Looking for the best solar company in San Diego? Finding a good installer is an important step — maybe the most important step — in getting solar panels at your home. But even before that, it’s important to understand the cost of going solar, your potential solar savings, and what incentives can bring down your costs and boost your savings.
Here’s what you need to know to make solar panels in San Diego work for you.
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Does Solar Make Sense in San Diego?
When California changed the rules for how its three big investor-owned utilities (San Diego Gas & Electric included) compensated homeowners who send solar electricity back to the grid, it turned the residential solar industry upside down. You might be wondering if solar is still worth it.
The answer is, yes, solar can still be worth it in San Diego. But the answer to the more important question — is solar worth it for you? — depends on the details of your situation.
Price of electricity
The burden of California’s high energy prices is one reason solar continues to make sense for many San Diego residents. SDG&E’s average electric rate in 2023 was 45.48 cents per kilowatt-hour, nearly three times the national average of 16 cents/kWh, according to the US Energy Information Administration. (Your actual rate may vary throughout the day and year. When you go solar, you’ll have to adopt a time-of-use rate.)
When solar panels help you avoid buying electricity from your utility, you save. The more expensive that electricity is, the more you stand to save.
Price of solar
The price of solar installations is near an all-time low. While the actual cost of any installation will vary by location, capacity, roof complexity, and whether or not a battery or other additional equipment is going in with it, one national estimate put the cost at $3.24 per watt in the second quarter of 2024. That’s down $.20 per watt from the same period the year before.
Available sunlight
While residential solar panels can thrive in places with less sun than Southern California (see New York, for example), more sunlight means more electricity production. San Diego gets an average of between 5.25 and 5.75 peak sun hours over the year, according to the National Renewable Energy Laboratory. That makes it one of the sunniest places in the country.
Outages
Solar panels are designed to shut down when the grid does to keep the equipment and line workers safe. When paired with a battery, they disconnect from the grid, creating a little island of power during a blackout.
Batteries can power select appliances through a blackout, but how many and for how long depends on your energy needs during that time and the size of your battery bank.
In 2023, the average California utility customer experienced 346 minutes of power outages, according to the US EIA. Solar and storage could be worth it if backup power will keep you from a costly or dangerous situation.
See how much you can save by going solar with Palmetto
Solar Incentives in San Diego
While the price of solar has come down dramatically from the early days of the industry, incentives that alleviate the upfront cost are still an important factor for most people.
Federal tax credit
The federal solar tax credit, properly known as the Residential Clean Energy Credit, lets you count 30% of your cost of going solar as a credit against your federal income taxes. The tax credit is not an upfront discount and only counts against taxes you owe or have paid in the year you’re going solar. If your tax liability is smaller than the credit you earn, you can roll it forward to future years.
Let’s say you purchase a five-kilowatt solar system at $3.24 per watt. The total cost of $16,200 would be eligible for a maximum tax credit of $4,860.
If you don’t pay taxes, you can’t use the tax credit and a lease might be a better option for going solar. Everyone’s tax situation is different, so consult a tax expert about your situation.
Credit SEIA
Net metering
SDG&E customers who install solar panels in 2024 and beyond are subject to NEM 3.0, the nickname for the net billing system that went into effect in the spring of 2023. Under NEM 3.0, using the electricity you generate is more valuable than sending it back to the grid. Each kilowatt-hour you produce and consume on your property saves you the cost of one kilowatt-hour from your utility (2023’s average was 45.48 cents), while the average credit you earn by sending electricity back to the grid is much less (averaging between 4 and 8 cents).
Both your cost of electricity and the value of your net billing credit change throughout the day. Starting in 2025, billing credits will be worth between zero cents per kilowatt-hour and just less than a dollar. Discharging your battery when export rates are the highest can increase your savings, but self-consumption will usually be how you can save the most.
Property tax exemption
Solar panels typically raise property values where they’re installed. Thanks to California’s state property tax exemption, you won’t pay higher property taxes just because you install solar panels.
Battery storage incentive: Self-Generation Incentive Program
The Self-Generation Incentive Program provides rebates for battery and clean energy projects. The Center for Sustainable Energy runs the program for San Diego Gas & Electric. Much of the funding for the residential side of the program is designated for low-income participants or those in a wildfire-threatened community. Your chosen installer will likely handle the application and can provide guidance on whether funding is available for your project.
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Solar Payback Period in San Diego
A solar payback period is the time it takes for your savings from solar panels to match the upfront cost of installing them. Here’s a simple formula.
( Total installation cost - Incentives ) / Annual savings = Payback period in years
Say you install a five-kilowatt system for $3.24 per watt, for a total of $16,200. Assume you’re eligible for and claim the full 30% tax credit, bringing your cost down by $4,860. If you save $1,260 a year on your energy bill, you’ll have a payback period of exactly nine years. Payback periods aren’t likely to work out so neatly, but the new net billing regulations were designed to deliver payback periods of about nine years.
Calculating a payback period in advance requires a bit of guesswork. If electricity rates rise faster than expected, for example, your payback period will be shorter. In 2023 in California, the average electricity rate was 29.51 cents per kilowatt-hour, but nine years earlier in 2014 it was 16.25 cents, an increase of almost 82%.
Credit: US EIA
San Diego Gas & Electric and Rooftop Solar Panels
When you go solar, you still have a relationship with your utility (unless you go completely off the grid). Here are some key figures about going solar with San Diego Gas & Electric. In 2025, net billing credits will get less valuable on average and, later in the year, utilities will increase the monthly set fee and lower electricity rates.
| Utility | Average 2023 electric rate (cents/kWh) | Monthly set fee (with EV-TOU-5) | Net metering type | Net billing credit range 2024 (dollars/kWh) | Max system size | Max system offset (for net metering) |
|---|---|---|---|---|---|---|
| San Diego Gas & Electric | 45.48 | 16.00 | Net billing | $0 - 3.98 | None | 150% |
Gas utilities and home electrification
Home electrification paired with home solar panels can be a meaningful way to cut your at-home carbon emissions and save money. By switching your home’s gas appliances and vehicles over to electric ones and then supplying that electricity from rooftop solar, you can take a larger bite out of your energy budget. Check out Palmetto’s home electrification resources to learn more.
See how much you can save with home energy changes
Leasing Solar Panels in San Diego
Third-party ownership — the umbrella that covers solar leasing and power purchase agreements — is an option for people who want to go solar without the upfront expense. Instead of purchasing the panels on your roof, a third party owns them and you pay predictable monthly payments for their use. When your solar savings are bigger than your monthly payments, you save money overall.
When you get Palmetto’s LightReach Energy Plan directly from Palmetto, it’s designed to save you money in year one. It comes with a production guarantee, options to purchase and own your system starting in year six, and comprehensive maintenance and protection for the life of your agreement.
Solar leases and power purchase agreements typically come with annual escalators: a set percentage your payments increase each year. When your payments go up less than your electricity rate, you can save even more toward the end of your agreement.
Solar Panel Maintenance in San Diego
Solar panels can be low maintenance installations. That’s great! Here’s what to consider in case something goes wrong.
Before you go solar, make sure you understand the warranties that apply. That includes coverage for equipment, damage to your roof, and parts and labor. Solar companies may offer protection packages, like Palmetto Protect, which includes a production guarantee, parts and labor coverage, and proactive monitoring, depending on your plan.
One maintenance task you can handle is cleaning your solar panels. During periods without rain, dust and other buildup can dampen your panels' production. Gently cleaning them can keep them productive. Follow all manufacturer’s instructions and don’t use anything that could damage the panels or void their warranty.
Finding the Best Solar Company in San Diego
Since solar installations are best handled by professionals, finding the right solar company is probably the most important decision you’ll make after deciding to go solar. Here are some tips for finding the best solar company for you.
- Read reviews to get a balanced view of the company.
- Talk with your friends and family about their experience going solar.
- Notice which company gives you time to make the decision on your own time and clearly answers all your questions.
- Compare equipment, warranties, and after-installation offerings.
See how much you can save by going solar with Palmetto
Palmetto Reviews
“I just hit my one year anniversary of having solar. It’s been a great experience and everyone at Palmetto has been a pleasure to work with!” Stephanie K. 10/19/2024 Google Review
“Palmetto Solar was 100% up front and honest with me. GREAT Customer Service with any questions or issues which arose.
Highly recommend Palmetto Solar.” Michael K. 10/23/2024 Google Review
“This process couldn’t have been smoother! Palmetto took their time and explained everything and always answered my questions. I would recommend this company to anyone considering solar!” Jen W. 10/31/2024 Google Review
“Palmetto did an outstanding job guiding us through the entire process of installing solar panels for our home. From start to finish they ensured we were updated step by step. If we had questions their customer service was always available by phone, chat, or email. We could not be happier with our solar panel installation and highly recommend Palmetto to anyone looking to go solar.” Jim R. 11/16/2024 Google Review
Frequently Asked Questions
What is the average cost of solar in San Diego?
The cost of solar panels can vary even for neighbors depending on the complexity of their roofs, their energy consumption, and whether they’re adding a battery. One national estimate says residential solar cost $3.24 per watt in the early part of 2024, but the best way to find out is to reach out for a quote at your home.
Does San Diego have net metering?
In 2023, California’s big three investor-owned utilities, including San Diego Gas & Electric, ushered in a new net billing tariff, under which the bill credits you earn with solar are worth less than what you pay for electricity from your utility. Solar still makes sense for many people in San Diego, but you’ll get the most value by using as much of the electricity you generate as possible.
What is the new set fee on electric bills in California in 2025?
Beginning in 2025, California’s big three investor-owned utilities will begin collecting a new fee on bills while lowering electricity rates. All customers will see a flat monthly fee of $24.15, $12, or $6 added to their bill (depending on their income) while electricity rates drop by 5 to 7 cents per kilowatt-hour. Customers who went solar under NEM 3.0 already pay part of the flat fee but will see theirs increase. The changes are slated to take effect in late 2025 or early 2026.
Does solar increase your home value in San Diego?
Solar panels usually increase property values. Thanks to California’s property tax exemption, you won’t pay taxes on that increase.
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Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.
Andrew BlokWriter and EditorAndrew has worked as a journalist and writer for four years, over half of those dedicated to covering solar. He currently lives in Tucson, AZ, where you might run into him walking his dog and birding while dodging the heat. He has degrees in English education and journalism.
