Arizona Solar Panels：Pricing & Savings

You can't accurately estimate the cost of solar panel installation in Arizona without evaluating your roof and energy needs. But you can look at average costs to get a better idea of what you can expect to spend on solar panels. However, the average cost of solar panels in Arizona ranges from $10,000 to $20,000, depending on the size and type you choose.

Going solar in Arizona

Arizona ranks as the 5th largest state for solar energy production in the United States, according to the Solar Energy Industries Association. The state has an impressive array of both large-scale solar farms and smaller household and commercial installations. While solar power and other renewable energy options are booming in popularity, there is much to consider.

Also, Arizona benefits from more than 300 days of sunlight each year making it one of the sunniest states in the U.S. This plentiful sunshine makes it optimal for solar energy to thrive, and provides consistent power generation from solar panels, which turns into big savings

Solar Panels Cost in Arizona

As of July 2024, the average solar panel system costs $2.24/W including installation in Arizona. This is lower than the average price of residential solar power systems across the United States which is currently $3.00 per watt.

For a 5 kW installation, this comes out to about $11,194 before incentives, though prices range from $9,515 to $12,873. After the federal tax credit, the average price drops by 30%.

Here’s what the average prices for common system sizes look like in Arizona:

Solar Panels Cost in Arizona: Key Factors to Consider

Solar energy has emerged as a sustainable and cost-effective way to power homes or businesses. As the demand for solar panels continues to rise, understanding the factors that influence their pricing becomes important for us. The cost of installing a solar panel system can vary significantly based on several factors.

1. System size
   The capacity and size of the solar panel have a significant impact on the cost of its installation. According to the scale of the installation, the price might increase or decrease, and you can get added benefits. Here’s how the capacity and size impact the cost. The bigger the system, the more you’ll pay.
2. Roof type
   Solar panels can be installed on metal, shingle, and flat roofs. Each type of roof requires different components and varying levels of labor to install. Shingle roofs require a specific flashing piece to attach the panel racking to the roof. For a ribbed or standing seam metal roof, racking is connected directly to the metal. Panels are installed on a flat roof using a ballast mount – a tray held in place by a concrete block.
   If you have a roof that’s especially sloped or difficult to work on, expect to pay more in labor fees.
3. Panel type
   Today, most installers sell primarily monocrystalline panels, which are the most expensive panel type. You can purchase polycrystalline or thin-film panels for less money, but you’ll sacrifice panel performance.
4. Panel brand and quality
   Beyond the panel type, the brand and quality also influence price. Higher-quality panels from reputable manufacturers often come with better warranties and performance guarantees, justifying a premium price.
5. Permitting and interconnection
   Before installing solar panels, you'll need permits from your local authorities. These permits sometimes come with fees. Additionally, connecting your system to the power grid (interconnection) involves another fee.
6. Installation company
   The installer you choose plays a crucial role in determining the final cost. Reputable companies with experienced installers often charge more, but their expertise and warranties can offset the higher upfront cost. It's essential to get multiple quotes and compare not just the price, but also the company's reputation, warranties, and services.
7. Solar Batteries
   Have solar batteries is not mandatory. But with a battery, you will be able to use your solar panels during a power outage, which is an invaluable benefit. But batteries are an investment and they will add to the cost of your solar panel installation.

Benefits and Drawbacks of Solar Panels in Arizona

Installing a solar energy system for your home in Arizona can be a cost-saving measure for many people, but it’s important to consider the benefits and disadvantages before signing a contract. While many people enjoy the lower utility bills and reduced carbon footprint, it’s a good idea to recognize potential drawbacks of going solar.

Below, we’ll include some benefits and drawbacks of choosing a lease to acquire your PV equipment in Arizona.

Advantages of Installing Solar Panels in Arizona

1. Increases Property Value
   When you make the decision to choose solar panels and solar energy, you’re also boosting the value of your property roughly 3-4%. This can help increase the equity in your home and it boosts curb appeal. According to data from Zillow Research, homes with solar-energy systems sold for 4.1% more on average than comparable homes without solar power.
2. Financial support from the government
   You can receive federal and state tax benefits when you install solar panels in your home or business. Taxpayers could potentially claim 30% of installation costs, with benefits varying by state. In some instances it may be possible to get a solar home installation with no out-of-pocket costs. This may take some time to research, but it is possible.
3. Saves You Money
   Electricity charges are trending up with an average monthly electric bill of around $157 a month in Arizona. By using solar panels to generate your own electricity you can drastically reduce or eliminate that charge every month. There are also special rebates and incentives for switching from the state and federal government levels.

Drawbacks of Installing Solar Panels in Arizona

1. Doesn’t Work as Well on Cloudy Days
   One disadvantage of solar energy is that solar electricity is totally reliant on weather conditions. If it is rainy or cloudy outside, the system doesn’t produce as much power. However, Arizona receives over 299 sunny days per year, making anywhere in Phoenix, Arizona perfect for going solar.
2. Have To Still Use Grid Electricity
   If you don’t have solar battery storage, you might still have to use grid electricity during the night time. However, nighttime is the least expensive time of the day to use electricity as utility companies charge more during daytime peak hours. However, this is no DIY project, make sure you choose a professional solar installer.

Leasing vs Buying Solar Panels in Arizona

When it comes to deciding whether to lease or buy solar panels in Arizona, understanding the financial implications and aligning them with your long-term goals is crucial. Each option has distinct advantages and drawbacks, making it essential to evaluate them carefully.

Buying Solar Panels in Arizona

Purchasing solar panels outright is an excellent choice for those looking to maximize long-term savings and gain complete ownership of their energy system. By paying in cash, homeowners avoid ongoing interest or fees, which translates to greater savings over time. However, the significant upfront investment required, often amounting to tens of thousands of dollars, can be a barrier for many.

An alternative to a cash purchase is financing the solar system through a solar loan. This option allows homeowners to manage the cost with affordable monthly payments. Additionally, financing through home equity or personal loans often comes with the benefit of low-interest rates and potential tax incentives. Nonetheless, it is important to note that interest costs over time may make this option more expensive than an outright cash purchase.

Leasing Solar Panels in Arizona

For those who prefer a lower initial cost, leasing solar panels might be a more attractive option. A solar lease involves the solar provider installing and maintaining the system for a fixed monthly fee. This setup simplifies budgeting and reduces the financial burden of upfront costs. However, the downside is that the homeowner does not gain ownership of the system, and lease terms may not always be favorable. Thoroughly understanding the contract terms is essential to avoid unexpected complications.

Another flexible option is entering into a Power Purchase Agreement (PPA). This arrangement typically involves little to no upfront costs, with payments based on the electricity generated by the solar panels. While PPAs offer a way to harness solar energy without a large financial commitment, the cost per kilowatt-hour may be higher compared to owning the system outright. Additionally, long-term contracts associated with PPAs can be restrictive, making it imperative to scrutinize the agreement details carefully.

Making the Best Choice

Ultimately, the decision between leasing and buying solar panels in Arizona depends on your financial situation and how long you plan to stay in your home. For those who seek long-term savings and energy independence, purchasing solar panels—whether through a cash purchase or a loan—tends to be the better option. Conversely, if minimizing upfront costs and avoiding ownership responsibilities are more aligned with your current needs, leasing or opting for a PPA might be more suitable.

Arizona Solar Incentives: Maximizing Your Savings

Solar panels save you money, but the benefits are far greater than individual energy savings. Because they have such widespread benefits, the federal government offers incentives to help you pay for your solar panel installation.

Incentives help bring solar's price tag down considerably in Arizona. Here are the major ones to know about:

• Residential Clean Energy Tax Credit (formerly the federal investment tax credit, ITC): This can lower your solar panel system's cost by 30%. Average Savings is about $8,379.
• Credit for Solar Energy Devices: This can lower your solar panel system's cost by 25%, or up to $1,000. The Average Savings about $1,000
• Arizona Solar Sales Tax Exemption: If you use solar energy as a power source, you won't need to pay tax on the value your solar panels add to your property. The Average Savings is 0.72% of your system's value, annually.

Arizona doesn't offer any state-specific battery incentives, but all batteries above 3 kWh are eligible for the 30% federal tax credit. Batteries are great for increasing your energy independence and providing protection from blackouts in Arizona.

Net Metering In Arizona

Arizona no longer offers a state-wide net metering program. Instead, utilities offer a reduced benefit known as net billing. Your credits will be worth the avoided cost rate, less than the retail rate, which means you won't save as much on your electric bills.

This avoided cost rate, which your utility company would pay for electricity, varies by utility but follows a methodology developed by the Arizona Corporation Commission (ACC). The avoided cost rate is set to drop in October 2023, but if you interconnect your solar panel system before then, you'll be locked into your current rate for 10 years

Some utility companies, like Arizona Public Service, Tuscan Electric Power, and UniSource Energy Services also require residential customers to sign up for its time-of-use rates to participate in net metering. This means your electricity cost will vary depending on the time of day, day of the week, and time of year.

Since Arizona doesn't offer net metering, batteries can also help you get the most out of your solar panels. You can use them to store excess solar energy for us later on, instead of sending it to the grid. This can help you avoid receiving bill credits below the retail rate.

Conclusion

In Arizona, homeowners can choose between different ways to get solar panels, like paying cash, taking out a solar loan, leasing, or using a power purchase agreement (PPA). Cash purchases and loans usually offer the most savings in the long run, while leases and PPAs have lower upfront costs but less financial benefit overall. Plus, there are several incentives and policies in Arizona that can help cut down the cost of going solar even more.

FAQ

1. Is Solar Worth It in Arizona?/span>

Solar panels are worth it in Arizona. If you pay for your system with cash, you'll save about $20,150 over 20 years on electricity costs with a 5 kW system in Arizona based on real solar quote data from our Marketplace.

2. What Should Arizonans Look Out For When Considering Solar?

• Upfront fees
• Payback periods
• Net metering policies
• Outlook on solar policies and incentives
• Weather and climate
• Companies that push financing options that don’t help you maximize your ROI

3. Can I install my own solar panels in Arizona?

DIY solar panel installation is possible in Arizona, but we strongly advise against this. Installing solar equipment is quite dangerous and needs to be done optimally for the best results and greatest savings. It’s best to leave the work to experienced and insured professionals.