The Cost of Solar Panels Versus Grid Electricity in San Diego
With ample sunshine and some of the country’s highest grid electricity prices, San Diego is perhaps the best city in America for rooftop solar.
In this article, we’ll cover the cost of solar panels in San Diego versus the cost of grid energy, and how much you can save over the 25-year life of a solar system. Then, we’ll show you how to maximize your solar savings using incentives and by getting multiple quotes.
Let’s dive in with how much solar panels cost in San Diego based on a real binding quote presented to a solar.com customer.
Cost of solar panels in San Diego
Based on our binding quotes, solar panels typically cost between $3 to $4 per watt in California.
You might find a lower figure elsewhere, but make sure that:
- You’re getting a binding quote (meaning the price won’t go up as the project progresses)
- The quote is from an experienced and reputable installer
- The solar panels have a solid 25-year performance guarantee to protect your investment
The figures below are from a real quote for a 4.4 kW solar system presented to a solar.com customer in San Diego.
|4.4 kW solar panel system||$20,078|
|30% federal tax credit||-$4,488|
Based on the contract price, this system costs $3.40 per Watt – right near the middle of our $3 to $4 per Watt range. This system is on the smaller end, and the Price Per Watt (PPW) tends to go down as the system gets larger.
Now let’s see how the cost of solar panels compares to grid electricity in San Diego.
Cost of solar panels vs grid electricity in San Diego
First, let’s break down the cost of a 4.4 kW solar system into cents per kilowatt hour, since that’s the measurement utilities use to price electricity.
Factoring in California’s abundant sunshine and an average rate of panel degradation, a 4.4 kW solar system in San Diego can be expected to produce:
- 6,506 kWh of electricity per year
- 149,687 kWh of electricity over 25 years
If you divide the net cost of the project by the lifetime production, the cost per kilowatt-hour of rooftop solar for this San Diego customer comes to:
- 7 cents per kWh with the 30% solar tax credit
- 10 cents per kWh without the solar tax credit
Now, let’s compare the cost per year electricity from home solar to the cost of grid electricity:
|SOURCE OF ELECTRICITY||COST OF ELECTRICITY (CENTS/KWH)||COST PER YEAR FOR 6,506 KWH OF ELECTRICITY|
|Solar with tax credit||7||$455.42|
|Solar without tax credit||10||$650.60|
|Grid – San Diego*||40.9||$2,660.95|
|Grid – National average*||16.7||$1,086.50|
*Average price for September 2022 per the US Bureau of Labor Statistics.
Even without the 30% federal tax credit, the cost of electricity from solar panels is more than four times cheaper than grid electricity in San Diego. And that’s just in the first year. These savings can be expected to increase each year as the cost of electricity rises.
The household cost of grid electricity has increased on average 6.24% annually since 2017 in the San Diego metro area, according to the Bureau of Labor Statistics. But let’s use a 5% annual increase to be conservative.
Meanwhile, going solar fixes your electricity price at a much lower rate for 25 years. Thanks to net metering, you can essentially replace your electricity bill with a much lower monthly payment on your solar system.
The graph below shows the cumulative cost of solar panels versus grid energy in San Diego compares over 25 years:
Alright, that’s a lot of lines and pretty colors. But what does it mean?
Here’s how going solar versus staying on grid pencils out for this customer.
With the 30% tax credit:
- Break even in Year 4
- Lifetime savings of over $116,000
Without the 30% tax credit:
- Break even in Year 5
- Lifetime savings of over $110,000
We weren’t kidding when we said San Diego is perhaps the best city for rooftop solar. Use our solar calculator to see how much you could save.
Solar incentives in San Diego
While the cost of solar panels in San Diego is already much lower than paying for grid electricity, there are several incentives that can maximize your savings. Let’s start with the most valuable incentive: The 30% federal solar tax credit.
*If you plan on moving out of California anytime soon, check out our list of other states incentives and rebates.
Federal solar tax credit
In August 2022, the passage of the Inflation Reduction Act set the federal solar tax credit (often called the solar Investment Tax Credit or ITC) at 30% for solar systems activated between 2022 and 2032.
At this level, the tax credit is worth $6,000 on a $20,000 solar system – effectively knocking the net cost down to $14,000 and shortening the payback period of going solar.
The ITC also applies to battery storage, and beginning on January 1, 2023 the battery storage does not need to be connected to solar panels.
One thing to note is that this is a non-refundable tax credit, which means it can only be used to reduce your tax liability. It is not a check that comes in the mail for everyone that goes solar.
Although the credit can be rolled over to future tax years, some homeowners – especially retirees – may not have sufficient tax liability to claim the entire credit. While that’s a bummer, it does not change the fact that the cost of solar panels is much lower than grid electricity in San Diego.
This article does not constitute tax advice. Consult a licensed tax professional with questions regarding the federal solar tax credit.
Disadvantaged Communities – Single-Family Solar Homes (DAC-SASH)
One incentive unique to California is the DAC-SASH program. This is an upfront rebate that can help reduce the cost of going solar for qualifying low-income households.
This is a substantial rebate and it’s designed only for narrow community low-income households that need it.
In order to qualify, you must:
- Receive electrical service from
- Pacific Gas & Electric (PG&E)
- Southern California Edison (SCE)
- San Diego Gas & Electric (SDG&E)
- Own and occupy a single-family home as a primary residence
- Be located in a disadvantaged community identified on this map
- Household income below the CARE or FERA program limits
DAC-SASH is scheduled to run through 2030. Visit GRID Alternatives to check your eligibility.
Self-Generation Incentive Program (SGIP)
San Diego homeowners with utility service through San Diego Gas & Electric (SDG&E) also qualify for the Self-Generation Incentive Program for battery storage.
As of November 2022, SDG&E customers can get a rebate for $150 per kilowatt of battery storage installed. That adds up to $1,500 on a typical 10 kWh battery project.
Some San Diegans that live in eligible housing may qualify for a SGIP rebate of $850 per kWh of battery storage, worth $8,500 on a 10 kWh battery project.
SGIP funds are subject to change and expire as the program progresses. Learn more about SGIP rebates and eligibility here.
Property tax exclusion
One final and often overlooked incentive for going solar in San Diego is California’s Active Solar Energy System Exclusion.
It’s well documented by Zillow and the Berkeley Lab that solar panels add the value of your home. That’s great… until it’s time to pay property taxes.
But in California, active solar panel systems are excluded from property tax assessments, meaning they won’t increase your property tax rate.
Important note: This tax incentive sunsets on January 1, 2025.
Getting multiple solar quotes in San Diego
The cost of solar panels – even without incentives – is far less than paying for grid electricity in San Diego, making them a great long-term investment.
The key to a fruitful solar investment is getting multiple quotes from experienced and trusted installers. Comparing multiple quotes gives you a sense of what a fair price is for your project and a wider selection of equipment and warranties.
The easiest way to get multiple solar quotes in San Diego is through solar.com. We’ll design a system based on your home and energy goals and generate quotes from our network of trusted local installers.
Then, we’ll bring you the best three to choose from and provide guidance throughout the entire process.