Is Solar Worth It in Arizona? (2022 Homeowner's Guide)
Here’s a quick overview of solar viability in Arizona:
- Arizona ranks 5th in the country for solar installations.*
- The average cost of electricity is 12.27 cents per kilowatt-hour (kWh).**
- The average solar payback period is 12 years.***
- Homeowners are eligible for the Residential Solar Energy Tax Credit and the federal solar investment tax credit (ITC)
- The average homeowner saves $23,891 over the lifetime of their solar system***
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Arizona is the sunniest state in the entire country, with residents enjoying over 300 days of sunshine every year. It’s no surprise that solar conversions in Arizona are generally worth the investment, but many homeowners see the average installation price of $30,015 — or $22,211 after the federal tax credit — and wonder how it could be worth the upfront cost. Moreover, many people will wonder if their home specifically will benefit from solar conversion. Below, you’ll find a detailed guide on how to figure out if going solar is right for your Arizona home. You’ll also find some information on the many benefits of installing solar panels and some things to keep in mind throughout the process.
How to 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.
What’s Your Home 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 costs 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.
How Much Is It To Go Solar in Arizona?
The average price per watt for solar panels in AZ is $2.61 — which is below the national average of $2.66 — and the typical system size requirement is 11.5 kW. That comes out to a standard system total of $30,015 or $22,211 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 893 kWh. As such, solar panels will provide a higher return on investment in Arizona than in most other states.
What’s the Payback Period for Solar 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 cost of the system is called the solar panel payback period. The typical Arizonan sees a return on their initial solar investment in 12 years, which is right in line with the national average. Most AZ homeowners will pay off their systems in between 9 and 15 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.
What Are Average 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 cost by several thousands of dollars, it helps offset your electric costs 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.
How Much Sun Does Your Roof Receive?
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.
What’s the Outlook on Solar 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 cost for solar equipment is $2.61 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.
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.
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 $136.70, residents can save as much as $1,640 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 12 years. Over the remaining 13 expected years of panel lifespan, the average savings will amount to $23,891 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 costs 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 26% of your total system cost. In Arizona, the ITC averages out to $7,804.
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 costs, effectively bringing down your cost 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
Solar panels cost quite a bit in Arizona, but they also bump up your property value quite significantly. 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 $415,372 in Arizona, that’s an average value increase of $17,030.4 The value increase could be even more significant in higher-cost 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.
What to Look Out For When Considering Solar in Arizona
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.
The upfront cost 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 costs 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 cost, but they are almost never better than financing or buying your equipment.
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 9 to 15 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 cost 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 cost, 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.
Wrap Up: 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 cost 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.
Frequently Asked Questions
The EcoWatch team is pleased to get questions about how valuable rooftop solar systems are from Arizona homeowners on a daily basis. Below are some of the things we get asked most often, along with our responses.
How long does it take for solar panels to pay for themselves in Arizona?
The average solar panel payback period in Arizona is 12 years, with most homeowners paying off their panels using energy savings within 9 to 15 years.
However, this isn’t the same for everyone, and you should calculate your estimated payback period carefully to determine how valuable solar will be on your home. Some factors that can affect the timeline of breaking even include the direction your roof faces, how much shade is on your property, your monthly energy expenditure, whether you install a solar battery and much more.
Does going solar actually save you money?
In most cases, yes! In fact, the average homeowner in Arizona will find that their panels pay themselves off in about 12 years and then provide energy savings totaling $23,891 over the remaining lifetime of the equipment. Arizona is one of the best places in the country for solar panels to save money due to the high energy usage for air conditioning and the abundant sunlight that hits most homes.
Does solar increase home value in Arizona?
Yes, but only if you buy or finance your panels. Solar leases and power purchase agreements (PPAs) won’t bump up your property value. If you finance or buy your panels outright, the average home will jump around 4.1% in value, according to data from Zillow. In Arizona, that averages out to a value increase of approximately $17,030.
Arizona solar customers will not only enjoy increased property value but will also benefit from the property tax exemption. Normally, home improvements that bump your value up will also cause your taxes to increase, but the exemption prevents that from happening in AZ.
Do you need a permit for solar panels in Arizona?
Yes, all solar panel installations must be permitted in Arizona. Permits add to your upfront costs and extend the installation timeline, but they also help ensure a safe connection to the grid. Most reputable solar installers will handle permitting for you.
Can I install my own solar panels in Arizona?
DIY solar panel installation is possible in Arizona, but we strongly advise against this. Installing solar equipment is quite dangerous and needs to be done optimally for the best results and greatest savings. It’s best to leave the work to experienced and insured professionals.