Solar Financing & Payback in Los Angeles (2026)
Short version: how you pay decides who owns the panels, what the system really costs and how long it takes to pay back. Paid in cash, our two Los Angeles scenarios pay back in about 10–11 years (LADWP, solar only) and 11–13 years (SCE, solar plus battery). A loan stretches that: in 2024 the median loan-financed home system cost $1.2 per watt more than the median cash purchase, before any interest. A lease or PPA has no payback at all, because you never own anything. And the 30% federal credit is gone for owner-bought systems.
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- Cash and loans make you the owner; a lease or PPA leaves the panels with a third party. Only ownership has a payback period.
- Financing costs more than the interest rate suggests: Berkeley Lab found loan-financed systems priced at a median $4.7 per watt in 2024 against $3.5 for cash purchases, partly from fees rolled into the price.
- On LADWP, net metering offsets imports kilowatt-hour for kilowatt-hour over each billing period; on SCE, a 2026-start summer-midday export earns about 6¢ plus a 1.6¢ bonus, so self-use and a battery carry the savings.
- The contract’s cover page must show the total cost and payments, including financing — the number to compare against the cash price.
Three ways to pay
Cash — you pay the price and own the system from day one. A solar loan — you own it too, but repay principal, interest and any financing fee over the term. A lease or power-purchase agreement (PPA) — a company owns the panels on your roof and you pay a monthly amount or a price per kilowatt-hour; the CPUC’s consumer guide warns that these payments typically rise every year by an escalator written into the contract (CPUC). The full side-by-side is in cash vs loan vs lease/PPA; this page is about what each path does to payback in Los Angeles.
How the way you pay moves payback
| Scenario | Cash | Loan, before interest | Lease or PPA |
|---|---|---|---|
| LADWP home, 6.5 kW solar only, saves about $1,750 a year | $19,000 → about 10.9 years | $26,800 → about 15.3 years | No payback: savings are the bill cut minus the payments |
| SCE home, 8 kW solar plus a 13.5 kWh battery, saves about $2,900 a year | $36,000 → about 12.4 years | $45,600 → about 15.7 years | No payback: savings are the bill cut minus the payments |
Method. Prices and savings are the two scenarios in is solar still worth it in California?: a 6.5 kW LADWP system at about $3.00 per watt cutting a $170 monthly bill, and an SCE system with a battery near $36,000 cutting a $280 bill. The loan column adds Berkeley Lab’s median 2024 gap between loan-financed and cash-purchase prices, $1.2 per watt ($4.7 against $3.5, host-owned home systems), to the solar kilowatts only: $7,800 and $9,600. Berkeley Lab notes that not all of that gap is dealer fees (LBNL, 2025 data update). Payback is price divided by first-year savings, with no rate increases, panel degradation or interest — a loan’s interest pushes the loan column further out. Run your own inputs in the payback calculator.
Why LADWP and SCE pay back differently
LADWP: kilowatt-hour netting
LADWP’s net-metering rider nets the kilowatt-hours you export against those you import over each billing period and carries a credit forward, so exported solar offsets purchases at the rate you would have paid (LADWP). A battery there is mainly backup — see LADWP net metering.
SCE: hourly export credits
On the Solar Billing Plan a 2026-start system earns about 6¢ for a summer-midday export plus a 1.6¢ bonus credit, while a kilowatt-hour bought in the 4–9 p.m. summer peak costs about 58¢ (SCE, Schedule NBT, sample bill). Savings come from using your own solar, which is why SCE scenarios usually include a battery.
The rate is the other half
The more each avoided kilowatt-hour costs, the faster any path pays back — see Los Angeles electricity rates.
What changed in 2026
The 30% federal Residential Clean Energy Credit ended for expenditures made after December 31, 2025 (IRS), so a cash or loan purchase in 2026 gets no federal credit — the payback figures above already assume none. With a lease or PPA the company that owns the equipment may claim a separate business credit, which is also tightening under the 2025 federal law; ask in writing whether any of that value reaches your price. Details: the 30% credit ended.
Before you sign a financed deal
- Compare the totals. The solar disclosure printed on the contract’s cover page must state the total cost and payments for the system, including financing costs (B&P §7169). Set that number next to the cash price.
- Down payment. A home improvement contract may ask for no more than $1,000 or 10% of the price, whichever is less (B&P §7159.5).
- Loan and lease terms. CSLB warns about clauses that allow a lien on your home or make all payments due at once after a missed payment, and about escalators in PPAs; a lease or PPA can also require a buyout or a buyer who assumes it when you sell (CSLB).
- Cancellation. A home improvement contract signed away from the contractor’s office can be cancelled until midnight of the third business day after you receive a signed, dated copy — the fifth if you are 65 or older — and Saturday counts as a business day (Civil Code §1689.6, §1689.5).
How dealer fees work, and how to spot them in a quote, is in solar loan dealer fees and solar quote red flags.
Frequently asked
What are the ways to pay for solar in Los Angeles?
Three: cash and a solar loan, where you own the system, and a lease or PPA, where a company owns it and you pay monthly or per kilowatt-hour, usually with a yearly escalator. The full comparison is in cash vs loan vs lease/PPA.
How long is the payback on solar in Los Angeles?
Paid in cash, about 10–11 years for a 6.5 kW LADWP solar-only system at about $3.00 per watt saving about $1,750 a year, and about 11–13 years for an 8 kW SCE system with a 13.5 kWh battery near $36,000 saving about $2,900 a year. Financing lengthens it; a lease or PPA has none. Your numbers depend on usage, rate plan and price — try the payback calculator.
How much more does a solar loan cost than paying cash?
Before interest, Berkeley Lab found the median loan-financed home system priced at $4.7 per watt in 2024 against $3.5 for cash purchases — a $1.2 gap, partly from fees rolled into the price, though not all of it. On a 6.5 kW system that is about $7,800, which moves simple payback from about 10.9 to about 15.3 years in our LADWP scenario; interest adds more. The contract’s cover page must show the total of payments.
Is there still a federal tax credit in 2026?
Not for owner-bought systems: the 30% Residential Clean Energy Credit ended for expenditures after December 31, 2025. With a lease or PPA the owner may claim a business credit, which the 2025 federal law is also tightening. More in the 30% credit ended.
Why does payback differ between LADWP and SCE?
Because the export rules differ. LADWP nets exported against imported kilowatt-hours over each billing period, so solar offsets purchases at the price you would have paid. On SCE’s Solar Billing Plan a 2026-start system earns about 6¢ plus a 1.6¢ bonus for a summer-midday export, against about 58¢ for a kilowatt-hour in the summer peak, so savings depend on self-use and usually a battery.
Does a lease or PPA have a payback period?
No. You own nothing to pay back; your savings each month are the bill reduction minus the lease or PPA payment, and the CPUC warns those payments typically rise every year by the contract’s escalator. Selling the home can require a buyout or a buyer who takes over the contract.
Related reading
Sources & methodology
Figures on this page come from the primary sources below and, where noted, from Cali Energy calculations using the stated assumptions. Rates, incentives, and program terms change; each was verified September 29, 2026.
- Lawrence Berkeley National Laboratory — U.S. Distributed Solar and Storage 2025 Data Update (cash vs loan-financed installed prices, 2024)
- IRS — Residential Clean Energy Credit
- SCE — Solar Billing Plan export values by start year
- SCE — Schedule NBT (Energy Export Bonus Credit)
- SCE — Solar Billing Plan sample bill (June–July 2026)
- LADWP — Service Rider NEM and related rates
- CPUC — California Solar Consumer Protection Guide (lease and PPA escalators)
- CSLB — Solar Smart (liens, acceleration clauses, escalators, home sale)
- Business and Professions Code §7169 — solar disclosure (total cost and payments including financing)
- Business and Professions Code §7159.5 — down payment limit
- Civil Code §1689.6 — right to cancel a home improvement contract
- Civil Code §1689.5 — definition of business day
Not sure whether to pay cash, finance or lease?
Send your utility and a recent bill and we'll put the cash price, the financed total and the payback for each side by side — itemized, no dealer-fee surprises. Call +1-323-844-7777.
Get a free estimatePrepared by Cali Energy, September 29, 2026. This article is for general educational purposes only and is not legal, tax, financial, engineering, or utility advice. Rates, incentives, codes, permit requirements, equipment specifications, prices, and program terms may change; figures and timelines are estimates, not guarantees. Confirm current requirements with the applicable utility, AHJ, program administrator, manufacturer, or a licensed professional. See our Content Disclaimer. Cali Energy · 19201 Parthenia St, Unit E, Northridge, CA 91324 · CSLB #1032379 (B, C-10, C-39)