The quick answer is yes, solar is worth it in Arizona.
Over the past few years, solar systems have become cheaper by about 40% across the board. But this isn’t at the expense of their output and quality. These systems are now much more effective, allowing you to make substantial savings on your electricity bill.
And sure, when you ask – is solar worth it in Arizona, you want to know the exact numbers and how much you’re looking to save.
This write-up provides that information and some general guidelines on solar systems to help you make an informed decision.
Is Solar Worth It in Arizona – The Basics
Without going into an astrophysical debate, it’s safe to assume that the sun is an unlimited energy source. And Arizona is one of the best places in the US to utilize that energy.
According to weather statistics, the state has almost 300 sunny days a year. In theory, you could have a continuous supply of electricity that would cover most, if not all, your household demands. Of course, this assumes you get a sufficiently robust system and a professional installation.
Moreover, NerdWallet recently published data on the “Sunniest Cities in the US.” Four cities in Arizona ranked among the first five, with Yuma ranking No.1.
With that in mind, it’s safe to expect you’ll get excellent power output from your solar system, making it well worth the investment.
But what does the installation cost?
At the low end, a solar system will set you back about $13,000, with the state average capping at around $16,000. Sure, there are more expensive systems than that. However, the numbers here don’t include the rebate and incentives you can get.
Also, note that those figures apply to a 6kW system, the average power most households choose. And keep in mind that the prices may vary based on the city, with Sedona and Lake Havasu City being the most expensive at $30,000 for a 5Wh system.
These are the numbers before rebates and tax credits. And they might go down even further by the time you’re reading this article.
Savings and Incentives
You might believe that the cost of installing a solar system is too high. And to be honest, the retail price might be a bit steep depending on the power output and the quality of your system.
But just looking at the retail price is the wrong way to assess this home upgrade. This is an investment that will save you a lot of money in the long run. Incentives and rebates can shave thousands of dollars off your investment.
Here’s a quick guide to all the savings you can get in Arizona.
Solar Tax Exemptions
When installing a solar system in Arizona, you’re eligible for the Energy Equipment Property Tax Exemption. Solar panels increase the value of your home, but you won’t need to pay increased taxes if you sell the property.
Federal Investment Tax Credit
This tax incentive allows you to reduce federal taxation by 26% of the total cost of your solar system. Now, this is not a fixed tax.
The given percentage applies until the end of 2021, and in 2022, it’ll go down to 22%. But even with the reduction, you’re still looking at substantial savings.
For example, if you install a $22,000 solar system, you’ll be saving more than $5,000 in taxes. Better yet, if the amount exceeds what you owe, you can roll the tax credit into the following year.
No Demand Response Charge
Some Arizona homeowners pay high electricity bills because of demand response charges. This is an increased rate that applies when demand is very high.
For example, many people crank up the air conditioning during the summer months, creating high demand and higher rates. But when you have a solar system installed, much of that demand is absorbed by the solar power you generate.
In peak sunlight, solar panels are likely to convert much more energy than your household might need. You can store that energy in a battery for later use. But if you don’t install a battery, the power you produce goes back to the grid to help other homes.
Also, modern solar systems have advanced monitoring that can automatically optimize consumption based on demand. In practice, this means you store all the energy produced in a solar battery or a solar wall, and that energy gets used only when the system notices an increased demand.
Arizona had a State Tax Credit system that lasted until early 2021. The credit allowed you to minimize state taxes by 25% of the solar system cost. The maximum benefit you could claim was $1,000.
Now, even though that credit has expired, the state could reinstate the system.
In addition, the Arizona Corporation Commission (ACC) rejected net metering laws back in 2016. Basically, that meant Arizonians couldn’t “sell” the surplus power they produced back to the company. However, the ACC established a different system, so that you can get rebates or credit for the power you relay back to the grid.
This system is called a feed-in tariff, and you can get a 12-cent rebate per each kWh your system generates. This rebate started in 2021 and applies to service with Tucson Electric Power (TEP), Arizona Public Service (ASP), and Saltwater River Project (SRP) Electric Services.
This option is not as attractive as net metering in some other states. However, it still drives down your utility bill markedly.
A Promising Future
The previous section may have led you to believe that Arizona is reluctant to offer more generous rebates. However, the reality is a bit different.
One of the reasons the solar market took off in Arizona is the state’s Renewable Portfolio Standard (RPS) laws. According to these laws, Investor-Owned Utilities (IOUs) must source 15% of their energy from renewable resources.
If all utility companies don’t follow suit by 2025, they’re looking at hefty fines. So, it’s safe to expect more benefits for homeowners who install solar panels in the coming years. But this doesn’t mean you should wait.
How Much Can You Save?
Aside from what you save in taxes, some estimates show you could save up to 99% on your electricity bill.
Understandably, the savings may sound unrealistic. But with close to 300 sunny days a year and a powerful solar system, the average monthly bill for homes with solar systems is around $35.
On top of that, Arizona homeowners who install solar panels will save $25,000 over 20 years. Plus, the overall value of their property may increase due to the use of renewable energy.
How Much Power Do You Need?
The answer to this question depends on the size of your household and its electricity demands. But it pays to check the requirements of an average home to get a better idea of what you’ll require.
On average, a 2,500 square foot household consumes about 12,800kWh of electricity a year. So it needs a 7.3kW system to cover all the needs.
Arizona Solar Dream
Is solar worth it in Arizona?
Again, yes, it is.
Compared to New York, for example, Arizona’s solar systems produce around 70% more energy. In other words, you can get much higher output with fewer solar panels.
All the money you invest will be absorbed by electricity bill savings and government incentives in only a few years.
Moreover, the number of solar-powered households is increasing every year, but the installation cost is going down in the residential segment of the market. And that’s not at the expense of the efficiency or quality of solar systems.
If you’re considering this powerful and money-saving home upgrade, now is the time to do it. Some incentives are expiring in the coming years, and you don’t want to miss a chance to take advantage of them.