For homeowners in National City, soaring SDG&E electricity bills are a constant pressure. With rates pushing $0.27/kWh and set to climb, many look to solar for relief. But since 2023, a policy change called NEM 3.0 has complicated the decision, making a simple solar panel installation a less effective financial strategy. The key to real savings now lies in pairing solar panels with a home battery.
Benchmark Cost Analysis
2026 Solar & Battery System Costs in National City
Because a battery is now essential for significant savings, most installers focus on combined systems. While a basic solar-only system costs around $8,050 after credits, it comes with a major financial disadvantage under NEM 3.0.
The recommended path for true energy independence and savings is a solar-plus-battery system. The average gross cost for a system appropriately sized for a National City home is around $23,500. After applying the 30% federal tax credit, the net cost drops to approximately $16,450, with a payback period of under 10 years.
Incentives & Tax Credits
Federal and State Solar Incentives
The primary financial incentive is the federal Residential Clean Energy Credit, which allows you to deduct 30% of the total system cost (including the battery) from your federal taxes. This is a dollar-for-dollar credit, not a simple deduction. Additionally, California offers a crucial property tax exemption—your home's value will increase with solar, but your property taxes will not.
Net Metering: San Diego Gas & Electric (SDG&E)
NEM 3.0 (2023)
Critical 🔋
Understanding SDG&E's NEM 3.0 Rules
The biggest change for solar owners is Net Energy Metering 3.0. Under the old rules, SDG&E gave you nearly full credit for extra solar energy you sent to the grid. Under NEM 3.0, that export credit has been slashed by about 75%. Sending power back to the grid now earns you just a few cents on the dollar, typically 5-8¢ per kWh.
This means a 'solar only' system will only save you money on electricity you use *the moment it's generated*. Any excess power, especially from midday sun, provides very little value. To counter this, you must store that extra midday energy in a battery and use it during the expensive evening peak hours (typically 4-9 PM). This strategy, called self-consumption, is the only way to maximize your solar investment with SDG&E.
Projected Savings
Real Savings: Solar Only vs. Solar + Battery
Let's look at the numbers for a typical National City home. A solar-only system might reduce your annual SDG&E bill by about $1,232. While that's helpful, you're giving away most of your excess solar power for pennies.
By adding a battery, you store that cheap solar energy instead. By using it to avoid expensive peak rates from SDG&E, your annual savings jump to an estimated $1,738. You gain an extra $500 in savings every year, achieve energy independence during outages, and insulate yourself from future rate hikes.