⚠️ 2026 update on the federal tax credit
The 30% federal residential solar tax credit (Section 25D) expired on December 31, 2025 for systems you buy with cash or a loan. Cost and savings figures on this page that assume that credit may be out of date. Two things still apply: Nevada's sales-tax and property-tax exemptions and NV Energy net metering, and systems on a lease or PPA may still qualify for a federal incentive through the end of 2027. For numbers that reflect today's incentives, book a free review and talk to a tax professional about your situation.
An SDG&E customer in San Diego on the EV-TOU-5 rate (peak rate around $0.42/kWh) installed 7 kW of solar plus a 13.5 kWh battery. Their bill dropped from $340/month to $79/month — a 77% reduction. Cash cost: $36,900 (the 30% federal credit expired December 31, 2025 for purchased systems, so there's nothing to subtract on a 2026 cash buy). Under NEM 3.0, battery storage is what makes this math work. SDG&E has the steepest peak/off-peak spread of any major California utility, which makes the battery arbitrage especially valuable here.
The Starting Point
Single-family home, 2,200 sqft, two adults, one EV charged at home overnight. Pre-solar SDG&E bill averaged $340/month, with summer peaks around $480. They were on EV-TOU-5 because of the EV — peak hours 4pm–9pm at roughly $0.42/kWh, off-peak overnight at roughly $0.16/kWh, super-off-peak weekday midday at about $0.13/kWh.
The EV-TOU-5 rate is brutal during peak hours but generous during super-off-peak. That spread is what we designed around. If you’re on a flat rate (no TOU), the math is meaningfully different — battery arbitrage is worth less because there’s no peak/off-peak spread to capture. Most San Diego solar candidates are on TOU now whether they wanted to be or not, because SDG&E defaults new connections to TOU.
What We Designed
A 7 kW solar system + a 13.5 kWh battery. The panels run during super-off-peak hours, so they're displacing $0.13 power from a self-consumption standpoint — but they're also charging the battery, which discharges during the $0.42 peak hours. So every kWh that flows panels → battery → evening consumption is an arbitrage of roughly $0.29/kWh saved on the evening bill versus what they’d have paid SDG&E.
The EV charges overnight on the cheapest tariff, drawing from the grid, not the battery. Designing the battery to cover the EV would have required two batteries and didn't pencil out. Overnight grid power at $0.16/kWh is already cheap; using a battery to displace that is a poor use of stored kWh that could otherwise displace $0.42 peak power.
The Numbers
| Item | Before | After |
|---|---|---|
| Monthly SDG&E bill | $340 | $79 |
| Annual electric cost | $4,080 | $948 |
| Year-1 savings | $3,132 | |
| Solar (7 kW) gross | $21,000 | |
| Battery (13.5 kWh) gross | $15,900 | |
| Combined cash cost | $36,900 | |
| Federal ITC | $0 — expired 12/31/2025 | |
| Net cash cost | $36,900 | |
| Simple payback | ~11–13 years (cash, post-credit) |
How NEM 3.0 Math Actually Works Here
Under NEM 3.0, exports are credited at the Avoided Cost Calculator rate — roughly $0.05–$0.08/kWh for most hours, occasionally higher during system peak. Compared to the $0.42 peak retail rate, exporting is worth about 1/8th of self-consumption. So the design priority is: self-consume first, store the rest, only export what's left.
For this customer, less than 8% of annual production gets exported. The rest is consumed directly or through the battery. That self-consumption ratio is what makes the math work. SDG&E publishes its NEM-related rates on its solar page. The Avoided Cost Calculator updates monthly and varies by time-of-day, which adds complexity but doesn’t fundamentally change the design priority.
What Surprised the Homeowner
How active they had to be. The system mostly self-manages, but optimizing requires paying attention — running the dishwasher and laundry midday instead of evening, keeping the AC pre-cooled before peak, etc. The savings show up faster when you adjust your behavior. They're competitive about it. The husband checks the production app every morning. Behavior change is responsible for maybe $30–$50/month of the savings on top of the structural design — small in percentage terms but real.
What We'd Do Differently
I'd have explored a smart EV charger that schedules charging based on solar production, not just time-of-use. There are chargers that talk to the inverter and only pull power when solar is producing surplus. That would have allowed some of the EV charging to come from solar directly, displacing more grid pull. The marginal benefit is small ($15–$25/month) but it's a refinement we passed on initially. Now I default to recommending solar-aware EV chargers on any EV-TOU customer.
Permitting and Interconnection
SDG&E interconnection took 18 days from PTO request to approval. City of San Diego permit took 11 business days. Total from contract signature to PTO: 41 days. SDG&E has gotten faster in the last two years; older case studies showing 60+ day timelines aren't representative anymore. The inspection process is mostly digital now, which compresses the back-and-forth that used to drag projects out.
The Total Cost Stack
- Panels (18 × 400W): $6,480
- Hybrid inverter (solar + battery): $4,200
- Battery (13.5 kWh): $11,500
- Racking, BOS, conduit: $2,800
- Electrical (main panel, automatic transfer switch): $3,500
- Permits + interconnection: $920
- Labor: $6,200
- Margin + overhead: $1,300
- Cash price: $36,900
The 30% federal residential credit (Section 25D), which used to cover both solar and storage, expired December 31, 2025 for purchased systems — so there's no federal credit on a 2026 cash or financed buy. Lease/PPA systems can still capture a federal incentive through the end of 2027. In California, SGIP storage rebates and NEM 3.0 net-billing are unchanged and remain the active incentives.
Why This Isn't Typical (or Why It Is)
This is typical for an EV-owning San Diego household on EV-TOU-5 under NEM 3.0. If you're on a flat rate or a different TOU schedule, the math shifts. If you don't have an EV, the rate spread is smaller and the battery payoff is slower. Don't anchor on the 77% number — anchor on your last 12 months of SDG&E bills and your actual rate plan. A SDG&E customer on a non-EV TOU plan with the same system would likely see closer to 65% bill reduction, not 77%.
One more San Diego-specific note. SDG&E’s service area covers a wide range of microclimates — coastal homes in La Jolla, inland homes in Poway, desert-edge homes near Ramona. Production varies meaningfully across the territory. A coastal home with morning marine layer produces 4–7% less annually than an inland home at the same panel orientation, which compresses the savings curve and stretches the payback by a year or more. We always ask about microclimate at the site visit and adjust the production model rather than using a single SDG&E-territory-wide assumption.
And on the EV side: if you don’t have an EV today but are planning one in the next 2–3 years, factor that into the system size now. Adding panels later costs more per watt than building right the first time, and an EV adds 250–400 kWh/month of overnight load that the original design might not anticipate.
Worth adding: SDG&E’s permit-to-operate process used to be one of the slowest in California. It’s improved meaningfully since 2023 — the digital inspection workflow rolled out, and the interconnection queue is shorter than it was. If you read older case studies online with 60–90 day SDG&E timelines, those don’t reflect 2026 reality. Plan on 35–50 days from contract to PTO for a standard residential install in San Diego.
More California-specific guidance at solar-california and solar-san-diego. Or request a quote. See also our LADWP case study for a different California utility comparison.