At $0.39–$0.45/kWh, SDG&E’s rates are among the highest in the nation — and they’ve risen over 60% since 2020. That rate environment is the single biggest driver of solar economics in San Diego. Under NEM 3.0, every kWh of solar you consume directly saves you at the retail rate; every kWh you export earns $0.05–$0.08/kWh. That gap — more than a 5:1 ratio — makes self-consumption the entire strategy. A well-designed solar-plus-storage system that covers your daytime load and discharges stored power during SDG&E’s 4–9 PM peak window can achieve payback periods in the 6–8 year range. Without storage, you’re exporting during midday at avoided-cost rates and buying back expensive peak power in the evening — and that’s where the economics fall apart. San Diego is a market where the solar decision and the storage decision are effectively the same decision.
San Diego Gas & Electric (SDG&E) is San Diego’s primary utility and one of California’s three investor-owned utilities subject to NEM 3.0, which SDG&E calls the Solar Billing Plan.
**How the Solar Billing Plan works:** All new solar customers are enrolled in SDG&E’s EV-TOU-5 time-of-use rate plan, which carries a $16/month basic service fee. Peak pricing runs 4–9 PM daily. Export compensation is paid at avoided-cost rates averaging $0.05–$0.08/kWh, set by the CPUC’s Avoided Cost Calculator and varying by hour and season. Unlike PG&E and SCE customers, SDG&E solar customers do not receive the NEM 3.0 export compensation adder available through 2027 — CPUC determined that SDG&E’s already-high rates make self-consumption economics strong enough without the adder. Excess credits roll over month to month; billing is monthly (no large annual True-Up bill). SDG&E issues Permission to Operate (PTO) once installation passes local inspection; interconnection processing typically takes 1–4 weeks after inspection. The one-time interconnection fee is $132. New solar customers have a 9-year legacy period locking in the Solar Billing Plan terms. Customers grandfathered on NEM 2.0 (PTO before April 15, 2023) retain those rates for 20 years.
**Community Choice Aggregators:** Some San Diego residents are served by San Diego Community Power (SDCP) or Clean Energy Alliance (CEA) for their electricity generation. CCA customers use SDG&E’s grid for delivery but have their generation charges and export credits set by their CCA — rates and incentive details vary, so CCA customers should confirm solar terms directly with their CCA.
Solar installation costs in San Diego run approximately $2.50–$3.00/watt. A typical 6–8kW system runs $15,000–$22,000 before incentives. Adding battery storage (the recommended approach under NEM 3.0) adds $10,000–$15,000 for a single battery system. Permitting is handled through the City of San Diego’s Development Services department; residential solar permits typically take 1–2 weeks. After installation, SDG&E requires an interconnection review and meter upgrade before issuing PTO, adding 1–4 weeks. Total timeline from contract to activation typically runs 8–12 weeks. Income-qualified homeowners in designated disadvantaged communities may qualify for DAC-SASH (free or heavily subsidized solar) and SGIP Equity Resiliency battery rebates. SDG&E also offers the GoGreen Home financing program, connecting homeowners with lenders for bundled solar-plus-storage financing at competitive rates.
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