Exports are worth much less
Net billing pays avoided-cost export rates that vary hourly and average a small fraction of retail. Overbuilding to sell power back no longer works.
Does Solar Still Pay in San Diego?
The honest payback math under NEM 3.0 — with and without a battery.
Last updated
Quick answer
Solar still pays in San Diego, but the reason changed. Under net billing — NEM 3.0, which applies to systems interconnected after April 2023 — exported power credits at avoided-cost rates that average roughly a tenth of the retail price you pay, so the value now comes from consuming your own production rather than banking credits. A typical 6 to 8 kilowatt system costs about 2.50 to 3.75 dollars per watt before incentives, so 15,000 to 30,000 dollars gross and roughly 10,500 to 21,000 net of the 30 percent federal residential clean energy credit where it applies. Solar-only payback in SDG&E territory commonly lands around 7 to 11 years because local electricity rates are among the highest in the country; adding a 10 to 13 kilowatt-hour battery raises cost by 12,000 to 20,000 but shifts production into expensive 4 to 9 p.m. peak hours and adds outage backup, typically landing payback in a similar 8 to 12 year band with much better bill savings. The deciding variables are your annual kilowatt-hour usage, your roof's age and orientation, whether you have or plan an EV or heat pump, and whether you buy cash, finance, or lease.
Typical San Diego residential solar scenarios
| Scenario | Net cost after 30% credit | What it does |
|---|---|---|
| 5 kW solar only | $9k–$14k | Covers a modest-usage home; offsets daytime load |
| 7 kW solar only | $12k–$18k | Common size for a 3-bed home with AC |
| 7 kW + 13 kWh battery | $22k–$32k | Shifts output into 4–9 p.m. peak; backs up essentials |
| 10 kW + 2 batteries | $32k–$45k | EV charging plus whole-home backup |
| Battery added to existing solar | $9k–$16k | Best move for pre-2023 NEM 2.0 homes facing peak rates |
| Lease or PPA | $0 down | Lower savings, escalators, and a lien-like complication at resale |
What NEM 3.0 changed
The rules for new systems are fundamentally different from what your neighbor got in 2019.
Self-consumption is the whole game
Every kilowatt-hour you use as it's produced is worth full retail. Running the dishwasher, pool pump, and EV charger midday is real money.
Batteries changed from luxury to lever
Storing midday production and discharging during the 4 to 9 p.m. peak captures the largest rate spread of the day.
NEM 2.0 grandfathering is valuable
Systems interconnected before the switch keep legacy terms for 20 years from interconnection. Don't casually replace or expand a grandfathered system without checking the impact.
Rate plan choice matters more
Time-of-use plans with steep peak differentials favor battery owners; the wrong plan can erase a chunk of expected savings.
High local rates keep it viable
SDG&E residential rates are among the nation's highest, which is precisely why San Diego payback still beats most of the country under the same rules.
How to actually run your own numbers
Five inputs decide everything. Get them before you take a sales call.
Pull 12 months of kilowatt-hours
Download your usage history from your utility account. Annual kWh, not your dollar bill, is the number every honest designer starts from.
Note your peak-hour share
If a large share of usage falls between 4 and 9 p.m., a battery does more for you than more panels.
Assess the roof honestly
South and west exposure win under time-of-use. If the roof has under about 10 years of life left, reroof first — removing and reinstalling panels later costs thousands.
Add future load
An EV, heat pump water heater, or heat pump HVAC changes the right system size substantially. Size for the house you'll have in three years.
Model the panel-only and panel-plus-battery cases
Compare estimated annual savings against net cost for both. If the battery case doesn't beat the solar-only case on your usage pattern, skip it for now.
Confirm the federal credit applies to you
The 30 percent residential credit is nonrefundable and requires ownership, not a lease. Verify current eligibility and deadlines with a tax professional before assuming it.
Cash vs loan vs lease
The financing choice moves total cost more than the equipment brand does.
Cash purchase
Best lifetime economics, you claim the tax credit, and the system is a clean asset at resale. Highest upfront requirement.
Solar loan
You still own the system and claim the credit, but watch dealer fees baked into low advertised rates — they can add 15 to 25 percent to the price.
Lease or PPA
No upfront cost, but the provider takes the tax credit, savings are thinner, escalator clauses raise payments annually, and transfer at sale can complicate escrow.
HELOC or cash-out refinance
Often the cheapest borrowing for homeowners with equity, and you keep ownership and the credit.
Property-assessed financing
PACE-style programs attach to the tax bill. Convenient, but the lien can create friction with buyers and lenders later.
Reading a solar quote without getting taken
The quality signals are boring and specific.
Price per watt, all in
Divide total cost by system watts. If it's far above the 2.50 to 3.75 range without a clear reason like a complex roof, ask why.
Production estimate in kWh per year
A credible quote gives annual production modeled from your roof's pitch, azimuth, and shading — not a percentage-of-bill promise.
Two warranties, not one
Panel and inverter product warranties are separate from the installer's workmanship and roof-penetration warranty. Ask how long the company has existed.
Who handles permits and interconnection
City permitting plus utility interconnection commonly adds one to three months after install. The installer should own both.
HOA and permit reality
California's Solar Rights Act limits an HOA's ability to block panels, though reasonable placement conditions are allowed. Still expect an architectural submittal.
Skip the pressure close
Any offer that expires today is a sales tactic. Get three quotes on the same system size and compare price per watt and modeled production.
Read this first
- • This is a plain-English orientation for homeowners and hosts, not legal, tax, or insurance advice. Confirm anything binding with the permitting agency or a licensed professional.
- • Rules differ by jurisdiction. The City of San Diego, Coronado, Del Mar, Carlsbad, Encinitas, Chula Vista, Oceanside, and unincorporated county land each set their own standards.
- • Fees, caps, and program windows change every year. Treat dollar figures here as planning ranges and verify current numbers before you budget.
- • If your property is in an HOA, city approval is only half the process — your association can be stricter than the city.
Frequently asked
Is solar still worth it in San Diego under NEM 3.0?
Usually yes, because SDG&E rates are among the highest in the country. But the value now comes from using your own production rather than exporting it, so payback typically runs 7 to 11 years for solar only and 8 to 12 years with a battery.
How much does solar cost in San Diego?
Roughly 2.50 to 3.75 dollars per watt installed before incentives, so a 7 kilowatt system commonly runs 17,000 to 26,000 gross and 12,000 to 18,000 after the 30 percent federal credit for owners who qualify.
Do I need a battery with solar in San Diego?
Not required, but it's where most of the added value sits under net billing — it shifts midday production into the expensive 4 to 9 p.m. peak and provides outage backup. If little of your usage falls in peak hours, solar alone may pencil better.
What happens to my NEM 2.0 grandfathering if I add panels?
Legacy net metering terms run 20 years from interconnection, and significantly expanding a system can move it to current rules. Ask your installer to confirm in writing before adding capacity.
Can my HOA prevent me from installing solar?
California's Solar Rights Act sharply limits an association's ability to prohibit solar, but it can impose reasonable aesthetic and placement conditions. Submit an architectural application and cite the statute if you're refused outright.
Should I lease solar or buy it?
Buying — cash or with a loan — has better lifetime economics because you keep the tax credit and own an asset. Leases and PPAs remove upfront cost but include escalators and can complicate a future sale.
How long does solar installation take start to finish?
Install itself is one to three days, but design, city permitting, inspection, and utility interconnection commonly stretch the full process to two to four months.
Keep reading
Short-Term Rental License Rules
Tiers, caps, the lottery, and what hosts actually pay.
ADU Building Guide
Costs, timelines, and what fits on a typical SD lot.
Permits & HOA Approval
How to get plans through the city and your association.
Insurance, Fire & Flood Zones
Why quotes vary block to block and what to do about it.
Utility Costs
What SDG&E, water, and trash actually run per month.
Property Taxes
Rates, Mello-Roos, and supplemental bills explained.
Power Outage Guide
What to do when the grid goes down, with or without a battery.
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