How Much Do Solar Panels Cost in Arizona in 2024?

Are you an Arizona homeowner thinking about making the switch to solar power? You’re probably wondering: How much will solar panels cost me? How much can I really save on my electric bills? What kind of incentives are available?

In this comprehensive 2024 guide, we’ll break down everything you need to know about the cost of going solar in Arizona.

We’ll cover average prices, potential savings, payback periods, and the generous state and federal incentives that can significantly reduce your out-of-pocket costs.

By the end, you’ll have a clear picture of the financial benefits of installing solar panels on your Arizona home.

Average Cost of Solar Panels in Arizona

So, how much do solar panels cost in the Grand Canyon State?

As of 2024, the average price for solar panels in Arizona is $2.64 per watt. For a typical 6 kilowatt (kW) system, this comes out to a total cost of $15,840 before applying any incentives.

However, thanks to the federal solar tax credit, the net cost drops to just $11,088 after claiming the 30% credit on your taxes. Arizona also offers a 25% state tax credit up to $1,000, further reducing your costs to $10,088.

When you factor in energy bill savings, a 6 kW solar panel system in Arizona pays for itself in just 7-8 years on average. After that, you’ll essentially be generating free electricity for the 25+ year lifespan of your solar panels!

Can you get free solar panels in Arizona? Find out in our in-depth review post.

 

A few key takeaways from this data:

• Larger solar panel systems have a higher total cost but a lower cost per watt due to economies of scale. For example, a 3 kW system costs $3.66/W before incentives while a 12 kW system costs $2.86/W.
• The 30% federal solar tax credit significantly reduces the net cost of solar panels. An average 6 kW system costs $18,795 before the tax credit but only $13,157 after claiming the credit.
• Larger solar panel systems tend to have slightly higher output efficiency ratings. This is because they often use higher-efficiency premium monocrystalline solar panels to maximize power production.
• Most residential solar systems are in the 5-10 kW range. An 11 kW system is considered large for a home and would likely only be needed for a very large house with high electricity usage.

The exact cost of your solar installation will depend on a few key factors:

• The size of your system (larger systems cost more overall but have a lower cost per watt)
• The type of solar panels you choose (premium panels are more efficient but also more expensive)
• Your roof’s orientation and shading (south-facing roofs with little shade are ideal)
• Any additional components like solar batteries

To get the most accurate pricing for your home, we recommend getting quotes from multiple solar installers.

Arizona Solar Incentives and Rebates

In addition to the substantial savings from the 30% federal solar tax credit, Arizona offers several incentives and rebates that can further reduce the cost of going solar for homeowners.

Arizona Residential Solar Energy Tax Credit

Arizona provides a generous state tax credit worth 25% of your total solar installation costs, up to a maximum of $1,000. This credit can be claimed on your state income taxes, in addition to the federal ITC. So for an average 6 kW system costing $15,840, an Arizona homeowner could claim the full $1,000 state credit on top of the $4,752 federal credit, for a total savings of $5,752.

Solar Equipment Sales Tax Exemption

When you purchase solar panels and equipment in Arizona, you are fully exempt from paying the 5.6% state sales tax.

For a typical $15,840 solar installation, this saves you an additional $887 right off the bat. The sales tax exemption applies to both solar photovoltaic (PV) panels as well as solar water heaters.

Energy Equipment Property Tax Exemption

Normally, when you add something of value to your home, like a solar panel system, your property taxes increase accordingly.

But Arizona offers a property tax exemption that ensures adding solar will not result in higher property tax bills. The value of your solar energy equipment is excluded from your home’s taxable value, so you can save with solar without paying more in taxes each year.

Local Utility Solar Rebates

Some utility companies and municipalities in Arizona offer their own solar rebates and incentives for customers. For example:

• Mohave Electric Cooperative provides a rebate of $0.05 per watt for solar PV systems, up to $2,500.
• Sulphur Springs Valley Electric Cooperative offers a rebate of $0.50 per kWh saved in the first year for solar water heating.
• Trico Electric Cooperative has a $0.40 per kWh rebate for the first-year estimated savings of solar water heaters.

Be sure to check with your local utility provider to see if there are any additional solar incentives or rebate programs you can take advantage of. When combined with the state and federal tax credits, these incentives can dramatically lower the upfront cost of your solar installation in Arizona.

For the complete guide on solar incentives and rebates in Arizona, read this blog post.

Electricity Bill Savings from Solar

One of the biggest financial benefits of going solar in Arizona is the substantial savings you’ll see on your monthly electric bills.

With some of the highest energy usage rates in the country, Arizonans stand to save a lot by generating their own clean, renewable electricity.

The average monthly electricity bill in Arizona is $128-135, which is well above the U.S. average of $122.15. This is primarily due to the high energy needs for air conditioning during the hot summer months. By installing solar panels, you can drastically reduce or even eliminate your electric bills.

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So how much can you realistically expect to save? Let’s break it down:

• A typical 6 kW solar panel system in Arizona generates about 10,649 kWh of electricity per year
• At an average electricity rate of 14.11 ¢/kWh, that equals $1,502 worth of electricity generated annually
• Over the 25+ year lifespan of the solar panels, that adds up to $37,550 in lifetime electricity savings (not including future increases in electricity rates)

Keep in mind, the exact savings will vary based on factors like the size of your solar panel system, your energy usage habits, electricity rates in your area, and whether or not you install a solar battery.

Speaking of solar batteries – they can help you maximize your electricity savings by storing excess solar energy produced during the day for you to use at night or during cloudy weather.

With the lack of a statewide net metering policy in Arizona, batteries are becoming an increasingly popular add-on for solar homeowners looking to get the most possible savings.

If you wonder how net billing works in Arizona, check this guide.

According to our calculations, the average Arizona homeowner with a 6 kW solar panel system and a solar battery can offset 95% or more of their monthly electric bill – leading to savings of around $1,800 per year. Over the 25-year solar panel lifespan, that’s over $45,000 in electricity savings!

To get a personalized estimate of how much you could save by going solar, we recommend using a solar calculator tool or requesting quotes from reputable local solar installers. They can assess your roof, energy needs, and local incentives to provide you with accurate savings projections.

Solar Financing Options in Arizona

While the upfront cost of solar panels can seem daunting, there are several financing options available that make going solar affordable for almost any budget.

Many Arizona homeowners can switch to solar for little to $0 down and start saving money on their electricity bills right away.

Here are some of the most popular solar financing options in Arizona:

Solar Loans

With a solar loan, you borrow money from a lender to purchase your solar panel system outright. You make monthly payments to pay off the loan, typically over a 10-20 year term.

Solar loans offer many of the same benefits as a cash purchase, like owning your system and being eligible for the federal and state tax credits, but with no upfront cost.

Some key features of solar loans include:

• $0 down payment options available
• Competitive interest rates, especially if secured by home equity
• Loan terms up to 20-25 years
• Credit score requirements typically 640+
• You own the system and can claim tax incentives and rebates
• Monthly payments are often lower than your previous electric bill

Solar Leases

With a solar lease, you essentially rent the solar panel system from a third-party owner, usually the solar installer.

You pay a fixed monthly “rent” payment to use the system, while the leasing company owns and maintains it. Solar leases allow you to start saving with no upfront cost, but you don’t own the system or get to claim the tax credits.

Solar leases generally have these features:

• No upfront cost
• Fixed monthly payments for 20-25 years
• Leasing company is responsible for system maintenance
• Homeowner doesn’t claim tax credits or rebates
• Typical credit score requirement of 650+
• Savings on monthly electricity costs, but less than with ownership

Solar Power Purchase Agreements (PPAs)

A solar PPA is similar to a lease in that a third party owns and maintains the system on your roof. But instead of paying a fixed monthly amount, you pay a fixed rate per kWh of electricity the solar panels generate. This rate is lower than what you pay your utility.

Key aspects of solar PPAs include:

• No upfront cost to homeowner
• 20-25 year contract term
• Pay only for the solar power generated each month
• Solar company handles maintenance and repairs
• Homeowner not eligible for tax credits or rebates
• Guaranteed savings on electricity rates, often 10-30%

Cash Purchase

Of course, if you have the funds available, paying for your solar panel system in cash offers the greatest long-term savings and fastest payback period. By owning your system outright, you’re eligible for the 30% federal tax credit and Arizona’s 25% state tax credit, which can cover a large chunk of the upfront cost. And with no loan or lease payments, you start saving on your electricity costs immediately.

The best way to find out which solar financing option is right for you is to compare personalized quotes from reputable solar installers. They can walk you through the expected costs, savings, and financing choices based on your home and energy needs.

Solar Payback Period and Return on Investment in Arizona

When evaluating the financial benefits of solar panels, two key metrics to consider are the payback period and return on investment (ROI).

The payback period tells you how long it will take for your electricity savings to pay back your initial investment in solar. ROI measures the total financial returns you can expect over the lifetime of your solar panel system.

According to EnergySage, the average payback period for solar panels in Arizona is 7.5 years. This means that after 7.5 years, the cumulative savings from reduced electricity bills will exceed the net cost of installing solar panels, after accounting for the federal and state tax credits.

Here’s an example breakdown of the payback period for an average 6 kW solar panel system in Arizona:

• Gross cost: $15,840
• Federal tax credit (30%): -$4,752
• Arizona state tax credit (25%, $1,000 max): -$1,000
• Net cost after incentives: $10,088
• Average first-year savings on electricity bills: $1,502
• Payback period: $10,088 ÷ $1,502 = 6.7 years

Keep in mind this is just an average – your specific payback period will depend on the final cost of your system, your household’s energy needs, and electricity rates in your area. Solar quotes from installers will include a detailed payback period estimate customized for your property.

As for ROI, solar panels offer a very attractive return in Arizona. The average 6 kW system generates over $37,000 in lifetime electricity savings over 25 years.

When you subtract the net cost of $10,088, that’s a total profit of $26,912 – an ROI of 267%!

Even if you finance your solar panels with a $0-down loan, your ROI is still impressive. With a 15-year loan at 5% interest, your total payments would be around $20,000. Subtract that from the $37,000 in electricity savings, and you’re still netting a profit of $17,000 over the lifespan of the system. That’s an 85% ROI, far higher than most other low-risk investments.

Of course, your individual ROI will vary based on factors like your energy usage, the size and orientation of your roof, and the equipment you choose.

Final Take

To recap, the average cost of a 6 kW solar panel system in Arizona is $15,840 before incentives, or $10,088 after claiming the 30% federal tax credit and 25% state tax credit. Arizonans can further reduce their costs with solar rebates, sales tax exemptions, and property tax exemptions.

With several $0-down financing options like solar loans, leases, and PPAs, going solar is more affordable than ever for Arizona residents.

Most homeowners will see a payback period of just 7-8 years, followed by decades of free solar electricity and savings on utility bills.

Over the 25+ year lifespan of a solar panel system, the average Arizona homeowner can expect to save over $37,000 on electricity costs – a return on investment of over 200%. Factor in the state’s high energy usage and electricity rates, and it’s clear that going solar is a smart financial decision for most Arizona residents.

If you’re ready to take the next step and see how much solar can save you, we recommend comparing free, custom quotes from vetted solar installers in your area.

By evaluating offers from multiple providers, you can find the best combination of price, quality, and customer service for your solar installation.