How Much Do Solar Panels Cost in San Diego?

The lowdown on savings and solar panel costs in San Diego

San Diego has high electricity prices, great sunlight, and more solar installers than you could ever ask for. Interested in taking that next step, but aren’t sure how much solar panels cost San Diego residents, or if it even makes financial sense?

We’re here to help! Below, we’ve laid out typical costs and savings for solar in San Diego.

Cost to install solar panels in San Diego

Installing solar on your San Diego roof hovers around $3.37 per watt after incentives. With the average homeowner installing a 5 kW system (equal to 5,000 watts FYI), this means you can expect to pay around $16,850 for your medium-sized installation.

In general, your electricity use dictates the size of your installation – the goal is to have an installation big enough to cover about 100% of your annual usage. In fact, many utilities cap your installation size to cover 100% or less of your average electricity use. Your needs are likely different from the example above. Your system may need to be larger or smaller, depending on your own energy use.

The best way to know what size installation you need is to reach out to a few installers for custom estimates. If you want to make your own calculations first though, check out our article How Many Solar Panels Do I Need?

Now that you know how to figure out how much it costs to install solar panels in San Diego, let’s move on to how much you can save with solar!

San Diego electricity rates are sky high

Before we get into your potential savings, let’s walk through the two factors that make going solar in San Diego such a sweet deal: the high electricity prices and great solar irradiance.

Electricity rates are the single most important factor when estimating your financial savings by going solar.

If your utility rates are high, you’ll be able to easily save money by purchasing and installing your own solar system and avoiding those high rates. Conversely, if your rates are low, it’ll take much longer for you to see a return on your investment.

If you live in San Diego, you’ve probably already noticed SDGE’s sky-high utility rates. In fact, they’re probably the main factor why you are reading this article right now!

Like other California utilities, SDG&E’s rates are based on increasing tiers to encourage customers to use less energy. As you use more energy within a month, you are charged more per kilowatt-hour. Check out the table below to see how SDG&E’s rates change based on use and season.

The first thing you’ll probably notice is that prices are higher during the summer, when electricity is in higher demand. While important, that’s not our focus here. When you look closer, you’ll also see you’re charged about 2x as much for your electricity when you go over 130% of your baseline energy use.

What does baseline energy use mean? Great question! SDG&E sets your baseline energy use based on your location, time of year, and service type (whether SDG&E provides your electricity and gas or just electricity). They even publish a handy calculator on their website so you can see what factors go into this decision. In theory, your baseline is about how much electricity you would need just living a ‘normal’ life.

If you use more electricity than expected, then you pay a higher premium for it. It might sound unfair, but it’s really a pretty good deal. If you keep your energy use in check, you’re actually getting cheaper electricity than what you would get without this tiered approach.

If you’re going solar, then these tiers provide a great way to save money! Even if your solar installation doesn’t cover 100% of your electricity use, it still allows you to use less electricity and avoid those higher rates! That’s a win-win.

Solar production in San Diego is high, too!

We’ve shown you how you can save lots of money going solar thanks to high electricity rates. Now let’s throw in another bonus. Solar installations in southern California (and the desert Southwest in general) will produce more electricity than anywhere else in the country.

Take a look at the map below showing the sun’s irradiance levels (basically how strong the sunlight is) across the US. The higher the irradiance level, the more electricity your solar panels will produce.

Looking at the map, you can see that sunlight is very strong in southern California, Arizona, New Mexico, and eastern Texas. All things being equal, a 5kW installation in San Diego will produce more electricity than a 5kW installation in New York. In fact, we can use NREL’s PVWatts solar calculator to see just how much electricity these 2 installations will produce. Let’s compare:

• 5kW installation in San Diego: 8,048 kWh annually
• 5kW installation in Albany, NY: 6,292 kWh annually

The 5kW installation in San Diego will produce about 20% more electricity than the same system in New York. Fortunately, New York residents are eligible for some incredible incentives to drop the price of going solar– so even though the installations produce less electricity than in other areas, installing solar is still a very lucrative endeavor for homeowners!

Even without incentives, though, San Diego is a great place to install solar! And speaking of incentives…

Hey, what about solar incentives?

San Diego’s got everything you need to make going solar a great decision: good installation costs, high electricity prices, and high solar irradiance.

You might notice that there’s one thing missing from our list: incentives. California was the king of solar incentives for years, offering homeowners across the state deep discounts on their installation costs. Unfortunately, as of 2017, most of those incentives have dried up and are no longer available.

San Diego residents are, of course, still eligible for the 30% federal tax credit as well as net metering through SDG&E, but not much else.

Even without any additional incentives, San Diego homeowners can still save quite a bit by installing solar. How much? Let’s find out.

Example: 5kW installation

Finally, let’s look at how much you can save by installing solar in San Diego! Let’s say you’re ready to install a 5kW installation and want to know how much money you can potentially save.

First, we already know a 5kW installation in San Diego will cost about $16,850 (after incentives) and will produce around 8,048 kWh in its first year. With experts estimating that solar panels will last around 25 years, this means your installation will produce about 183,019 kWh over its lifetime (after accounting for solar panel’s 0.8% decrease in output each year due to wear and tear).

To find your total savings, we now need to know how much it would cost to purchase that 183,019 kWh from SDG&E over the same 25 year period. First off, just to stay on the lower end, we’ll only use the lowest winter rate ($0.19 per kWh) for our calculations – this ensures we’ll have a conservative savings estimate. Secondly, California utilities raise their rates an average of 2.5% each year, so we’ll have to apply this to SDGE’s rates as well.

Doing the math (spreadsheets help), we find that you’d spend $47,025 purchasing a total of 183,019 kWh (the same amount your installation will have produced) from SDG&E over the next 25 years.

Now here’s the exciting part. Subtracting your original investment from the money you’d be spending on power ($47,025 – $16,850), you can see a net profit of $30,175 by installing a 5kW installation in the San Diego area. Again, this is using only the lowest electricity rate. In actuality, higher summer rates and higher tier prices mean your actual savings would likely be even higher!

A quick note: These savings are calculated for a cash purchase. Loans or leases will decrease your savings due to interest rates, leasing payments, and any other fees.

For example, let’s say you don’t want to spend that $17k out of pocket and so you take out a loan to pay for your installation. Your credit union gave you a 15-year loan with 5% interest. With this loan, you’d spend an additional $7,092 on interest, dropping your total profit to $23,183. That’s still pretty good!

Now, remember that the installation cost already includes incentives. With the loan above, you’d have to bring a few thousand dollars to the table, then ‘recoup’ that initial investment the following year at tax time (through the federal tax credit). Even so, if you took out a loan for the entire installation cost, you’d still come out ahead. Very, very far ahead in fact.

As you can see, installing solar in San Diego is a great investment. If you’re interested in going solar, the first thing to do is reach out to a few installers and get customized quotes for your own house. Have any questions? Ask away in the comments!

Image Credits under CC License via Pixabay – 1, 2 & Flickr & Map courtesy of NREL