Electricity is relatively cheap in Arizona, but sunlight is abundant. So do solar panels make sense for your home?
Arizona is one of the top five states generating electricity from solar energy. Why does it rank so high? It might have something to do with its average 7 hours of peak sunlight daily.
Arizona residents paid an average rate of less than 14 cents per kilowatt-hour for electricity in August 2023, according to data from the US Energy Information Administration. But incentives can help lower the cost of solar panels to help make the math on going solar pencil out. Arizona offers some state-level tax breaks on top of the 30% federal tax credit.
Here’s what you should know about going solar in Arizona.
Can solar panels save you money?
Interested in understanding the impact solar can have on your home? Enter some basic information below, and we’ll instantly provide a free estimate of your energy savings.
Best solar panel companies in Arizona
Local Arizona solar panel installation companies
How to determine which solar company in Arizona is best for me
The best installer for your home is someone who has experience working with the type of solar project that you’re looking for. Make sure your installer has experience working on the type of roof that your home has, and the type of solar system you want installed, such as grid-tied or off-grid.
“As a homeowner, you also want to look for an installer that has North American Board of Certified Energy Practitioners certifications and the right licensing and bonding for their work,” said Ben Delman, a communications director with Solar United Neighbors, a clean energy nonprofit.
Reading online reviews can also help you get a better picture of an installer’s reputation. A few places to start your search for solar company reviews are Google, Yelp and Angie’s List. Delman recommends looking for solar companies that have at least 20 to 30 reviews. If you know someone who has solar installed on their home, ask them for installer recommendations, too.
Aside from certifications and reviews, there are some other things to look for in a solar company. A good installer, Delman said, will be able to:
- Provide you with good word-of-mouth references
- Clearly explain the project schedule and deadlines
- Define technical terms in an clear and easy-to-understand manner
- Be transparent about pricing and how financing works for your system
- Know the local permit requirements and the process for interconnection with the local utility company
- Understand and have experience with homeowners association restrictions and help you navigate through that process
A reputable installer should also be able to answer any questions you have, no matter how difficult your questions are. Don’t be afraid to ask for clarification on any project, system and pricing details. To get the best price possible, make sure to shop around for multiple quotes. Delman recommends comparing at least three quotes before picking a solar installer.
Average cost of solar panels in Arizona
Here’s a look at the average cash price for a 5-kilowatt system before factoring in tax credits incentives, according to data from FindEnergy.com.
Arizona solar panel costs
|System size (kW)||Price per watt||Total cost|
Arizona solar panel incentives or rebates
While solar panels in Arizona can save you money on your monthly electricity bills, the upfront costs can be a deterrent. Thankfully, there are federal and state incentives to reduce the overall cost.
The federal government offers the Residential Clean Energy Credit (formerly known as the Investment Tax Credit) as part of the Inflation Reduction Act. This tax credit provides 30% of the total cost of a solar panel system as a credit on your federal income taxes.
The state of Arizona has additional state and local solar incentives. Find the list based on your ZIP code on the Database of State Incentives for Renewable and Efficiency. Here are a few to note:
Arizona solar incentives
|Net billing||Arizona residents can sell excess energy generated from their solar systems back to their electricity provider.|
|Property tax exemption||The addition of solar panels usually increases the value of your home. When this happens, property taxes can increase, too. Arizona has a property tax exemption in place to protect this increase for a solar installation.|
|Residential Solar and Wind Energy Systems Tax Credit||Receive 25% of the price of your solar system credited to your personal income taxes. The maximum credit is $1,000 and must be claimed in the same year as installation.|
|Solar and Wind Equipment Sales Tax Exemption||A 100% sales tax exemption for retail sales of solar energy devices installed by contractors.|
|Residential clean energy credit||Allows you to claim 30% of the total cost of your solar panel system back in federal tax credits.|
Solar financing options in Arizona
There are several ways to pay for solar panels in Arizona, including cash, power purchase agreements, solar loans or leases. Each option has its advantages and disadvantages. Explore the payment options to determine what works best for you.
- Cash: No interest or loan fees, but greater upfront costs. You would be eligible to apply for the Residential Clean Energy Credit.
- Personal loan: You can also borrow the money through a personal loan. The main difference between a personal loan and a home equity loan is that a personal loan is typically unsecured. That means your house isn’t at risk. The downside is they tend to have shorter terms and higher interest rates than home equity products.
- Home equity: You don’t have to use a loan from your solar company. Financial institutions offer home equity loans and lines of credit (or HELOCs) that are commonly used for home improvement projects. These loans can be used for basically any purpose, and they may be a good fit for your solar project. Shop around and make sure you’re getting the best deal.
- Power purchase agreement: Solar company owns and provides maintenance on the solar panels. You only pay for the energy used. Ineligible for solar tax credits and incentives.
- Solar lease: Pay a fixed monthly price, but the company owns the panels. Ineligible for solar tax credits and incentives.
- Solar loan: Easy to apply, not as expensive upfront, but can result in high-interest fees.
Paying with cash or solar loans provides a larger return on your investment because you pay upfront and can claim tax credits. PPAs and solar leases are best for those who do not have the upfront capital, do not qualify for loans or rent their home. Remember that solar leases and PPAs do not qualify for tax credits and other green energy incentives.
Installation factors to keep in mind
Setting up solar panels can cost thousands of dollars. Before saying yes to solar, there are a few things to consider.
- Are you a homeowner? Homeowners can make solar decisions for their homes, but renters are typically not allowed to change the property without a landlord’s consent. There are still solar options for renters, such as community solar programs, where you subscribe to services like Arcadia and receive solar power from nearby panels.
- Can you cover solar panels under your current home insurance? Check with your homeowner’s insurance company to ensure your policy covers solar panels.
- Do you have an HOA or a neighborhood association? Arizona law states that an HOA may not prohibit the installation of solar panels. Check with your HOA or other neighborhood association before installation, as it may still have rules and regulations regarding solar devices.
- What is the condition of your roof? Consider the age, size, slope and tree cover of your roof. Older roofs may need maintenance before installing solar, which can be an added cost. The Department of Energy says solar panels work best on roofs sloped between 15 and 40 degrees and facing the south. Solar installers will assess your roof before installation.
- Where is your home located? While solar panels still work in partially shaded areas, they benefit most from direct sunlight for at least four hours a day. If your solar system is shaded most of the day, it will not generate as much electricity for your home.
Read more: Just looking for an emergency backup? Check out portable solar panels and solar generators.