical installed cost for these systems is $5,500 to $7,500.


For more information:

Read Paul Rosen's Q&A "Can you tell me how well solar hot-water heaters work?"

Tagged In: green cost, solar panels, solar water heater, energy tax credit

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