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Are Solar Panels Worth It in Arizona?

By: Home Otter Team

Sep 7th 2022

Time: 7min

Learn about the cost of solar panels in Arizona.

Solar panels are an excellent investment in Arizona. The state is known for its sunny days, which means if you go solar your panels can produce ample power.

The Solar Energy Industries Association ranks Arizona 17th in the nation for installed solar capacity with 1,240 megawatts. Arizona also ranks highly in installed solar capacity per capita. The state ranked 3rd in 2015 and 2nd in 2016 behind California.

Solar panels can save you a lot of money on your electric bill. So, if you're considering installing solar panels, Arizona is a great state.

What Factors Impact the Cost of Solar Panels in Arizona?

Solar panel costs in Arizona depend on the amount of sun that Arizona receives. The panel's wattage, brand, and material construction can also influence the pricing.

Solar installers must first determine the number of kilowatts (kWh) you currently use to know how many kWh you need to replace with the solar panels. They will also take into account:

  • The overall size of your roof.
  • Your roof's angle or orientation.
  • The amount of shade your property receives.

Once they establish these details, they know roughly how many panels you'll need to fulfill your energy consumption needs. However, since Arizona receives so much sunlight, your cost to install solar panels should be relatively low compared to other states.

What Incentives Are Available for Homeowners Who Install Solar Panels in Arizona?

Arizona offers several incentives for going solar. The state provides a tax credit of up to $1,000 for installing solar panels and a property tax exemption for the value of your panels. A few utility companies in the state also offer rebates for installing solar panels.

For example, one of the most common rebates electric companies in Arizona offer is the Solar Renewable Energy Credit (SREC). The SREC is a performance-based incentive that homeowners can earn for each kilowatt-hour (kWh) of solar energy their panels generate.

Other rebates include a percentage of solar installation costs and may be available for purchasing solar equipment, such as batteries or inverters. For a quick and easy way to learn the local incentives that may be available to you - unlock your complimentary, fully-personalized solar report.

Net Metering Policies in Arizona

Net-metering is a billing arrangement where you can get credit for the electricity your solar panels produce.

If your system creates more power than you use, the excess gets credited to your account at the end of the month. The Grand Canyon state does not require net-metering because Arizona's utility regulations do not require it.

However, Arizona does participate in a similar arrangement called net billing. Under net billing, customers with active solar panels receive bills for their "net" energy consumption.

So, if you install solar panels, as a homeowner in Arizona, your electric provider would only bill you the difference between the electricity you produce and what you consume.

What's the Payback Period for Solar in Arizona?

There's no one-size-fits-all answer when determining what type of payback Arizona homeowners could expect after installing solar. Your payback period can vary depending on multiple factors.

For instance, the following factors can all impact solar payback:

  • The size and efficiency of your solar panel system.
  • How much sunlight your home receives.
  • The energy costs in your area.

However, in general, Arizona homeowners can expect a payback period of between 5 and 10 years.

What Are My Options When It Comes to Financing Solar Panels?

A few solar financing options are available to Arizona homeowners interested in solar panels. One option is to lease the panels from a solar company. This option usually has low or no upfront costs, but you will have to pay a monthly fee for the lease.

Another avenue is to borrow money to finance the purchase of the panels. This option will have higher upfront costs, but you will own the panels and may be eligible for state and federal tax credits.

You can also purchase the panels outright - with cash. This option comes with the highest upfront costs but involves no loans, which means you own your system outright.

Electricity Bill Savings on Solar Panels in Arizona

The average household in Arizona can save anywhere from 20% to over 70% on their electric bill by going solar. Solar panels can help offset these high bills by generating electricity from the sun's rays. And, since solar panels typically last 20 to 25 years, these savings will continue for many years.

However, the actual amount you save will depend on a number of factors, including size, roof orientation, the amount of sunlight your home receives, and the rate you're paying for electricity.

To get a better idea of what you stand to save by going solar, download your complimentary personalized solar report today.

A Potential Resale Value Increase for Your Home

Of course, there's no definitive breakdown of what to expect regarding how much your home's resale value could increase after installing solar panels.

It depends on multiple factors, including:

  • Your home's location.
  • Size and type of solar panel system you install.
  • Current market conditions.

However, it is not uncommon for Arizona homeowners to see their resale value increase by as much as 4% or roughly $20,000 after installing solar panels. But again there are multiple considerations at play.

Do I Need to Cut Down My Trees to Go Solar?

Solar panels need direct sunlight to work best, so you might need to trim or remove trees that shade your home. But don't worry—we can help figure out the best way to go solar with the least amount of tree trimming.

Download your complimentary custom solar report to determine if your home receives enough direct sunlight to avoid altering your treeline.

Which Direction Should Solar Panels Face in Arizona?

The location's latitude determines the direction solar panels face in Arizona. In Arizona, the latitude is 34°N, so solar panels should be facing true-south.

This placement will maximize the sunlight that hits your panels and produce the most electricity.

You can still install solar panels on your Arizona home if your home does not face true-south. The sunlight your panels will receive will be less than if your residence was facing south. However, the panels will still generate electricity.

How Does the 26% Federal Solar Tax Credit Work?

The 26% federal solar tax credit is a tax incentive for businesses and homeowners to install solar panels. You apply the credit to the total cost of the installation and use it to offset the income taxes owed.

The federal tax credit is a 26% tax credit for solar installations between January 1, 2020, and December 31, 2022. The 26% solar tax credit drops to 22% in 2023, then expires in 2024.

The Arizona Solar and Wind Equipment Sales Tax Exemption

The exemption applies to the sale of solar and wind equipment that you use to generate electricity for personal use. The credit doesn't apply to selling equipment used for commercial or industrial purposes.

The exemption is available for equipment installed and used in Arizona and is yet another great way homeowners in the Copper State can save money on electric bills.

Can I Sell My Arizona Home if I've Already Installed Solar Panels?

You can sell your Arizona home if you've installed solar panels. Solar panels are considered personal property. Hence, you can sell them with the home.

Additionally, if you have solar panels installed on your residence, you may be able to sell your home for a higher price than if you did not have solar panels.

Solar panels can make your dwelling more energy efficient, and potential buyers could be willing to pay more for a home with solar panels installed.

What Are My Next Steps?

Several steps are involved in installing solar panels, but the process is generally quite simple.

  1. You'll need to find an installer and get a quote from them.
  2. Once you've approved the quote/agreement, the installer will usually come to your home and assess your roof to confirm it's suitable for solar panels.
  3. If it passes the suitability test, they'll schedule the installation.
  4. Next, the crew completes the installation and connects the panels to your electrical system.
  5. Then they test the system to make sure it's working correctly.
  6. Finally, your electric provider must complete an inspection to ensure everything is up to spec.

Once done, you'll be able to begin using your panels to generate electricity for your home!

Find Out What Type of ROI Payback Your Home Qualifies For

Solar panels are a great way to save money on your energy bill and improve your home's marketability. However, before investing, it’s vital to research and determine what type of solar panel ROI payback your home might attract.

To find out what type of ROI you can expect from installing solar panels, let us be part of your research process by downloading your complimentary personalized solar report today!