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Arizona’s arid climate and abundant sunshine create an ideal environment for harnessing solar energy. Ranking among the top five states in solar generation, solar panels supplied about 17% of Arizona’s total net energy in 2023
But is solar truly worth the investment in this sun-drenched state, especially when it comes to small-scale rooftop solar installations?
Our blog will explore the state’s solar potential, cost-saving benefits, and incentive programs to help you understand the value of solar panels in Arizona. It will also explore the key factors that will help you determine if solar is right for your home and how you can maximize your return on investment.
Whether you want to reduce your carbon footprint or benefit from financial incentives, our guide will help you determine if solar is worth it in Arizona.
Does Arizona Have Sufficient Solar Energy?
With an average household enjoying more than 300 sunny days each year, Arizona is one of the sunniest states in the USA. This exposure makes Arizona an excellent location for investing in solar energy. Additionally, the state’s dry climate and clear skies enhance solar panel efficiency, meaning the chances of weather-related interruptions are low.
Arizona’s solar potential is among the highest in the country. The intense sunlight means solar panels can generate a significant amount of electricity, which can often be enough to run an average household with minimal grid reliance. As a result, homeowners can achieve quicker returns on their solar investments.
Overall, Arizona’s climate and geographical location make it one of the best places to invest in a rooftop solar panel system. Their reliability can help you reduce electricity costs and contribute to a greener environment. So, whether you want to cut down your utility bills or reduce your carbon footprint, Arizona’s solar potential makes it an ideal choice for harnessing the power of the sun.
How to Determine If Solar Panels are Worth It in Arizona?
Arizona has significant solar potential. But are solar panels worth the investment for your home? The answer depends on several key factors, and evaluating them can help you make an informed decision
Your Home’s Electricity Consumption
One of the first things you must consider is how much electricity your household needs. Installing solar panels can significantly reduce your monthly expenses, helping you take the first step toward grid independence.
For example, if you use air conditioning to combat Arizona’s hot climate, it can drive up your electricity costs. Solar panels can help offset these costs with clean energy to power your home. As a result, solar panels are especially beneficial for households with higher energy consumption. However, if your electricity bills are consistently too high, you might have to wait longer to get a return on your investment.
Your Roof’s Exposure to the Sun
The orientation, slant, and shading of your roof can significantly affect the effectiveness of solar panels. In the USA, south- and west-facing roofs, with little to no shading, will have the best access to sunlight throughout the day.
Although sunlight is abundant in Arizona, ensuring your roof has the optimal exposure to sunlight can enhance the efficiency of your rooftop solar panels. Therefore, assessing if your roof has the right orientation and exposure is critical before you decide to invest in solar panels.
Average Solar Payback Period in Arizona
The payback period is the time it will take for your solar panel investment to pay for itself through energy savings. An average homeowner in Arizona will see their initial investment pay off in about 11 years and most will pay off their system from anywhere between 8 to 14 years. Although this may seem like a long time, the state’s high solar efficiency makes it a smart long-term investment.
Carefully evaluating these factors can help you make a well-informed decision about whether solar panels are a worthwhile investment for your Arizona home.
What are the Main Benefits of Solar Panels in Arizona?
From lucrative incentives and significant financial savings to environmental benefits, investing in solar panels in Arizona can offer you numerous advantages.
Electricity Bill Savings
One of the most compelling and immediately visible benefits of installing solar panels in Arizona is the potential for substantial savings when it comes to your electricity bills. Dealing with Arizona’s hot climate, an average Arizona resident spends about $260 per month, adding up to $97,400 over the next 25 years, with the cost of electricity increasing each year.
Solar panels can offset these costs, allowing you to generate your own electricity and reduce grid dependence. Over time, these savings can add up, and you can save up to $74,300 over the next 20 years. And once the system is paid off, you can enjoy nearly free electricity for the rest of the panels’ life.
Tax Advantages and Additional Incentives
Arizona offers several tax benefits and incentives to its residents to make solar panels an attractive investment. The state provides a solar tax credit, allowing homeowners to deduct 25% of the solar system cost (up to $1,000) from their state taxes.
Arizona residents can get a 5.6% state sales tax exemption on any home solar equipment purchased in the state under Solar Equipment Sales Tax Exemption. They are also eligible for Energy Equipment Property Tax Exemption, which exempts the added value of rooftop solar panel systems from property taxes. Apart from state incentives, Arizona homeowners can also get a federal solar tax credit or Investment Tax Credit (ITC), allowing them to deduct 30% of the solar installation cost from federal taxes.[6]
Beyond tax incentives, some Arizona utility companies also offer rebates and incentives to help reduce the upfront costs of solar installations or net billing programs to buy back additional electricity from rooftop solar systems. These incentives make solar panels not only more attractive but more accessible as well.
Environmentally Friendly, Renewable Energy
Solar energy is one of the most accessible and convenient sources of clean, renewable energy to help reduce your reliance on fossil fuels. You can lower your carbon footprint and take the first steps toward a greener future by installing solar panels in your home.
In Arizona, where sunlight is abundant, investing in solar power is an effective way to promote sustainability and help combat climate change. Every kilowatt of solar energy the rooftop solar systems generate reduces the need for traditional energy sources, contributing to a cleaner and healthier environment.
Boost Property Value
A rooftop solar panel installation can make your home energy-efficient, increasing your home’s property value. For every $1 you save in energy bills, your property value increases by approximately $20. Potential home buyers prefer such energy-efficient homes and are willing to pay an average of 4.1% – or $9,274 – more for them. Solar panels can be a significant selling point for your home in Arizona, giving you a competitive edge in the real estate market.[7]
Overall, the combination of electricity bill savings, tax incentives, environmental benefits, and increased property value makes solar panels a smart and worthwhile investment for Arizona homeowners.
Key Factors to Consider When Purchasing Solar Panels in Arizona
Here are the key factors for you to consider when making an informed decision about purchasing solar panels best suited to your needs and maximizing your solar investment in Arizona:
Upfront Costs
The upfront cost of a solar panel system – the equipment and installation costs – is one of the primary concerns for many homeowners. Although solar technology has become more affordable over the years, the initial investment still remains significant.
Icon Power offers a no upfront cost policy, allowing you to start your solar journey without the burden of the initial investment. This policy helps make solar more accessible to Arizonian homeowners and get them started on the journey to benefiting from solar energy without financial strain.
Your Energy Consumption
Understanding the average energy consumption of your household is crucial when deciding on the solar panel system you want to install. Analyzing your past electricity bills can give you insights into the size of the solar system you will need to offset your current energy use. Matching your energy consumption with the system size gives you the most value and efficiency from the solar installation.
Local Net Metering Rates
Net metering or net billing initiatives allow homeowners to sell the excess electricity from their solar panels back to the grid. Arizona does not have a net metering initiative, where export rates are the same as those of retail electricity rates. It does, however, offer net billing, which provides rates typically lower than retail electricity rates.
As of 2023, Arizona’s net billing policy offers a Resource Compensation Proxy (RCP) rate of ¢7.6 per kWh against ¢15.1 per kWh average retail utility rate. The Arizona Corporation Commission (ACC) has also placed a 10% limit on the annual reduction of export rates and implemented a 10-year export rate lock-in period for homeowners.[8]
Although net billing rates are reducing, they are still a valuable way to offset the cost of solar panels due to the lock-in period and reduce your overall energy expenses.
Cost vs. Savings of Solar Panels in Arizona
The cost of installing solar panels in Arizona can vary depending on the size of the system and specific installation needs. As of August 2024, the average cost per watt for solar panel installation is $2.23 in Arizona state, with a 5kW solar energy system installation costing anywhere between $9,472 and $12,814 before federal and state tax credits.[9]
After installation, solar panels can lead to substantial savings on electricity bills. And over the 25-year lifespan of the panels, these savings add up to tens of thousands of dollars. This makes solar panels a financially sound investment in the sunny state of Arizona.
A Trusted Choice: Icon Power
Icon Power is committed to providing personalized service and exceptional quality, helping us stand out as a leading solar installer in Arizona. Our team goes the extra mile to tailor a solar plan that fits the unique needs of each homeowner, helping you get the best out of your solar investment.
With no upfront cost, we make solar energy accessible without financial strain. We use top-of-the-line equipment and offer ongoing monitoring and maintenance support for the lifetime of your solar panels to ensure optimal performance. With custom-designed installation for each home, we are dedicated to delivering the best residential solar solutions for every home.
Conclusion
The bottom line is that solar panels are a worthwhile investment in Arizona, given the state’s exceptional solar potential and the financial incentives available. The combination of abundant sunlight, significant utility bill savings, tax incentives, and the potential for nearly free electricity after a payback period makes solar energy a smart investment for both short- and long-term benefits.
Factors such as your home’s energy consumption, roof exposure, and net billing rates can influence your return on investment in solar energy. However, the substantial savings over time and the boost in your property value make going solar in Arizona a smart decision.
With Icon Power, you can get access to custom solar solutions and ongoing support to ensure optimal performance of your solar system and maximum returns on your solar investment.
FAQ
Yes, the state’s dry climate, availability of abundant sunlight, generous incentives, and potential for substantial energy savings make solar an ideal investment in Arizona.
Yes, solar panels can increase home value in Arizona by up to 4.1% by making properties more energy-efficient and attractive to potential buyers.
The average cost of solar panel installation is $2.23 per watt, with a 5kW system costing between $9,472 and $12,814 before state and federal tax credits.
The typical lifespan of solar panels in Arizona is 25 years or more.
