First thing to do is explain your disk setup, so we can understand more about your system. You have already explained that the normally backups are written to a SAN drive, but now your backup is written to a local drive.
The information we need includes the following:
- Is it a physical server or a virtual server?
- On a physical server, how many local disks does your server have? How are they setup? (.e.g. raid levels, partitions, etc.)
- On a virtual server, how many other virtual servers share the same storage facility? (In most cases local disks of virtual servers are actually on a SAN drive.)
- How many other servers have a SAN drive on the same storage facility? (In most cases all these SAN drives share the same physical disks so they compete for performance which each other.)
- On a virtual server, is the SAN drive located on the same storage facility as the local disks?
- Which drives are magnetic rotating disks (e.g. normal hard drives) and which are Solid State Drives (SSD)? (SSD's have significantly better performance, but are a lot more expensive.)
For instance you may have a simple setup where you have a physical server with one local drive which contains the Windows operating system, SQL Server, and all your databases files. Backups are normally written to the SAN drive. In this case during a normal backup the database is read from the local disk and written to the SAN disk. However when you are performing a backup to the local disk the databases is read and written from the same drive which typically reduces performance significantly. For as I can see this compares best to your explanation but we can't be too sure.
If you can't answer those questions, you should probably speak with your storage administrator to get learn how the storage facilities are setup.