LADWP solar programs, incentives, and net metering

LADWP serves over one million homes and apartments and offers various programs so its customers can take advantage of solar power. L.A. is an increasingly green city, so they’ve made it easier than ever for people to get solar panels or purchase solar energy from installations elsewhere in the county.

LADWP offers two solar programs for homeowners: net metering and Solar Rooftops, and two programs for people who rent apartments: Shared Solar and Virtual Net Metering. Like most places, the best deals here are for homeowners. Net metering provides excellent savings on electricity bills, meaning homeowners with solar panels will be able to recoup their investment in just a few years and enjoy clean renewable energy for decades to come.

How solar works with LADWP net metering

If you’re considering purchasing solar panels for your home, it pays to know the steps. Here’s a quick rundown:

• Learn about what goes into a solar installation and how solar saves you money

• Gather multiple quotes from installers near you

• Choose the best quote and work with the installer as they complete the design, permitting, and installation of your system

• Get permission to operate your system from the utility company

• Save money and the planet!

If you’re reading this article, you’re already on the way to completing step one! Los Angeles is an excellent place to install solar, and in general, LADWP is easy to work with. Plus, the utility offers a program called net metering that can save you lots of money on electricity bills with solar panels on your roof.

Net metering is how solar owners get credit for the energy their solar panels produce. During the day when the sun is high in the sky, your system will generate enough energy for your home to use, plus some excess electricity that will be sent to the grid. When it's too dark for solar to meet your needs, you'll draw power from the grid. During the month, LADWP's two-way meter will measure both how many kilowatt-hours (kWh) of electricity your solar system sends to the grid and how much you use from the grid.

If your system sent more energy than you used (i.e. produced a net surplus), you earn a credit equal to the number of excess kWh multiplied by the retail rate for electricity. That credit can be applied to your next bill to offset energy charges. If your system sent less energy than you used, any previous credit you have will be applied first, and then you’ll be billed for any difference. This works on an annual cycle, with solar panels producing more energy during the summer months when the sun is higher in the sky, and less energy during winter.

The one thing these credits cannot offset is called the minimum charge, which is the fixed dollar amount you pay for service every month. For LADWP customers, that minimum charge is $10 per month (or $20 per 2-month bill), plus taxes.

Sample net metering bill

If all of the above sounds confusing, it might help to look at an example (and you wouldn’t be the first person to get confused by utility company billing practices). Thankfully, LADWP has produced this excellent video about how to read your net metering bill:

Potential savings

Now that you know a little bit about how solar panels will save you money with net metering, let's talk about how much money they can save, and how fast those savings will pay back your initial investment in solar.

The average household in Los Angeles pays about $240 for electricity every two months, which corresponds to an average usage of 545 kWh per month, or 6,540 kWh per year. A home in Los Angeles with a good south-facing roof would need a 4.2 kilowatt (kW) solar system in order to meet those needs. Average-sized solar panels can generate 370 watts under full sun, and 12 of them would make a 4.44 kW system. This is slightly larger than the home needs, but LADWP net metering credits roll over indefinitely, so a little extra solar power is not a bad thing.

After the $10 minimum monthly charge, that 4.44 kW system can wipe out the homeowner's full electricity cost of about $1,440 per year, and leave them with a rollover credit of about $200 in the first year. At an average cost of $3.25 per watt, the system could cost $14,430 before the federal solar tax credit, and $10,101 after. Divide that $10,101 by the $1,640 in estimated annual savings, and you get a simple payback time of just 6.2 years!

Given that your solar installation will likely come with a 25-year warranty, that means you can have nearly two decades of free renewable energy from your investment in solar. Also, that payback time assumes LADWP doesn't increase rates for the first 6 years, which is highly unlikely. As rates go up, solar panels pay back their cost faster!

More to know about net metering

As we mentioned above, there are several steps to going solar, and it pays to understand the process. Once you've chosen an installer, they'll inform you of project timelines, but it's important to note that the process isn't entirely up to them. Once the installer has done their work, LADWP has to do a final inspection and grant Permission to Operate (PTO).

Unfortunately, this step is the hardest one to predict the timing of, and some LADWP customers have waited for months to get PTO. Many of the reported delays occurred in 2021, while L.A. was still experiencing major effects from the COVID-19 pandemic. Hopefully, things are moving a bit faster now and continue to improve as L.A. transitions to online permitting software called SolarAPP+, which should free up staff to grant PTO in a timelier manner.

LADWP solar incentives

LADWP no longer offers direct solar incentives to its customers. Years ago, direct incentives like rebates were used to support the development of a solar marketplace and lower prices for consumers. These incentives worked, and prices for solar installations decreased dramatically. As a result, LADWP phased out solar incentives.

Thankfully, the federal government still offers a big tax credit for solar panels. The Inflation Reduction Act (IRA) of 2022 re-authorized the federal solar tax credit, which is set at 30% of the cost to install solar panels until the end of 2032. The IRA also made it so home battery storage installed after 2023 qualifies for the tax credit, whether installed alongside solar panels or not.

Speaking of battery storage, California’s Self-Generation Incentive Program (SGIP) covers people in LADWP territory. If you’d like to get money off a home battery, you can apply for SGIP through SoCal Gas and receive a rebate worth thousands of dollars for most popular batteries. If your income qualifies for the equity or equity and resilience incentives, the incentive is much larger and can cover most or all of the costs to add a battery to your home.

Solar Rooftops program

Net metering isn’t the only program available for people who own their homes and want to benefit from solar. The Solar Rooftops program allows you to receive a direct monthly payment from LADWP for allowing them to install solar panels on your home.

Under the Solar Rooftops program, you essentially become a landlord for solar panels owned by LADWP. In exchange for the use of your roof, you will receive a monthly payment of between $20 and $50, depending on the size of the solar installation your roof can fit.

The Solar Rooftops agreement lasts for 20 years, meaning it can earn participating homeowners between $4,800 and $12,000 over the agreement term. All LADWP residential customers are eligible to participate in Solar Rooftops.

To qualify, customers must be located in the L.A. service area, be on a residential rate schedule (R1-A, R1-B, R1-D, or R1-E), and must not have participated in LADWP's Solar Incentive Program. The home must be owner-occupied and able to satisfy LADWP evaluations and other criteria (like age, size, and shape of the roof).

There’s just one “tiny” catch. The Solar Rooftops program was suspended at the start of the COVID-19 pandemic, and there is now a large backlog of people who applied during that time. The program website contains a note about the backlog, saying “New applications will be processed once the backlog has been addressed. We will also continue to monitor and follow safety protocols from local, State, and Federal health and emergency response agencies.”

LADWP Community solar and low-income programs

If you’re not a homeowner, you can benefit from one of LADWP’s other programs, Shared Solar and Virtual Net Metering. These programs are designed to offer renters a unique way to earn a small amount of savings by using solar energy.

Shared Solar program

Renters in multifamily units in LADWP territory can take advantage of long-term solar savings by signing up for the Shared Solar Program. Under this program, renters receive a special rate for either 50 or 100 kWh per month that is generated by dedicated solar installations elsewhere in LADWP territory.

The program comes with a 10-year term, during which the payments for the 50 or 100 kWh of solar energy are fixed at the agreed-upon amount. Participants should see savings over time as the retail rate for electricity rises but the subscribed portion of their bills doesn’t.

According to the program website, the cost for the Shared Solar subscription in 2022 is $0.20508/kWh. That energy can be used to offset Tier 1 energy charges on a customer’s bill. Current Tier 1 charges for an average customer in 2022 equal $0.19375/kWh. So for now, the solar kilowatt-hours cost a little more than the retail energy rate by about $0.01 per kWh.

Here’s an example: A renter in LADWP uses 350 kWh per month, and pays $67.81 for the energy (350 multiplied by $0.19375). Under the Shared Solar Program, the same 350 kWh of usage would cost $68.95, or about $2.14 more. That might not sound great, but let’s say LADWP raises the price of retail electricity by 3.5% per year. By year 2 of the agreement, the renter is saving a tiny fraction of money with Shared Solar, and by year 10, they’re saving $5.89 per month or about $70 per year.

That’s still not a huge amount of money, but it’s better than what many utility companies in the country offer. These types of “choose to support clean energy” programs usually cost a few cents per kWh more than retail prices, and rarely maintain a fixed cost like the Shared Solar Program.

Read more about the program details on LADWP's official site.

Virtual Net Metering

If your landlord wants to get in on the solar revolution, they can sign up for LADWP’s Virtual Net Metering (VNEM) program. The city launched its VNEM program as part of its “Green New Deal—Sustainable City pLAn 2019” (yes, the capital “LA” in “pLAn” is intentional).

LADWP says VNEM “allows property owners and developers to install solar photovoltaic systems at multifamily sites and sell the solar energy generated to LADWP. A minimum of 40% of the proceeds will be distributed among on-site tenants, allowing multifamily tenants to experience first-hand the savings solar power provides”.

Unfortunately, the program website also shows there are no active VNEM installations in LADWP territory. LA Landlords: Maybe you can be the first?

Bottom line: Is it a good idea to install solar in Los Angeles?

If you live in L.A. and you’re looking to save money with solar panels, your best option is to install a grid-connected system and get on LADWP net metering. You’ll be able to earn thousands of dollars in solar and battery incentives from the federal and state government and pay off your system’s cost in under 7 years. After that, you’ll enjoy essentially free solar energy for two decades, or you can choose to sell your home and expect it to go faster and for more money than similar homes near you!

Yes, going solar in L.A. can be an excellent financial decision, helping the planet and your pocketbook at the same time. Just make sure you get a good deal by comparing solar installation companies and understanding the process.