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Financial Incentives & Solar Financing

Commercial Solar ROI Calculator for San Diego Businesses

2026

How long until your solar system pays for itself? What is your 25-year return on investment? Use the calculator below to estimate your commercial solar ROI based on your current electricity costs, system size, and available incentives, then review the methodology and key variables in the guide below.

01

How Commercial Solar ROI Is Calculated

Return on investment for commercial solar is calculated by comparing the total cost of the system (after incentives) against the financial benefits generated over time. Those benefits include direct electricity savings, export credits, avoided utility rate increases, and tax benefits.

The ROI Formula

Commercial Solar ROI = (Total 25-Year Benefits – Net System Cost After Incentives) ÷ Net System Cost After Incentives × 100

Example: A $500,000 system with $239,250 in combined ITC + MACRS benefits nets out to $260,750. If it generates $850,000 in electricity savings over 25 years (accounting for 3–4% annual utility rate increases), the ROI is approximately 226%.

02

Key Variables That Affect Your Commercial Solar ROI in San Diego

1. Current SDG&E Electricity Rate

San Diego Gas & Electric has among the highest commercial electricity rates in the nation, currently averaging $0.18–$0.28 per kWh for commercial customers depending on rate schedule. Higher utility rates translate directly to higher solar savings and faster payback. SDG&E commercial rates have increased at approximately 4–6% annually over the last decade. Solar locks in your energy cost, protecting against future rate increases.

2. System Size and Your Energy Load

The optimal solar system size for your business is determined by your 12-month electricity consumption history. Indigo Energy analyzes your SDG&E interval data to size your system for maximum bill offset without excessive unused generation.

System SizeEstimated Cost Range (Before Incentives)
Small office / retail (50–150 kW)$125,000–$500,000
Mid-size warehouse / school (150–400 kW)$500,000–$1,250,000
Large industrial / campus (500 kW–1 MW+)$1,250,000–$2,500,000+

3. Incentives Applied

The federal ITC (30%), MACRS depreciation, SGIP battery rebates, and SDCP incentives all reduce net system cost and accelerate payback. Businesses that claim the full ITC + MACRS on a purchased system typically reach payback 2–3 years faster than those using a PPA.

4. Financing Method

How you pay for solar significantly affects your cash flow and ROI:

Financing MethodITC AccessTypical Payback
Cash PurchaseFull ITC to owner4–7 years
Commercial Solar LoanFull ITC to owner5–8 years
Solar LeasePartial benefit (depreciation passed to lessor)Immediate savings, no ownership
PPA (Power Purchase Agreement)No ITC to businessImmediate savings, no ownership

5. Demand Charge Reduction (With Battery Storage)

Many SDG&E commercial rate schedules include demand charges, fees based on your highest 15-minute power draw in a billing period. Battery storage systems can reduce peak demand by discharging during high-usage periods, reducing demand charges by 20–40% for qualifying businesses. This dramatically improves overall ROI on a combined solar + storage investment.

03

Typical Commercial Solar ROI Scenarios in San Diego

ScenarioPayback Period25-Year Net Savings
Cash purchase, full ITC + MACRS, high SDG&E rate4–6 years$750,000–$1.2M
Loan-financed, full ITC, moderate consumption6–8 years$500,000–$900,000
PPA, no ownership, immediate savingsDay 1 (no upfront cost)$200,000–$400,000
Nonprofit, Direct Pay ITC, cash purchase5–7 years$600,000–$1.0M
04

What the Calculator Cannot Tell You

The calculator above provides estimates based on inputs you provide. For a precise ROI analysis, Indigo Energy uses your actual SDG&E interval data, building load profiles, shading analysis, and 25-year utility rate escalation models. Our commercial proposals include a full financial model at no cost.

Frequently Asked Questions: Commercial Solar ROI

Most San Diego commercial solar systems reach payback in 5–8 years for loan-financed purchases. Cash purchases with full ITC and MACRS depreciation often reach payback in 4–6 years. Payback is faster for businesses with high SDG&E usage and strong tax appetite.

Solar ROI is directly tied to your electricity spend. Businesses paying $5,000 or more per month to SDG&E are typically excellent solar candidates. Lower-consumption businesses may find smaller systems or specific rate-schedule changes more impactful. Indigo Energy provides honest ROI assessments for every client.

A PPA is generally treated as an operating expense (off-balance-sheet in many cases), while a solar loan or capital lease is treated as an asset with associated debt. Your CFO and accountant should review the accounting treatment — Indigo Energy can provide documentation for both scenarios.

Battery storage improves overall ROI for businesses on SDG&E time-of-use rate schedules with significant demand charges. The SGIP rebate also directly reduces battery storage cost. For lower-consumption businesses without significant demand charges, the ROI improvement may be more modest.

Get a Precise Commercial Solar ROI Analysis

For a precise commercial solar ROI analysis — not an estimate — contact Indigo Energy. We model your actual SDG&E bills, roof conditions, and tax situation to build a proposal you can take to your board or lender.

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