Is Solar Worth It in Arizona? (2024 Homeowner's Guide)

Watch Below: Does This AZ Homeowner’s Cost Savings Make Solar Worth It?

How Can You Figure Out If Solar Panels are Worth It In Arizona?

As a resident of the sunniest state in the nation, it’s very likely that solar panels will ultimately benefit you and your home. However, solar power systems aren’t ideal for everyone, so you’ll have to analyze your property and figure out your expected return on investment.

Below are the factors to consider to help you decide if solar is right for you.

• Your home’s energy use
• Cost of going solar in Arizona
• Average payback period in Arizona
• Average buy-back rates in Arizona
• Your roof’s exposure to the sun
• Solar outlook in Arizona

Your Home’s Electricity Consumption

Solar energy systems are priced based on the size of the system in watts or kilowatts, and the size is primarily determined by your average monthly energy bills.

The more power you consume, the more solar panels you’ll need. While this drives up your price, it also means you’ll save more on electricity rates each month that your panels are in commission. Homeowners who don’t use much energy won’t benefit as much from solar conversion.

A good rule of thumb is that homes that use less than 500 kWh per month might not find solar panels to provide a worthwhile return on investment, and any consumption above that amount will likely make the system worth it. The average home in Arizona uses 1,114 kWh per month, meaning the large majority of residents will benefit immensely from installing solar panels.

You can check your utility bills for past energy usage to see where your home falls in terms of energy consumption.

Cost of Going Solar in Arizona

The average price per watt for solar panels in AZ is $3.01 — which is below the national average of $3.33 — and the typical system size requirement is 11.5 kW. That comes out to a standard system total of $34,615 or $24,231 after the ITC is considered. While this number might be difficult to justify, solar panels are most valuable in areas where homeowners use a lot of energy and pay high electricity rates.

Although the price of electricity in Arizona is below the national average, homeowners throughout the state use an immense amount of power, averaging around 1,114 kilowatt-hours per month. For comparison, the national average is just 881 kWh. As such, solar panels will provide a higher return on investment in Arizona than in most other states.

Average Solar Payback Period in Arizona

Through monthly energy savings, solar panels almost always pay for themselves and then provide additional savings. The time it takes for the savings to offset the total upfront fees of the system is called the solar panel payback period.

The typical Arizonan sees a return on their initial solar investment in 11 years, which is right in line with the national average. Most AZ homeowners will pay off their systems in between 8 and 14 years.

We recommend using a solar calculator or having a solar installer assess your home to estimate your payback period. If it’s longer than 15 years, your overall savings will be lower than average. You’ll still save money in the long run, but it will take longer to recuperate your initial investment.

Average Solar Buy-Back Rates in Arizona

Most states have a net metering program — also called an energy buy-back program — that lets you overproduce energy with your panels and sell back the excess to your power company for a credit on your energy bill.

Unfortunately, net metering is not required by the state, so utility companies typically don’t offer any kind of energy buy-back program. This will make your solar panel payback take longer and will reduce your ROI in the long run.

Many Arizona residents opt to install a solar battery alongside their solar panels. While this will undoubtedly bump up your total installation expense by several thousands of dollars, it helps offset your electric rates quite dramatically by providing power through the night and on those rare cloudy days.

In the long run, installing a solar battery can improve your payback period and your ROI.

Your Roof’s Exposure to the Sun

Solar panels depend on direct sunlight to produce energy, so the more sunlight your roof receives daily, the more efficient your solar panel system will be. Unfortunately, the reverse is true as well.

Given that Arizona receives over 300 sunny days annually — more than any other state — solar panels will likely be at peak efficiency anywhere in the state. However, there are some individual factors to consider as well.

If your roof is shaded by trees or buildings, for example, your property might not be the ideal candidate for solar conversion. The direction your roof faces is also an important thing to consider, as homes in the US with south- or west-facing roofs will have the best access to sunlight.

A reputable solar installer will assess your daily sunlight levels to help you decide if solar energy is right for you.

Solar Outlook in Arizona

Arizona is considered the fifth-best state in the country for solar panel installation, primarily because of the abundant sunlight and the outstanding solar incentives available from the state and federal governments.

The price of solar equipment is $3.01 per watt, on average, which is below the national average and makes solar even more valuable in Arizona. Residents in AZ favor solar power over most other renewable energy sources, but there’s still some debate over whether solar is beneficial.

This is due primarily to the lack of net metering and some resistance to the industry from consumers. Still, going solar is worthwhile for most residents, and solar is likely to grow in prevalence going forward, potentially leading to better incentives and more favorable solar policies.

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What Are the 4 Main Benefits of Solar Energy in Arizona?

Solar energy is massively beneficial in most areas of the country but especially in Arizona, where intense and direct sunlight is most abundant. Below, we’ll discuss some of the financial and environmental benefits of going solar in AZ to help you decide if converting is best for your home.

1. Electricity bill savings
2. Lower taxes and access to other incentives
3. Increased home value
4. Eco-friendly

Electricity Bill Savings

Most homeowners know that the biggest benefit to going solar is the reduction in energy bills you’ll see after installation, but few know just how substantial the savings can be.

In an area like Arizona, where the typical monthly energy bill is well above the national average at $157.41, residents can save as much as $1,888 annually. Saving this much will very likely require a solar storage solution, given the lack of a net metering policy in AZ.

The typical homeowner pays off their solar panels with energy savings in around 11 years. Over the remaining 13 expected years of panel lifespan, the average savings will amount to $34,982 on electricity bills. This amount could actually turn out to be higher as well because electricity rates have risen historically and will very likely continue to do so in the future.

Going solar lets you avoid the price spikes and essentially lock in a lower rate for 25 + years.

Lower Taxes & Access to Other Incentives

Although there is no mandated net metering policy, there are still plenty of solar incentives available in Arizona that reduce your upfront fees of going solar and make conversion more appealing. One of the most substantial incentives is the federal solar investment tax credit (ITC), a credit to your federal income tax for a massive 30% of your total system expense. In Arizona, the ITC averages out to $10,385.

Below are some additional Arizona solar incentives:

• Residential Solar Energy Tax Credit: This is a state tax credit for solar equipment for 25% of your entire system value or $1,000, whichever is lower.
• Solar Equipment Sales Tax Exemption: This exemption prevents you from having to pay the state sales tax on solar equipment and installation fees, effectively bringing down your expense to go solar.
• Energy Equipment Property Tax Exemption: This exemption stops your property taxes from increasing as a result of going solar. Without this benefit, the property value increase you’d enjoy from installing solar panels would be less of an incentive to convert.

Home Resale Value Increase

The price of solar panels is quite a bit in Arizona, but they also bump up your property value quite significantly. In fact, according to an EcoWatch solar survey, 63% of respondents said that they would pay more for a home with solar panels than a home without them.

Based on data from Zillow, the typical homeowner will see a 4.1% value increase after going solar.3 Given the average home value of $422,243 in Arizona, that’s an average value increase of $17,311.4 The value increase could be even more significant in more expensive areas like Tucson.

This value bump is only expected if you finance your solar panels or buy them with cash. Solar leases and power purchase agreements (PPAs) will not make your home more valuable.

Clean, Renewable Energy

While the financial benefits you’ll enjoy from installing solar panels on your home are appealing, many homeowners also care about the impact solar conversion has on the environment. By converting to this renewable energy source, you’ll reduce your dependency on fossil fuels and your utility company, and you’ll also help reduce pollution and combat global warming.

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What Should Arizonans Look Out For When Considering Solar?

Finding out if solar panels are worth it for your home is a big step in converting to clean energy, but there are still some things you need to consider throughout the actual process. We’ll discuss some things you should be aware of as you pursue solar conversion in Arizona.

• Upfront fees
• Payback periods
• Net metering policies
• Outlook on solar policies and incentives
• Weather and climate
• Companies that push financing options that don’t help you maximize your ROI

Upfront Fees

The upfront fees of a solar panel system will always be something to consider, especially in an area like Arizona, where high energy usage demands large and expensive solar arrays.

You can keep your upfront fees down by minimizing the equipment you have installed — usually by avoiding solar batteries and other add-on products — choosing more affordable solar panel brands and securing a no-money-down solar loan.

We’d be remiss if we didn’t mention once again that solar leases might seem appealing due to no upfront fees, but they are almost never better than financing or buying your equipment.

Payback Period

Every homeowner should calculate the time period in which their panels are expected to pay for themselves or have a local solar company estimate it for them. The solar panel payback period is a good indicator of how worth it solar will be for your home and how significant your return on investment (ROI) will be.

The average payback period range in Arizona is around 11 years. If yours is longer, your ROI will be lower, and it will take longer to realize true savings.

Net Metering Policies in Arizona

Net metering is mandated in many states and ultimately helps solar customers reduce their energy bills, pay off their panels more quickly and enjoy greater savings in the long run. Unfortunately, Arizona State no longer mandates net metering. For the most significant savings, many homeowners install a solar battery alongside their panels.

A solar battery will bump up the upfront fees of going solar but will generally help save on electric bills and quickly pay itself off.

Pending Policies & Changes to Incentives

Arizona is already a relatively solar-friendly state, but solar energy adoption is only becoming more and more popular. As the relatively young industry changes and improves, the incentives, rebates and solar policies — including net metering — are subject to change.

In a solar-forward state like Arizona, the chances are good that things will improve over time. While you probably won’t benefit from waiting for better incentives, you should check for any updates to policies before going solar.

Weather & Climate in Arizona

The weather is one of the last things most Arizonans worry about when they install solar panels because the large majority of days will be abundantly sunny, which is ideal for panel efficiency. Some homeowners worry about their panels during monsoon season, but opting for a solar panel installation company that provides a robust physical protection warranty is usually enough to put residents’ minds at ease.

While the efficiency of your panels can drop to as low as 10% during those rare rainy and cloudy days, the rainfall will naturally wash dirt and debris off of your panels, which will improve efficiency during the much more prevalent sunny weather.

Companies Pushing Solar Leases or PPAs

Finally, you should be mindful about the solar installer you choose, as the quality and consistency can vary quite a bit from company to company.

You should be on the lookout for companies advertising “free panels” or pushing solar leases or power purchase agreements (PPAs). Leasing solar panels often seems appealing because of the low upfront fee, but it saves far less over time, doesn’t give you access to the federal tax credit and won’t increase the value of your home.

Unfortunately, in areas like Arizona, where solar demand is rapidly increasing, there have been reports of solar scams and disingenuous companies. Fox 10 reported on Arizona solar companies that took tens of thousands of dollars from customers and never installed equipment.5 The Phoenix New Times has reported on similar scams occurring throughout Arizona.6

When you’re choosing a solar installer to handle your home solar project, make sure the company is reputable, vetted and has a history of good customer service.

So, Is Solar Worth it in Arizona?

As the sunniest state in the nation, Arizona consistently ranks as one of the best states to convert to solar power. However, installing solar panels isn’t right for everyone. It’s best to assess your monthly energy bills, figure out how much sun your property gets, calculate the size and total expense of the solar panel array you need, determine your panel payback period, and more before diving into this clean energy source.

You should also consider your financing options and your expected return on investment to determine if solar is a good option for your home. We strongly recommend contacting a reputable solar installer in your area to have them complete a professional review of your situation and your home to find out if solar is a worthwhile investment.

See also: Calculate how much you can save by going solar

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Read More About Going Solar in Arizona

• What Are the Best Solar Companies in Arizona?
• Are There Solar Tax Incentives in AZ?
• How Much Do Solar Panels Cost in Arizona?
• Homeowner’s Guide to Solar Panels in Texas

The cost information presented in this article is derived from a comprehensive analysis, incorporating data from multiple industry sources. The average cost per watt per state was calculated based on figures from Consumer Affairs, Energy Sage, and Berkeley Lab’s Electricity Markets & Policy Department. Additionally, monthly energy consumption and the average monthly cost of electricity were sourced from the U.S. Energy Information Administration, ensuring a well-rounded and accurate representation of the information presented.