Arizona gets the most sun of any state in the US. It makes sense that 300+ days of sun a year and the Arizona desert are easily associated with solar power. As of 2023, Arizona was the fifth-ranked state for total solar power generation. Even with that past solar adoption, there’s still a lot of room to grow, maybe on your home’s roof.
If you’re thinking of going solar for the first time, there’s a lot of information, facts, figures, and terms you may need to learn. You can start with this Arizona guide to how home solar panels work, the money you could save, and the incentives available to help you start.
See how much you can save by going solar with Palmetto
Does Solar Make Sense in Arizona?
Solar already makes sense for many homes and businesses in Arizona. The year-round sun makes solar power reliable, economical, and definitely renewable.
Price of electricity
Arizona’s average electricity rate in 2023 was 14.02 cents per kilowatt-hour, according to the US Energy Information Administration. That rate is up from 13.02 in Arizona in 2022 and slightly below the national average of 16 cents per kWh.
Your electricity rate depends on your local utility and can vary throughout the year or a day if you have a time-of-use rate. Your power consumption and the utility company’s rate can impact how much money home solar power can save you.
Credit: Solar Energy Industries Association
Price of solar
The nationwide estimated price of residential solar power is $3.33 per watt, according to the Solar Energy Industries Association.
Your cost can vary within a state, within a city, and even across the street or from your next-door neighbor. System size, components specific to your system, the complexity of your roof, labor costs, incentives you qualify for, and if you’re getting battery storage are some of the main factors to take into account. The best way to get a precise estimate of your customized home solar system cost is to contact a reputable solar company.
Available sunlight
Arizona gets a lot of sun. Most of the rest of the country is jealous in January and February. According to the National Renewable Energy Laboratory, Arizona averages 6-8 peak sun hours per day throughout the year.
Solar panels need sunlight to generate power, so the amount of sunlight your roof gets is a definite factor to solar making sense for your home. The “your roof” part of the equation is usually more important than any stat for your state, county, or even your city. A reputable Arizona solar company will do a survey, in person or remotely, to know if your roof is a good fit for solar panels. This is part of a custom design process before you commit to any plan.
Credit: NREL
Outages
Home solar systems, if connected to your local utility’s electric grid as they typically are, will shut down if the power goes out. Battery storage as part of your system lets you use stored electricity during an outage, as well as at night when you’re receiving no solar power.
Arizonans had an average of 106.8 minutes of power outages in 2023 according to the US Energy Information Administration. (This number could’ve been more for some residents, down to no outages for others.)
Battery backup is an optional choice. If you want backup power during an outage or greater utility bill savings, battery power might make sense.
Solar Incentives in Arizona
Solar prices across the country and in Arizona have been trending down for years. Incentives, from the federal tax level to local utility programs, can make the expense more affordable for most people going solar.
Federal tax credit
The Residential Clean Energy Credit, often called the federal solar tax credit, gives owners of residential solar panels tax credits on their federal income tax for up to 30% of the cost of their solar system, including batteries. Equipment and installation costs are usually eligible for the federal tax credit.
You must have a federal tax liability to use the credit. If your tax liability is too small to claim the entire credit in a single year, you can roll remaining credits over to future years. It’s best to consult a tax professional or financial advisor regarding eligibility and any restrictions before assuming any tax credit or incentive.
State tax credit
Arizona is one of a few states with a state solar tax credit. The state tax credit is 25% of the total system cost up to a maximum credit of $1,000. If your tax liability is too small, you can roll over the excess for up to five tax years.
Net billing
Most of Arizona’s utilities, Arizona Public Service Electric, Salt River Project, Tucson Electric Power, Mohave Electric Cooperative, Trico Electric Cooperative, and UNS Electric, have net billing programs. Similar to net metering, net billing lets you earn credits to your electric bill for any solar electricity you don’t use or store and send into the power grid.
The net billing credit rates vary from about $0.02-0.075 per kWh. Depending on your utility, you may be locked into an electric or net billing rate for a period of years after you switch to solar. Your net billing credit rates may change from time to time, too.
Credits are typically applied each month. Extra credits may be rolled over month to month, and if there are credits remaining to be paid out at the end of a year or the designated 12-month period, there is a true-up payment.
The three largest electric utilities in the state, Arizona Public Service Electric, Salt River Project, and Tucson Electric Power use a solar export credit set by the Arizona Corporation Commission for the net billing amount.
In Pinal County, Electrical Districts No. 3 and No. 4 use monthly net metering to credit customers.
Property tax exemption
Solar panels can increase the value of a home by close to 4%, according to some studies. In Arizona, fortunately, this won’t increase the property tax you owe. If new solar panels or other solar power appliances or tech increases your property’s value, you aren’t taxed on the added value.
More eligible solar technology covered in Arizona’s Energy Equipment Property Tax Exemption include:
- Passive solar technology
- Solar water heaters
- Solar space heaters
- Solar thermal electric
- Solar thermal process heaters
- Solar pool heaters
- Other solar-powered appliances
Consult a financial or tax advisor to see how Arizona’s solar tax incentives apply to you.
Sales tax exemption
Arizona has a state sales tax exemption: the Arizona Solar and Wind Equipment Sales Tax Exemption. Home solar panels are 100% exempt from sales tax.
See how much you can save by going solar with Palmetto
Solar Payback Period in Arizona
Going solar makes financial sense only if you’re going to save money for many years to come. You might hear about the solar payback period. This is how long it takes your solar savings to match the initial cost. Here’s how to calculate it.
( Total solar cost - Upfront incentives ) / Annual savings = Payback period in years
Expected payback periods included here, and even in a quote from a company, are just estimates. Factors might change over time. For example, a payback period estimated at 10 years when you have a new system installed might become shorter if the electricity rate rises faster than expected.
Arizona’s 2023 state average electricity rate was 14.02 cents/kWh, but 10 years earlier in 2013 it was 11.71 cents/kWh.
Credit: US EIA
Arizona Utilities and Rooftop Solar Panels
Your utility company’s policies, electricity rates, and other factors affect your experience going solar and your savings.
| Utility | Avg. 2023 electric rate (cents/kWh) | Net metering type | Max system size for net metering | Max offset for net metering |
|---|---|---|---|---|
| Arizona Public Service Electric (APS) | 15.6 | Net billing | 50 kW (AC) | No max |
| Salt River Project (SRP) | 11 | Net billing | None | 125% |
| Tucson Electric Power (TEP) | 14.7 | Net billing | None | 125% |
| Mohave Electric Cooperative | 9 | Net billing | None | 125% |
| UNS Electric/Unisource Energy Services | 14 | Net billing | None | 125% |
| Trico Electric Cooperative | 12.2 | Net billing | None | 125% |
| Electrical District No. 3 Pinal County (ED3) | 11.4 | Monthly net metering | 10 kW (AC) | No max |
| Electrical District No. 4 Pinal County (ED4) | 14 | Monthly net metering | 10 kW (AC) | 125% |
Gas utilities and home electrification
If you also use natural gas, home electrification can reduce or eliminate your gas bill. Replacing gas appliances with electric appliances will cut your gas bill and likely raise your electric bill. But utilizing your solar electricity for as much of your power as possible will give you the biggest energy cost savings.
Arizona Gas Utilities
- Alliant Gas, LLC
- Copper Market, Inc.
- Duncan Valley Electric Co-op
- Graham County Utilities, Inc.
- Southwest Gas Corporation
- UNS Gas, Inc.
- City of Benson
- City of Willcox
- City of Mesa
- City of Safford
Leasing Solar Panels in Arizona
If you want to use the clean power solar panels generate but don’t want the upfront expense, third-party ownership (TPO) with a lease could be the best option.
With a lease, you make monthly payments for panels on your property. The panels and system are owned by the leasing company.
Palmetto’s LightReach Energy Plan, available in Arizona, gives you predictable monthly payments designed to save you money right away. Palmetto owns and maintains the solar power system.
See what solar can do for you:
Solar Panel Maintenance in Arizona
Solar panels and home solar systems often do not need a lot of maintenance. In Arizona, there could be some extra care needed for dry, dusty conditions. Cleaning your solar panels can be a pro or DIY job. A gentle rinse is usually good to clean off a film of dust. Follow the manufacturer’s recommendations and don’t use anything that could damage or scratch panels.
An annual maintenance and system check is a good idea, and it’s best done by a licensed professional. In fact, DIY work can void warranty coverage. Palmetto Protect includes system monitoring, maintenance, intelligent issue detection, and top-ranked customer service.
Finding the Best Solar Companies in Arizona
When you go solar, you’re expecting to have the panels for 25 years or longer, and it’s a major financial decision. Finding the best solar company for you is important. You’ll be working with this company before, during, and for years after your system is up and running.
Here are suggestions on what to look for when searching for and deciding on the best company for you.
- Choose a company that gives you clear answers, plenty of time, and no pressure. If you’re frustrated on day one, do you want this feeling for years to come?
- Read reviews, positive and negative, and compare them among companies.
- Talk to friends, neighbors, or family who have solar to learn about the company they hired.
- Ask questions about warranties and after-installation plans.
Palmetto Reviews
“We feel great helping the environment, reducing our costs, and partnering with Palmetto! Great customer service and communication!” Wes B. 10/21/2024 Google Review
“I just hit my one year anniversary of having solar. It’s been a great experience and everyone at Palmetto has been a pleasure to work with!” Stephanie K. 10/19/2024 Google Review
“Palmetto Solar was 100% up front and honest with me. GREAT Customer Service with any questions or issues which arose.
Highly recommend Palmetto Solar.” Michael K. 10/23/2024 Google Review
See what solar can do for you:
Frequently Asked Questions
Does solar make sense in Arizona?
Arizona has a large capacity in home solar panels and large-scale solar facilities already in use. The state ranked fifth in the US in solar-powered energy generation in 2023 according to the US Energy Information Administration. With so much predictable sun for so much of the year, solar makes sense for many Arizonans.
Do solar panels increase your home value in Arizona?
Solar panels are likely to increase property value all over the country. That’s according to plenty of research, like a 2022 analysis by Rocket Homes that found homes with solar panels typically sold faster and for more than the asking price.
How much does it cost to go solar in Arizona?
An estimate from the Solar Energy Industries Association gives the national average cost of residential solar panels as $3.33 per watt. Solar costs, though, vary across the country and can even vary from house to house on the same street. Your roof, the size of your system, if you’re including a battery, and more factors will determine cost.
Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.
Andrew GiermakWriter and EditorAndrew joined Palmetto in Charlotte in August 2024. He’s been a writer in journalism, then in business, going back to almost the 20th century. He’s lived in Indiana, Virginia, Pennsylvania, Virginia again, and now North Carolina for the last 12 years. He likes golf. Is he good at it? Not so much.
