The federal residential solar tax credit (Section 25D, IRS) expired for homeowner-purchased systems installed after December 31, 2025, so a 2026 purchase of a San Diego 9.0kW installation at $26,100 does not benefit from a federal credit reduction. With SDG&E at $0.298/kWh and California's avoided cost NEM 3.0 net metering, payback timelines will be longer without the federal credit — earlier if SDG&E raises rates before the payback milestone. (If you opt for a lease or PPA, the installer may still claim 30% under Section 48E, IRS, and pass savings through as a lower rate.)
San Diego, California: 2026 Market Data
📊 LOCAL MARKET DATA
- Average system size: 9.0 kW
- Typical purchase cost (2026): $26,100 — the 30% federal residential credit (§25D) expired Dec 31, 2025; a lease or PPA still captures it via §48E
- Net metering: avoided cost NEM 3.0
- State tax credit: 0%
- Federal residential credit (§25D): expired for purchases after Dec 31, 2025; lease/PPA still gets 30% via §48E
- Median household income (San Diego): $108,077
Data from U.S. Census Bureau, DSIRE, NREL
Solar Installation Costs in San Diego: 2026
If you're considering going solar in San Diego, it helps to know what local homeowners are actually paying. The average residential system here is around 9.0 kW, which reflects the typical energy needs of households in the area. However, an important change took effect for 2026: the federal residential solar tax credit, known as the ITC under Section 25D (IRS), expired for homeowner-purchased systems installed after December 31, 2025. A homeowner who buys a system in 2026 receives no federal credit, meaning the full purchase price applies without that offset. California does not offer a state solar tax credit either, so there is no longer a major federal or state tax credit working in your favor on a purchased system. If you prefer lower upfront exposure, a solar lease or PPA may still allow the installer to claim a 30% commercial credit under Section 48E (IRS) — often passed through as a lower rate — provided the system is placed in service by December 31, 2027 or construction began by July 4, 2026. One factor that's reshaping the math in San Diego is net metering. The region now operates under NEM 3.0, which uses an avoided-cost structure for the energy your panels send back to the grid. This affects how quickly your system pays for itself, so it's worth understanding before you sign anything. With a median household income of $108,077 in San Diego, a solar investment is a meaningful financial decision, so take your time. Gather several quotes, read the fine print on any contract or financing terms, and ask plenty of questions about warranties and production estimates. Comparing multiple offers is the best way to make sure the numbers genuinely work for your household. This is general information, not tax advice.
$0.298/kWh on SDG&E: What That Means for San Diego Solar Math
At roughly $0.298 per kWh, SDG&E's rates are brutal on your wallet but oddly great for solar economics. Here's why: every kilowatt-hour your panels produce is a kilowatt-hour you're not buying at that premium price. In a region where utilities charge 12 or 15 cents, solar savings drip in slowly. In San Diego, they pour. A system that offsets most of your usage can save a typical household well over $2,000 a year, and that number tends to grow as SDG&E files for rate increases almost annually. The flip side is that you want a system sized to match your actual consumption, because under current net metering rules you earn far less for power you export than you pay to import it. That makes a well-designed system, ideally paired with battery storage to dodge expensive evening rates, the smart play for getting the most out of San Diego's high-cost grid.
