Arizona Solar
Understanding Solar in Arizona
Arizona's abundant sunshine makes it one of the prime locations in the United States for solar energy production. Known for its Desert Basin and Range region, the state boasts some of the highest solar irradiance levels in North America, offering residents ample opportunity to harness solar power for their homes and businesses. With over 300 sunny days per year, Arizona’s solar potential is not just an alternative but a mainstream energy solution.
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The Grand Canyon State's commitment to renewable energy is evident in its growing number of solar installations and supportive policies. Homeowners in Arizona are turning to solar as a cost-effective and environmentally friendly way to reduce their energy bills, increase their property value, and contribute to a sustainable future.
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Arizona's solar-friendly policies, including net metering and state tax incentives, further sweeten the deal for those considering solar installations. By allowing homeowners to sell excess electricity back to the grid, net metering can significantly offset the cost of power usage during less sunny periods. Moreover, the state's solar tax credit encourages residents by providing a tax reduction on the purchase and installation of solar energy systems.
How Solar Works
Solar panels convert solar energy into electricity. They work by absorbing the solar rays from the sun and then converting them to an electric current that is sent to your home or business. The solar power can be used instantly, saved for later use, or sold back to the grid depending on how you configure your solar system!
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The amount of solar energy solar panels can generate depends on the solar panel size and how much direct sunlight they are able to capture. The more solar electricity you use, the more solar power is used!
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In Arizona, solar panels work in a variety of different conditions and can be used any time, no matter what the weather is like outside! Solar panels in Arizona will generate power even if it's cloudy out or at night.
Your Home Solar Options
When it comes to solar power, your home is one of the best places for you to start. Solar panels in Arizona are a good way to generate renewable energy and save money over time!
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There are three main types of solar systems: stand-alone photovoltaic (PV) systems using string inverters or microinverters, grid-tied solar systems with battery backup inverters or without battery backup inverters, and off-grid photovoltaic (PV) systems.
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To help you make the best choice, it's important to understand all the different solar panel options available.
Solar energy is the newest way to lower your electricity bill. Here are three of the most popular options, explained in more detail below:
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Purchase a solar system (with cash or a loan) and own both the system and all the power it produces
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Lease a system, usually for a monthly rate, and own all the power it produces
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Enter a “power purchase agreement” (PPA) to buy (in price per kWh) the electricity the system produces
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Purchase
You're going solar! When you buy a system, you become the owner of the system and enjoy all the benefits from the electricity it produces. The cost of upkeep varies depending on your provider, but most residential solar systems require little to no maintenance, and some providers offer maintenance services on purchased systems.
Solar panels can be an expensive initial investment, but they are also an investment in the future. Solar panels can lower your utility bills and reduce environment-damaging emissions. And, in most jurisdictions, you can benefit from tax credits or other incentives that promote solar energy. If you do decide to sell your home, you may list the solar power system in the sale just like any other major home component.
Lease
In many markets, you can lease a solar system for a set time period. The solar company owns the system, leases it to you, and is responsible for maintaining it. You make monthly payments to the solar company at a specified rate for use of the system.
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Some solar vendors will allow you to get installation and equipment leasing at no up-front cost (“no money down”), though this doesn't mean the system is free. Some companies also offer customers a financing option that allows them to purchase the system after a specific timeframe. A third-party-owned system means the company that installed your solar panels owns them and you will enter into a power purchase or leasing agreement with the company in order to use the solar energy to offset your electricity cost. Make sure you ask questions about whether these agreements are transferable if you plan on selling your home in the future.
Power Purchase Agreement (PPA)
From a consumer’s perspective, a power purchase agreement (PPA) is very similar to a 30-year lease contract. Under the terms of the PPA, you pay for the units of electricity generated by your new solar system rather than leasing the entire system and paying an up-front fee regardless of how much energy it actually generates. A PPA is a contract between you and the company that owns the solar panels. The benefits to a PPA are similar to those of going solar under a lease agreement: no equipment costs, which reduces your upfront investment in the system and lowers or eliminates your monthly electricity bills.
A power purchase agreement, or P.P.A., is also a third-party ownership arrangement because the solar company owns the system; however, some companies give you the option to buy back the system after a certain period of time has passed. You’ve got options for when you sell your home, so make sure to ask about PPA fees at the time of installation.
Arizona Tax Credit
If you install solar panels on your home in Arizona, you can take advantage of the state's Residential Solar Tax Credit. This credit allows you to deduct 25% of the cost of your new solar system from your personal income taxes, capped at $1,000, in the installation year.
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In Arizona, solar installations are also financially attractive due to the Solar Equipment Sales Tax Exemption, which eliminates the sales tax on the purchase of a solar energy system. Furthermore, the Energy Equipment Property Tax Exemption ensures that your property taxes will not increase as a result of the added value that solar panels contribute to your home.
Details of Arizona Solar Incentives
Federal Solar Investment Tax Credit (ITC)
​Arizona residents can benefit from the Federal Solar Investment Tax Credit (ITC), which allows homeowners to deduct a significant percentage of their solar PV system cost from their federal taxes. This incentive has facilitated numerous solar installations throughout Arizona by reducing the initial investment burden for homeowners.
Arizona Electricity Rates
Arizona’s electricity rates are a critical factor for homeowners considering the switch to solar power. As of the latest data, residential electricity prices in Arizona are higher than the national average, which increases the potential savings for those who install solar panel systems.
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The rates vary depending on the utility provider and can be subject to seasonal and time-of-use fluctuations, meaning that electricity can cost more during peak demand times, typically in the afternoons and early evenings. This variation plays a significant role in the potential cost savings of solar energy, as solar panels can produce electricity during peak rate periods, allowing homeowners to avoid the highest charges.
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Arizona's sunny climate means that solar panels can produce more electricity here than in many other parts of the country. This abundance of solar energy potential means that Arizona homeowners can generate more power, offsetting a larger portion of their electricity bill. Solar panels not only provide a way to lock in lower energy rates but can also offer protection against future rate increases, which are a common occurrence in the energy market.
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The state’s tiered rate plans also incentivize energy conservation and can increase savings for solar users. Under these plans, customers pay higher rates as their usage goes up. Solar panel systems can keep usage from the grid low, even during high consumption periods, keeping homeowners on the lower end of the tiered rate scale.
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Arizona Net Billing
Net billing operates on a principle similar to net metering, where the solar energy generated by your panels is first used to power your home, with the surplus being fed back into the electricity grid. The key difference with net billing lies in the reimbursement rate for this surplus solar power.
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In the net billing framework implemented in Arizona, when your solar panels produce more electricity than your home needs, the utility company compensates you for this excess at a rate known as the "excess generation credit rate." This rate is typically lower than the retail price you pay for electricity. For example, if your rate for consumed electricity is $0.10 per kWh, the utility may compensate you at $0.08 per kWh for the surplus solar energy you provide to the grid.
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Rather than receiving a direct payment for this excess generation, the utility will apply credits to your account. These credits can be used to reduce future electricity bills, effectively saving you money over time. However, these credits are not redeemable for cash, and their primary use is to defray the cost of electricity that you draw from the grid when your solar system isn't producing enough to meet your home's energy demand.
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Cash Purchase VS Loan: What’s Best for Arizona Homeowners?
Choosing between a cash purchase and a loan for a solar panel system in Arizona depends on individual financial circumstances and long-term energy goals. Here's a breakdown:
Cash Purchase:
Pros:
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Immediate Ownership: You own the system outright from day one, which can increase the value of your property.
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Maximum Savings: No interest payments mean more savings over the lifespan of the system.
Full Incentives: You're eligible for all available tax credits, rebates, and incentives immediately.
Cons:
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Higher Upfront Cost: A cash purchase requires a significant initial investment.
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Maintenance Responsibility: You're responsible for maintenance, although many systems require little upkeep.
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Less Liquidity: A large cash purchase can reduce your financial flexibility.
Solar Loan:
Pros:
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Spread Out Cost: Loans allow for an immediate installation with payments spread over time.
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Ownership Benefits: You can still benefit from tax credits and increased home value.
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Potential Positive Cash Flow: If your monthly loan payment is less than your average electricity bill savings, you can be cash flow positive from the start.
Cons:
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Interest Payments: Over time, you'll pay more due to interest, although this can often be offset by energy savings.
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Long-Term Commitment: A loan is a long-term financial commitment that requires careful consideration.
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Variable Interest Rates: Depending on the loan, you might be subject to variable interest rates.
For Arizona homeowners, the best choice will hinge on whether they value immediate savings and total system ownership (cash purchase) or prefer to manage their cash flow without upfront costs (loan). It's important to assess current financial health, energy consumption, and future plans for the property before deciding. Consulting with a financial advisor and comparing quotes from multiple solar providers can also help in making an informed decision tailored to personal financial situations.
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Get your system size and battery details
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Find your solar cost and energy usage
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Learn about the incentives in your state
Helping customers make solar simple!
Get the most out of your new home solar system
Switch to solar power and start saving money right away
There are many benefits to switching over to solar energy including lower monthly bills, improved property value, and cleaner air. The solar panels in Arizona can help you live a more sustainable lifestyle while also lowering your carbon footprint by displacing emissions that would have been created from traditional power plants. Solar is an investment with the potential for significant returns on investment, so solar panels are quickly becoming a more affordable way to generate power!
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You may want solar installation costs depending upon your area--read more about that below--and you'll want to ask solar experts about solar panel efficiency so that you know how much power each solar cell produces and what the solar cells are made of.
For those looking to reduce their environmental footprint, solar installation is becoming more affordable with the help of government incentives and rebates. There are around 20 different types of tax credits for investments in renewable energy or any infrastructure project that directly reduces greenhouse gas emissions (such as wind farms). These tax benefits can be used by both individuals and corporations alike while also helping defer some upfront costs associated with installing a system such as labor expenses or expensive panels themselves.
For example, an individual might have difficulty paying $25K upfront on equipment worth $32K but they may qualify for a 30% federal investment credit which would lower the amount down to just under $21k! The Solar Energy Industry Association estimates that about half of all new homes will use this solar energy by 2022, so solar installation is becoming an increasingly popular option to go green!
