5 Facts About San Diego Photovoltaic (PV) Solar

Last updated: October 2026

San Diego homeowners have long recognized solar as one of the most practical home improvements available — and the math has only gotten more compelling as SDG&E electricity rates have climbed. The landscape has shifted significantly since solar’s early adoption years, with new federal incentives, California’s net metering overhaul, and dramatically lower equipment costs all reshaping what homeowners can expect when they go solar.

Here are five facts every San Diego homeowner should know before making the switch to photovoltaic solar.

1. SDG&E’s Electricity Rates Make San Diego One of the Best Solar Markets in the Country

San Diego Gas & Electric consistently ranks among the most expensive utilities in the United States. Residential electricity rates have climbed well above the national average, with many households paying $0.40 to $0.55 or more per kilowatt-hour — several times the national average of roughly $0.16/kWh. High baseline rates mean every kilowatt-hour your solar system produces is worth significantly more in San Diego than in most other cities.

San Diego also averages more than 266 days of sunshine per year and approximately 5.5 to 6.0 peak sun hours per day along the coast, which is among the highest solar potential of any major U.S. city. The combination of expensive grid power and exceptional sun exposure is what makes San Diego one of the top solar markets nationally, year after year.

For homeowners whose SDG&E bill runs $250 to $400 per month, a properly sized solar system can offset a substantial portion of that cost, and the savings compound every time SDG&E raises its rates.

2. The Federal Investment Tax Credit Is 30% Through 2032

The Inflation Reduction Act of 2022 restored and extended the federal solar Investment Tax Credit (ITC) at 30%, a significant increase from where it had been scheduled to drop. The credit applies to the full installed cost of a solar system, including panels, inverters, racking, wiring, and installation labor. It reduces your federal income tax liability dollar-for-dollar, not just as a deduction.

The 30% ITC applies through 2032, then steps down to 26% in 2033 and 22% in 2034. For a homeowner installing a $22,000 system today, the credit is worth $6,600 off their tax bill.

Critically, the ITC also applies to battery storage systems — whether installed alongside solar or added to an existing system. Given the changes to net metering described below, battery storage has become an integral part of most new San Diego solar installations, and the 30% credit covering battery costs significantly improves the overall economics.

California does not offer a separate state income tax credit for solar, but the state does exempt solar systems from property tax assessment, meaning your home’s assessed value does not increase when you add solar.

3. NEM 3.0 Changed the Rules — Battery Storage Is Now Central to the Decision

The most significant development in California solar in recent years was the transition to Net Energy Metering 3.0, which took effect for new applicants on April 15, 2023. NEM governs the rate at which your utility buys back excess solar energy you export to the grid.

Under NEM 2.0, homeowners received close to the full retail rate for energy they exported. Under NEM 3.0, export rates dropped by approximately 75%, making it far less financially beneficial to send power back to the grid. The practical implication: a solar-only system without battery storage is less effective under NEM 3.0, because the excess power generated during the middle of the day — when your household may not need it — is credited at a much lower rate.

Battery storage addresses this directly. A home battery system (Tesla Powerwall, Enphase IQ Battery, Franklin WH, and others are common in San Diego) stores your excess midday solar production so you can use it in the evening and overnight, when SDG&E’s Time-of-Use rates are at their peak. Self-consumption is far more valuable than exporting under NEM 3.0, and a well-sized battery can dramatically improve the economics of a solar installation.

Homeowners already on NEM 2.0 are grandfathered under those terms for 20 years from their interconnection date, which is a significant advantage worth preserving if you have an existing system.

California’s Self-Generation Incentive Program (SGIP) also provides rebates for battery storage, with higher incentives available to households in high fire-threat zones and those with medical baseline rates. Check with SDG&E or a licensed solar contractor for current SGIP availability, as funding is allocated in tranches and availability changes.

4. Solar Costs Have Dropped Significantly, but Know What to Expect Under NEM 3.0

Solar panel and equipment costs have fallen by more than 80% over the past decade. In San Diego, the average installed cost for a residential solar system in 2025 ranges from approximately $3.00 to $3.50 per watt before incentives. A typical 7- to 8-kilowatt system sized for a San Diego household runs between $21,000 and $28,000 before the 30% federal tax credit.

After applying the ITC, the net cost of that same system is approximately $14,700 to $19,600. Adding a battery system (commonly in the $8,000 to $15,000 range before incentives, also eligible for the 30% ITC) increases the upfront investment but improves the return under NEM 3.0.

Under NEM 3.0, typical payback periods for solar-only systems in San Diego range from approximately 9 to 13 years, compared to 5 to 7 years under NEM 2.0. Solar-plus-storage payback periods can be shorter when the battery reduces evening grid purchases during peak TOU hours. After payback, the system continues producing value for the remaining life of the equipment — most modern solar panels carry 25-year production warranties, and many perform well beyond that.

Because payback projections depend on your household’s energy usage profile, your existing SDG&E rate plan, shading, roof orientation, and system sizing, working with a licensed solar contractor who provides a detailed production estimate and savings model is important before committing to a purchase.

5. California Law and San Diego Permitting Make Going Solar Straightforward

California has made solar installation progressively easier through legislation and permitting reform.

Title 24 solar mandate. Since January 1, 2020, California’s Building Energy Efficiency Standards (Title 24) have required solar photovoltaic systems on all newly constructed single-family homes. This means solar is already integrated into most new construction in San Diego, and contractors building additions or ADUs often incorporate solar as part of the project scope.

AB 2188 — streamlined permitting. Assembly Bill 2188, effective January 1, 2024, requires local jurisdictions to approve residential solar and battery storage permits in a streamlined online process. Most residential solar permits in the City and County of San Diego can be submitted and approved electronically, without a full plan check, when the system meets specific criteria. This reduces the time and cost to get a project permitted and installed.

HOA protections. California law (Civil Code Section 714) significantly limits an HOA’s ability to prohibit or restrict solar installations. HOAs can impose reasonable aesthetic guidelines but cannot effectively block a homeowner from going solar. If you live in an HOA community, your right to install a solar system is legally protected.

Property tax exemption. As noted above, the California Active Solar Energy System Exclusion means adding solar to your home does not trigger a reassessment or increase your property tax, even though it adds real value to the property.

What This Means for San Diego Homeowners Considering Remodeling

If you’re planning a room addition, ADU, kitchen remodel, or other significant home improvement project in San Diego, solar and battery storage are worth evaluating alongside the project. Incorporating solar during construction or a major renovation reduces installation complexity, may allow wiring and electrical work to be consolidated, and ensures your expanded home footprint is covered by the system from day one.

Murray Lampert’s in-house architectural designers and interior designers work with homeowners on projects of all scales. While we do not install solar systems, we design and build the homes that solar goes on — and we can coordinate with your solar contractor to ensure roof orientation, structural load requirements, and electrical panel capacity are planned correctly from the start. Contact us to talk through your project, or learn more about our design-build process.

Note: Solar incentive programs, SDG&E rate schedules, and NEM policies change over time. Confirm current ITC percentages, SGIP availability, and NEM terms with a licensed California solar contractor or the California Public Utilities Commission before making a purchasing decision.