Cost of Solar Panels in Arizona: Local Solar Installation Prices (2022)
Here’s a quick look at the estimated cost of solar in Arizona:
- Average Cost Per Watt: $2.61
- Cost of Average System: $22,211*
- Cost of Energy Without Solar: $53,906
- Payback Period: 12 Years**
- Lifetime Savings of Going Solar: $23,891
*Average system size is calculated using data from the Energy Information Administration. This price is after tax credit.
**Payback period is calculated assuming the system is purchased in cash.
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Anyone who has spent time in the southwestern U.S., particularly in the deserts of Arizona, would find it no surprise that the region has some of the best natural solar resources in the country. But all the sunshine in the world won’t mean anything if the cost of solar panels in Arizona keeps renewable energy out of reach for homeowners across the Grand Canyon State.
From reduced energy bills to shrunken carbon footprints, there are many benefits of going solar. Regardless, for most homeowners, making the switch comes down to one key question: How much do solar panels cost in Arizona?
In this article, we’ll discuss the average cost of solar panels in Arizona as well as key information about financing solar, public policies that may incentivize solar installations and more. If you want to see how much solar would cost for your home, specifically, you’ll need to get a free quote from a solar installer near you.
How Much Do Solar Panels Cost in Arizona?
Solar panel costs in Arizona are about on par with the U.S average. Local factors and supply limitations don’t hamper Arizona installations or pull prices in either direction. Based on market-based research and data from top solar companies, we’ve found that the average cost of solar panels in Arizona is $2.61 per watt (the national average is $2.66 per watt).
Of course, solar systems aren’t purchased one watt at a time, so what does that price look like in terms of actual installations? Using the state average, for a modestly sized 5-kilowatt (kW) system, the total system cost would be $13,050, but after the federal tax credit is applied, out-of-pocket costs would be lowered to about $9,657.
For larger systems to be installed on homes, businesses, schools or other facilities, average solar power costs break down as follows:
|Size of Solar Panel System||Arizona Solar Panel Cost||Cost After Federal Tax Credit|
The above table provides statewide average prices, but each home solar panel installation will have its own unique characteristics, so costs will vary in actuality.
Some installations will be more straightforward (such as those on a roof that readily faces the sun) while others will be more complicated (such as an irregular-shaped roof or a ground-mounted system), so the actual price for a specific project is best estimated with an installer who can account for your individual needs.
What Determines the Cost of Solar Panels in Arizona?
There are a number of factors that can influence the cost of solar panels in Arizona, including the extent of your home’s energy needs and the local incentives you’re eligible for. Here are a few other key things that will play into pricing:
Not all solar energy systems are alike, and the specific equipment chosen for your project will influence the final cost. Solar panels themselves are seeing lots of research and development, meaning the most efficient solar panels can generate greater amounts of electricity — but they come at a higher cost.
Similarly, things like inverters, solar batteries and the mounting equipment needed to secure the panels to your roof will vary in cost based on the quality of materials and complexity of the install. If you opt for added features like rotating panels or smart technology, your investment will be even more significant.
Regardless of the size and quality of the solar system being installed, the total will usually be relatively high upfront. Because of these capital requirements, it’s extremely common for customers to finance their solar systems. The type of financing used will not only impact what a customer pays upfront, but it will also affect the length of the customer’s solar payback period, or how long it takes to “break even” on the investment.
Here’s how the three most common payment options can affect the cost of solar panels in Arizona:
- Cash: For homeowners with the capital available to cover the full price of their solar system, it’s smart to pay in full upfront. This is less common because of the aforementioned high price point, but if workable, it results in the lowest overall cost and thus shortens your payback period.
- Loans: If you’re unable or unwilling to pay in full, there’s the option to take out a simple loan to pay for the solar system. A solar loan can allow you to purchase a more expensive, premium system, but of course, loans come with interest, and that extra cost will eat into your payback period.
- Leases or power purchase agreements (PPAs): Lastly, potential solar customers may opt to work with a solar company that leases panels to homeowners. With this payment method, you don’t have to pay upfront costs, but you also don’t own the system (and, thus, are ineligible to cash in on tax credits). In the long run, the amount you will save on energy bills will be much lower, but you are also relieved of the burden of paying for the system yourself.
A third factor that really impacts the cost of solar systems for Arizonans is the choice of installation company. The solar industry is booming, and as such, there is no shortage of contractors and installers who will be eager to help you install your residential solar system.
As with any major home improvement project, different installers have their own rates, oftentimes correlated with the quality or even speed of their work, and it’s up to the customer to do their homework to evaluate potential installation companies. Simply going with the lowest-cost installation company may not be wise if it isn’t reputable, but at the same time, certified local installers may charge lower prices to compete with big-name national installers.
Our best advice is to look at the best solar companies in Arizona, research what deals or specials are available, and talk to neighbors or look at online reviews to find a company that offers you a good price and will deliver the quality of work you need.
Arizona Solar Incentives
Public policy leaders have done a fair job of offering financial incentives that lower the cost of solar in Arizona. Although the state’s net metering program was phased out in 2016, there are still a number of tax credits and incentives available to homeowners. These include:
|Arizona Solar Incentive||How it Affects the Cost of Solar Panels in Arizona|
|Arizona solar tax credit||This statewide program allows people who install solar on their homes to be credited 25% of total installation costs (up to $1,000) in the form of a personal income tax reduction.|
|Solar tax exemptions||The 5.6% of sales tax that’s typically charged in Arizona is not applied to the purchase of solar equipment. |
Similarly, most upgrades to homes will increase the value of the home, and that value is what is taxed via property taxes. Arizona, however, excludes the value increase from solar panels when evaluating how much property tax you must pay.
|Local solar incentives||On top of state incentives, numerous towns, cities and counties may have their own incentives to encourage citizens to engage with solar. Because these can vary greatly from one jurisdiction to the next, you should research your area (or call your local representatives) to find out more.|
|Federal solar tax credit||Anyone in the U.S., including Arizona, is able to take advantage of the federal solar investment tax credit, or ITC. For any solar systems installed before the end of 2022, 26% of the cost of the system is available as an income tax credit.|
FAQ: Cost of Solar Panels in Arizona
The average payback period for solar panels is about eight years, and the average lifespan of a system is about 25 years. The payback period can be greater or shorter depending on the size of installation, tax incentives utilized and total cost paid by the customer.
The average home needs about 20 to 25 solar panels to offset 100% of energy needs. However, that figure will vary widely based on the energy used by the home, the size and efficiency of the panels, how much shade falls onto the panels from nearby buildings or trees, and other factors.