In San Diego, California, a solar energy system of 5 kW comes in at about $26,000 before state, local, and federal incentives. Let’s break down the numbers for different sized installs in America’s finest city.
San Diego has gone solar in a big way. The city is second only to Los Angeles for the most installed solar capacity in the U.S. Why? In part because home solar is a solid investment in San Diego, what with all that sunshine.
Given the high cost of electricity in San Diego, and ever-increasing prices, most homeowners can expect to pay off the cost of their home solar energy system in San Diego in less than five years!
How much does it cost to go solar in San Diego? Let’s find out.
The cost of home solar in San Diego
The average San Diego household uses around 9,000 kWh annually. To meet these needs, you’re looking at installing a 5 or 6 kW home solar array.
Looking at data from California Distributed Generation Statistics, the average size of a residential rooftop solar energy system installed in San Diego in 2022 was, indeed, around 5.8 kW. And the average cost of a residential rooftop installation was $25,991.
Most online estimates of the cost to go solar in San Diego are too low
That works out to around $4.50 per Watt in San Diego, which is quite a bit higher than the cost estimates given on many online solar marketplaces (typically $2.87 per Watt). Still, with the federal tax credit of 30%, homeowners in San Diego are looking at a net cost of around $15,738 for a 5 kW system (without storage).
Let’s say you have a bigger home, bigger family, or just use a lot more electricity than the average San Diego resident (we see you La Jolla and Rancho Sante Fe). For a larger, 10 kW home solar array you’re looking at a cost of around $45,000 gross. Assuming you have the tax burden to make use of the federal tax credit, the net cost would be $31,500.
San Diego residents might also be able to access some utility and manufacturer rebates and incentives, or even get home solar for free or subsidized. The Go Solar San Diego County program, for instance, brings public and private sector partners together to make solar more affordable and accessible for low- to moderate-income households.
Check out our solar incentives in California page for more information.
How much can you save by going solar in San Diego?
San Diegans pay some of the highest prices for electricity in the U.S., and those costs are set to rise even higher in 2023. The city’s main utility, San Diego Gas & Electric (SDGE) estimates that electricity delivery rates will go up 8% for an average residential customer on January 1, 2023. This amounts to an increase from 22.6 cents per kilowatt-hour to 24.4 cents.
Assuming the same 8% increase happens every year for the next few years, the average homeowner in San Diego stands to save around $13,805 in energy costs over a five-year period by going solar. Over 10 years, the savings could amount to more than $34,000. Over the lifetime of the solar array (assuming just 25 years of operation), that array could save a staggering $205,5000.
Even with just 1.2% inflation, homeowners could save more than $12,000 in the first five years of going solar, nearly $25,000 over 10 years, and around $75,000 over 25 years.
Your actual savings will depend on your current electricity tariff, changes to energy costs in the future, how much electricity you use, how well your array functions, and other factors.
Putting it all together – Your solar payback period in San Diego
Based on a very conservative rate of inflation (1.2%), most homeowners in San Diego will pay off the cost of going solar in less than five years. If the current 8.2% rate of inflation sticks around, however, that solar payback period could be even faster.
Let’s run a few examples:
Assuming no increase in electricity costs over 2022 prices
Gross cost of a 5 kW solar array = $22,483 gross
Federal tax credit of 30% = $6,745
Net cost of solar = $15,738
Estimated cost of electricity for SDGE customers in 2023 = $0.244/kWh
Average electricity use in California = 9,000 kWh per year
Average annual cost of electricity = $2,196
Annual savings (assuming 90% of energy bill offset by going solar) = $1,976
Solar payback period = $15,738/$1,976 = 8 years
Eight years is about the average solar payback period for home solar across the U.S. Chances are, though, that inflation will stay much higher than 1.2% for the next little while at least. That means a much faster payback period because you’ll be protected against those huge increases in the cost of electricity.
Assuming the current 8.2% rate of inflation continues
Gross cost of a 5 kW solar array = $22,483 gross
Federal tax credit of 30% = $6,745
Net cost of solar = $15,738
Estimated cost of electricity for SDGE customers in 2023 = $0.244/kWh
Average electricity use in California = 9,000 kWh per year
Estimated cost of electricity for first six years = $18,323
Six-year savings (assuming 90% of energy bill offset by going solar) = $16,491
Solar payback period = Less than six years!
Even if we use a much more conservative rate of inflation (2%), the solar payback period in San Diego is still under six years.
Assuming a conservative 2% increase in electricity costs each year
Gross cost of a 5 kW solar array = $22,483 gross
Federal tax credit of 30% = $6,745
Net cost of solar = $15,738
Estimated cost of electricity for SDGE customers in 2023 = $0.244/kWh
Average electricity use in California = 9,000 kWh per year
Estimated cost of electricity for first six years = $18,848
Six-year savings (assuming 90% of energy bill offset by going solar) = $16,963
Solar payback period = less than six years!
What if you install a much larger home solar array in San Diego, CA? Even then, given the huge savings on electricity costs each year, your solar payback period is likely to be well under a decade, meaning you get to enjoy around 20 years of free electricity!