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Solar Panels in Arizona: Cost and Savings

Editor:Lisa Iscrupe

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Solar panels in Arizona

Arizona ranks fifth nationally in solar energy. Over 801,000 homes use solar panels, and 301 solar companies call the area home.

Is solar worth it? It can be, as you receive a federal tax incentive that drives down the initial costs by as much as 26 percent. Plus, solar helps you reduce your carbon footprint and gain energy independence. 

Another benefit of solar is the energy savings you accumulate. Over time, you will save enough to offset the initial investment. And with solar panels lasting on average 25 years, this savings will far surpass what you paid for the equipment.

Cost of solar panels in Arizona

The total cost of your solar panels depends on several factors, such as which manufacturer you use and the size of your roof. The Center for Sustainable Energy reports the average cost of a residential solar system is between $15,000-$25,000. 

There could also be local incentives from your utility company and the federal tax credit that could lower some of those initial costs.

When installing a solar panel system, you need the following equipment:

  • Solar cell panels
  • Solar inverters (power, centralized, micro)
  • Solar racking 
  • Performance monitoring device
  • Array DC connect (to disconnect panels when servicing them)
  • Power meter
  • Charge controller
  • Breaker panel

Get your free solar savings estimate

You can significantly lower your energy costs by investing in solar panels. Enter some basic information below and we’ll provide an instant, free estimate of solar cost and savings for your home.

Solar incentives and rebates in Arizona

Arizona has several incentives residents can use to lower solar energy costs. The first of which is the Residential Arizona Solar Tax Credit. With it, the state reimburses 25 percent of the price of your system, up to $1,000. 

You can also take advantage of the Solar Equipment Sales Tax Exemption, where you do not have to pay sales tax when you buy (or finance) your solar equipment. On its own, this incentive can save you hundreds of dollars.

Arizona also incentivizes homeowners through the Energy Equipment Property Tax Exemption. This exemption allows homeowners to enjoy the property value increase that solar adds without increasing their property taxes. Installing a solar energy system can increase your property value by an average of 4.1 percent. 

Finally, there is the solar panel tax credit. The federal Investment Tax Credit (ITC) gives you a 26 percent incentive on the cost of solar panel projects started before 2022.

Solar energy in Arizona may help lower your electric bills

Solar energy gives you immediate savings by way of lower electricity costs. Arizona residents paid 12.1¢/kWh for electricity service in February of 2021. 

This chart illustrates how much money you can save with solar panels. To calculate the average initial investment, take the cost of your solar system, then multiply it by .26 (which is the solar tax credit) if you have no other tax liabilities. 

Next, subtract the state incentive of $1,000. It gives you your average initial investment. Therefore, if your system costs $15,000, after incentives, your investment is $10,100. 

Now, you want to calculate your savings with solar panels. Take a six-month average of what your electric bills were before your solar panels and a six-month average after solar panels. It is ideal to account for some summer months. 

After calculating your averages, say you save $100 per month in electric costs. Now divide your initial investment by your annual savings ($1200) to give you how many years until your return on investment. 

Once you have saved more than your initial investment, this chart shows you how your savings balloon the longer you use them. Please note, that this chart is an example based on the predicted totals above. Your actual cost and savings may differ.

Initial investment Years to get ROI Savings per year after ROI Savings five years after ROI
$10,100 8.4 $1,200 $6,000

Energy independence in Arizona can help you

Energy independence is when you do not have to completely rely on an energy provider to supply electricity to your home. For example, suppose a strong thunderstorm reaches your area, rendering many without power. However, because your solar battery stores solar energy, you can maintain your electricity when the weather turns bad. 

Another benefit of solar power is you can more accurately predict your energy bills. And once you see the average of your savings each month, it makes budgeting easier. 

The long-term benefits also include the value of your home. The United States Department of Energy states the value of your home can increase by an average of $15,000 after installing solar panels. 

Arizona also allows residents with solar power to sell some of their excess energy to utilities. In turn, it allows you another opportunity to earn money and reduce your return on investment time.

How to buy solar panels in Arizona

When considering solar power, there are several factors you need to examine first. They include:

  • HOA rules: Some homeowner’s associations (HOAs) have specific provisions on projects like solar panels. Check with your HOA first to ensure they deem the project appropriate.
  • Roof condition: Your roof should be large enough (at least 500 square feet) to accommodate solar panels. Also, since panels can last up to 25 years on average, you should have a professional inspect your roof to ensure it can hold up as long as the panels. If it cannot, you may need to add the roof upkeep costs to your initial investment.
  • Roof direction: Ideally, your roof should face the southern sky with minimal shading. You can still, however, get solar panels even if the roof does not face south.

Solar energy FAQs

What is the average life expectancy of solar panels in Arizona?

Solar panels are durable, with the average operational lifespan being 25 years. If you have a weathered roof, you will need to replace it before installing panels. 

Should I lease solar panels?

If you cannot afford the initial investment, leasing might be a wise option for you. However, when you lease, you do not qualify for tax incentives from the state or federal government. 

What percentage of Arizona’s energy production is solar?

Currently, 7.93 percent of the state’s energy production derives from solar energy.

Are there disadvantages to using solar energy in Arizona?

No, because the cost savings will exceed the initial investment. You want to check with your HOA to ensure it meets their guidelines or work with them to establish a solution that works for both parties.

[Andrei Orlov] / Shutterstock