If the latter then the cost savings are a bit less impressive than stated.
Also can you put power back into the grid in San Francisco? Is that benefit included in the cost savings estimate?
You can sell power into the grid but PG&E only has to pay you wholesale rates, 3-4 cents per kwh, not what they are charging you to take the same amount of energy out, which is 34 cents per kwh at the top tier. It's basically a scam. You don't want to overbuild on the assumption that selling the surplus would be profitable.
There are of course large-scale infrastructure costs (you get to fail-over to nuclear/coal/gas/wind/other), but it seems like all of those things should be accounted separately instead of all being lumped into two line items on a monthly bill from your local monopoly.
Why is it a scam that PG&E won't pay you more for power than they can buy it wholesale?
Anyway, to my mind, any system in which current comes out of your PV installation at 3 cents and flows directly into your neighbor's air conditioner at 34 cents is a prima facie scam.
edit: I'm more familiar with the Texas grid, but beyond the cheapish price of modern peaker plants, in that case the most expensive input sources (small peaker plants, and esp. spot-market purchases) are rarely used at all. Demand prediction and management is good enough to avoid the more expensive inputs, through a mixture of local generation management and advance wholesale purchases on the DC interconnects. On the handful of days when some issue causes a shortfall, it would be valuable to buy residential solar inputs, but this happens about 5-6 days a year. To handle those days, most utilities have a savings-rebate program, where if you agree to reduce your usage between 2-5pm on these handful of days, you get a $0.60/kwh credit. So they solve their occasional peak problem by just turning your thermostat up 2º and "buying" the unused energy at a premium price.
This data may not be publicly available, but I'd love to see graphs of current flowing out of PG&E substations vs. time of day. At some point the PV generation capacity is going to make them have weird upside-down diurnal cycles.
Also in the winter if I have "free" electricity and have to pay for natgas to heat, I'll simply buy a raid array of plug in electrical heaters to eliminate that "free" electricity and eliminate paying for some natgas. Or maybe I'll just install a bigger raid array. Either way, I like free heat in the winter and typical analysis usually doesn't consider heating. If you pay me 3 cents per KWh in the winter, and charge me 15 cents equivalent in natgas energy, I'm not going to sell you a single KWh until my house is above 75F in January.
I'm not saying you can't do it, but even with today's cheap solar panels it's not likely to be a good value proposition.
In the limit of course (too cold outside), a heat pump is just as efficient as using the electricity for heat directly.
But you can use heat pumps, and you can do deep storage of summer heat, for use at winter (no idea about how well it works at your place). Both are very efficient.
Anyway, if your marginal price for electricity is zero, and the marginal externalities are also zero, there's not much problem in using it.
This actually works in your benefit if you have solar panels, because electricity prices are higher during the middle of the day (more demand). So you can "sell" daytime electricity (at high prices) [1], and then buy electricity at night which is much cheaper. This actually is the main benefit of the battery if you are connected to the grid, you can do the same thing.
1: You don't want to sell past your own consumption though otherwise you get paid very little for it
This is important with solar system sizing, because not only don't you want to be a net exporter of energy, the lower tiers of PG&E's energy rates are very cheap so you don't want to generate that power either. You really only want to offset the high-tier, high-demand electricity you use (or plan to use in the future).
For me it didn't really matter because my energy usage is highest during the peak times of the day, but this is my understanding of how it works. I'll know for sure in a couple of months when I see my bill :)
Right now in the Bay Area, almost everyone is using net energy metering (NEM). You get a bill once per year, and they balance out your usage vs generation, and any extra usage is charged.
There is a minimum you have to pay each year, so most installers aim for 85-95% of your usage to be generated by your system. As other folks have stated, it's not advantageous to sell back to the grid given the low price - as such, very very few people actually sell back to the grid, and instead make a small purchase each year, and mostly at off-peak rates.