Is it worth going solar in Arizona?

Key Takeaways

• Arizona has some of the best solar potential in the U.S. due to abundant sunshine
• Solar panels can save the average Arizona homeowner $21,000 to $30,000+ over 25 years
• Payback period is around 7-9 years in Arizona, after which electricity is essentially free
• Arizona offers a 25% state tax credit up to $1,000 on top of the 30% federal tax credit
• Solar increases home value by an average of $17,000 in Arizona

The Short Answer: Should You Go Solar in Arizona?

Yes, going solar is definitely worth it in Arizona. With abundant sunshine, substantial long-term savings, short payback periods, increased home value, and generous state and federal incentives, solar panels are a smart investment for most Arizona homeowners. The average solar home in Arizona can save $21,000 to over $30,000 on electricity bills over 25 years, with a payback period of only 7-9 years. Plus, solar panels boost home values by an average of $17,000 in Arizona. When you factor in the environmental benefits of reducing carbon emissions and conserving water, going solar is a win-win for both your wallet and the planet.

As an Arizona homeowner, you’ve probably noticed the explosion of solar panels popping up on rooftops across the state.

With over 300 days of sunshine per year, Arizona has some of the highest potential for solar energy in the country. But is making the switch really worth it for your bottom line?

In this article, we’ll dive into the costs, savings, and payback period of going solar in Arizona to help you make an informed decision.

The Cost of Going Solar in Arizona

One of the first questions Arizona homeowners have when considering solar is, “How much will it cost?” The good news is that solar panel prices have fallen dramatically in recent years, and Arizona’s ample sunshine and incentives make it one of the most affordable states to go solar.

As of 2024, the average cost of solar panels in Arizona is $2.70 per watt. For a typical 5 kilowatt (kW) system, which is suitable for most homes, the total cost would be around $13,500. However, after applying the 30% federal tax credit, the net cost drops to a more palatable $10,455 to $14,145.

Of course, the exact cost will depend on the size of your home, your energy needs, and the specific panels and installer you choose. Larger systems, like a 10 kW array, will obviously cost more – around $26,600 after incentives, according to one estimate.

But here’s the kicker: you don’t necessarily need to pay that full amount upfront. Many solar companies offer attractive financing options, such as $0-down solar loans, that allow you to go solar with no upfront cost and simply pay off the system over time with your monthly savings.

So while there is certainly a cost to going solar in Arizona, it’s more affordable than ever before, and the long-term savings and financing options make it a very accessible investment for most homeowners. Plus, when you factor in the state’s 25% tax credit (up to $1,000) on top of the federal credit, the numbers start to look even better.

Long-Term Savings and Payback Period

Here are the key points you should know about the long-term savings of going solar in Arizona:

1. Over the 25-30-year lifespan of solar panels, the average Arizona homeowner can save between $21,000 and over $30,000 on electricity bills by going solar.
2. A typical 5 kW solar system in Arizona provides around $1,900 per year in electricity bill savings, paying for itself in under 8 years. After the payback period, the electricity is essentially free for the remaining 15-20 years.
3. An 8 kW system is estimated to save the average Arizona resident $34,982 on utility bills over 20 years, after accounting for the system cost, federal tax credit, and inflation.
4. Compared to projected electricity costs of over $100,000 if sticking with traditional utility power over the next 25 years, the savings potential of going solar in Arizona is substantial.
5. The payback period, or time it takes for the solar panels to pay for themselves through electric bill savings, is only around 7-9 years in Arizona.[2][10] After that point, the solar electricity is essentially free.
6. Solar also increases home value by an average of $17,000 in Arizona, providing an additional financial benefit beyond the monthly utility bill savings.

Between the drastic reduction in electric bills, a relatively short payback period of under a decade, free solar electricity for 15+ years after payback, and a bump in home value, the long-term financial benefits of going solar in Arizona are very attractive for most homeowners. The total 25-30-year savings are often in the $30,000-$100,000 range, making solar a smart investment in the sunny Grand Canyon state.

Arizona Solar Incentives and Rebates

Key Arizona Solar Incentives:

1. 30% federal tax credit available through 2032 for purchased systems
2. 25% Arizona state tax credit up to $1,000
3. Solar system sales tax exemption of 5.6%
4. Property tax exemption on the value added by the solar panels

First and foremost, there’s the federal solar tax credit, also known as the investment tax credit (ITC). This allows you to deduct a whopping 30% of the cost of your solar installation from your federal taxes. So if your system costs $20,000, you’d be eligible for a $6,000 credit. And the good news is that this credit will be available at the 30% level through 2032, thanks to the recent Inflation Reduction Act.

But Arizona doesn’t stop there. The state also offers its own 25% solar tax credit, up to a maximum of $1,000. This can be claimed in addition to the federal credit, further reducing the net cost of your solar investment.

Arizona also exempts solar panel systems from both sales tax and property tax. That means you won’t pay the state’s 5.6% sales tax on the purchase of your system, and the value it adds to your home won’t be subject to property taxes. These exemptions can add up to substantial savings over the life of your system.

Finally, some Arizona utilities offer their own incentives for going solar. For example, Arizona Public Service (APS) and Tucson Electric Power (TEP) have offered rebates and other programs to encourage solar adoption among their customers.

Solar Loans

The main type of solar loans in Arizona are from primary solar finance companies backed by large international banks.

These loans typically have $0 down, real-time approval, no prepayment penalty, fixed interest rates, and terms of 20-25 years.

The most widely used primary solar loan companies are Dividend Finance, Mosaic, and Sunlight Financial.

Credit unions like Marisol Federal Credit Union and Credit Union West also offer solar-specific loans to finance installations in Arizona.

Other loan options include personal loans, home equity loans/HELOCs, and company-provided solar loans.

Solar Leases and Power Purchase Agreements (PPAs)

• With a solar lease, you rent the solar panels and use the electricity generated, with the leasing company owning and maintaining the system.
• PPAs are similar to leases, except you pay for the electricity generated at a rate lower than your utility’s.
• Leases and PPAs have no or low upfront costs but you are not eligible for tax credits and incentives.

Paying Cash

• Paying cash upfront provides the greatest long-term savings and return on investment.
• Cash purchases allow you to claim all available tax credits and incentives.
• The solar system will pay for itself in energy bill savings over several years.

Arizona residents have a variety of options to finance a solar panel system, including solar loans, leases/PPAs, and paying cash.

Loans and cash purchases provide the greatest long-term savings and allow you to claim valuable state and federal tax credits. Discussing the options with a solar installer can help determine the best financing method for your budget and energy goals.

Increased Home Value

Installing solar panels on your Arizona home isn’t just about saving money on your electric bills – it can also significantly increase the value of your property.

According to a recent study, solar panels boost home values by an average of $17,000 in Arizona. That’s a substantial amount of equity to gain just by making an energy upgrade.

But it’s not just the dollar value that goes up. Homes with solar also tend to sell faster – 20% faster, in fact – and for 17% more than comparable homes without solar. So if you’re thinking about selling your home in the future, solar panels can give you a real competitive edge in the Arizona real estate market.

Best of all, thanks to Arizona’s solar property tax exemption, the value that solar adds to your home won’t be subject to property taxes. That means you get to enjoy the boost in equity without having to pay any extra in taxes.

So not only do solar panels save you money on your electric bills and provide a great return on investment, they also add significant value to your home. It’s just one more reason why going solar is a smart choice for Arizona homeowners.

The Environmental Impact

While the financial benefits of going solar in Arizona are compelling, for many homeowners, it’s about more than just dollars and cents. It’s also about doing their part to protect the environment and combat climate change.

The average solar home in Arizona offsets a staggering 100 tons of carbon dioxide over its 25-year lifespan. To put that into perspective, that’s the equivalent of planting 2,400 trees or taking 20 cars off the road for a year. By generating clean, renewable energy from the sun, solar panels help reduce our reliance on fossil fuels like coal and natural gas, which are major contributors to greenhouse gas emissions.

In fact, a typical residential solar panel system will offset the energy-related emissions of an entire home by 80-90% over its lifetime. That’s a huge step towards a more sustainable future.

But the environmental benefits of solar go beyond just reducing carbon emissions. In Arizona, where water is a precious and limited resource, solar also helps conserve the massive amounts of water used by traditional power plants. Coal and natural gas plants use billions of gallons of water each year for cooling, while solar panels require virtually no water to generate electricity.

By choosing solar, Arizona homeowners are not only saving money and increasing their property value but also making a meaningful contribution to the fight against climate change and the preservation of our state’s natural resources. It’s a win-win-win for your wallet, your home, and the planet.

Final Word

When you crunch the numbers, going solar in Arizona is a smart investment that pays for itself in under a decade and provides substantial savings over the 25+ year lifespan of the panels.

With plentiful sunshine, enticing incentives, increased home value, and environmental benefits, 2024 is the perfect time for Arizona homeowners to make the switch.

Check our free solar quote and solar calculator to see your personalized savings estimate and take the first step towards energy independence today.