Are you an Arizona resident ready to learn more about the cost of solar panels? You’re in luck- Arizona is one of the sunniest places in the U.S., and many residents have already used this to their advantage by making the switch to clean solar power.
According to data from 2020, a 5 kilowatt (kW) solar installation in Arizona averages between $12,495 and $16,905 in cost, with an average gross price of $14,700. After considering the money-saving incentives and tax credits available, the cost will drop significantly. Read on to learn about the costs and benefits of going solar power in the Grand Canyon State!
Primary Factors that Determine Costs
Size of the System
First, you’ll want to determine what size system you’ll need. Think about your home’s energy needs and how much electrical usage you want your system to cover. Many choose to cover 100% of their energy needs with solar power, fully eliminating electricity bills! The average U.S. home consumes approximately 10,400 kWh (kilowatt-hours) a year, so between 28 and 34 250-watt panels (a popular size) would cover the electrical needs for such a home.
The amount of sunlight you receive also makes a difference in the size of your system. Arizona’s average annual sunshine far exceeds most other states, with an estimated 299 sunny days per year.
A solar energy system requires some equipment. Here is what you’d need:
Solar panels – Monocrystalline and polycrystalline are the two types of panels to choose from. They work similarly, with monocrystalline having a more streamlined appearance, higher efficiency rating, and the higher cost associated with those benefits.
Racking – Solar panels aren’t installed right onto your roof- instead, they are mounted on a racking system installed upon your roof. The racking system places your solar panels to receive maximum energy from the sun while avoiding damage to your roof. Instead of roof racking, if you are in the market for a solar carport or ground mount solar, you can find a mounting system to fit your needs.
Inverters – Solar power is received as DC current, and the inverter switches it to AC power, which most homes are wired to use.
Performance monitoring system – These let you monitor how effectively your system is running. Performance monitoring systems measure how much energy your system produces per hour and helps to identify any issues that may come up with your solar system.
Solar batteries – Solar power storage systems let homeowners use solar energy that their homes generate when sunlight isn’t available, such as at night or on cloudy days. That way, even if your town is more overcast, you can still benefit from solar power at those less sunny times.
Solar Installation Company
Solar energy is enjoying increased popularity, particularly in a sunny state like Arizona. Installation quotes can vary, so check with local companies to get an idea of estimates in your area. Some companies charge more because they invest in top-notch equipment, while others spend more on advertising and promotional items, transmitting that cost to the customer.
Take your time researching local installers. You can try asking neighbors who have solar panels how happy they are with their installers. It’s recommended to ask multiple installers for quotes and to compare their reviews and equipment used.
Again, be sure you thoroughly research installers in your area. This will likely take some time, but it could save you up to thousands of dollars on installation costs. Large-scale companies already have a reputation, so they can charge more and not worry about competition from small-scale businesses. They also frequently charge more to cover their marketing and additional overhead expenses.
Solar Incentives, Tax Credits, and Rebates
Residential Solar and Wind Energy Systems Tax Credit
This tax credit benefits Arizona residents who install a solar or wind energy device at their state residence. The credit is worth 25% of their cost of solar installation against the taxpayer’s income tax, with a $1,000 maximum allowable limit. You must claim the credit in the same year your system was purchased.
Solar Equipment Sales Tax Exemption
This tax exemption means you are relieved from paying sales tax on your solar energy system. The solar devices covered in this exemption include passive solar heating, active solar space heating, solar water heating, and solar photovoltaics.
Federal Solar Tax Credit
This federal incentive lets you claim 26% of the cost of your new system’s installation as a credit on your federal tax return. This generous tax credit will be available for a limited time- the credit amount will drop down to 22% in 2023 and continue to decrease until it is completely phased in 2024.
Solar Financing Options
When you pay for your solar system outright, this makes you the owner of your panels. Owning them gives you some benefits, such as increased home value.
If buying isn’t a viable option for you, there are also some benefits to solar loans and solar leases/PPAs. They both offer $0 down, and your monthly payments will most likely be less than your current electric bill. On average, solar loans can be paid off in 7-15 years, while solar leases often come with a 20-25 year term of repayment.
Other Factors that Affect the Cost
Solar energy is a long-term investment, so keep in mind the price and savings you will encounter over the next twenty years or so. Good things to consider are:
- Cost of materials needed for installation
- Labor and overhead fees from your installer
- Maintenance fees
- Savings you’ll receive through federal, state and local tax credits
- The price and average power usage on your current electric bills
- What you can expect to save on future bills (or lack of!)
The payback period is a measure of how long it takes to financially recover from your solar power investment, be it by profit or savings. In Arizona, the payback period averages 6.5 – 8.8 years. After you financially recover from the purchase, your savings on electricity would have paid for the full cost of your system! Solar panels commonly have a 20-30 year warranty, which means you will have many years of essentially free electricity (other than connection fees) after you surpass the payback period.
Arizona residents pay an average of 10.64 cents per kilowatt-hour (kWh), just above the national average 0f 10.48 cents per kWh. Considering the 20+ year lifespan of solar panels, this will amount to significant savings on electric bills over time!
Solar installation costs in Arizona can also be affected by your roof’s size and configuration. Some factors are how steep your roof is, whether it has one level or multiple levels, and if you have skylights or other items installed.
The condition of your roof also matters. An old roof might need to be replaced since solar panels tend to last 20-25 years. This expense, however, can likely be bundled into the solar project and qualify for incentives and rebates.
Costs by City
Solar installation cost varies based on multiple factors, including the size of your home, how many watts you install, and in which county you reside. For a 5kW system, Cochise county residents pay an average of $16,437, which drops down to $11,506 after factoring in tax credits. The same size system in Mojave County averages $12,667, or just $8,867 after those savings.
These figures are just estimates, and solar systems are highly customizable to your finances and power needs.
Solar power systems are pretty self-sufficient, once they are up and running. Minimal maintenance is required throughout the year, namely cleaning and inspection. Regular cleaning of your system will keep it running smoothly, and an inspector can alert you if a problem arises.
Professional cleaning services cost an average of $3 – $10 per panel, or a flat rate of at least $100. Cleaning your own panels is an option- some people do, but be sure to speak with your installer before trying it yourself!
Annual inspection runs about $150 per year. During an inspection, the contractor searches for cracks or issues with the system. The price to repair a solar panel averages around $650.
Your system’s performance is often covered by warranties issued by the installation company, which also potentially covers workmanship and equipment. If damage is caused by inclement weather, your homeowner’s insurance will likely cover some of that expense. Be sure to check with a professional in that area for more information.
Home Value Increase
The average solar-powered U.S. home increases in value by 4.1%. That estimate does vary from place to place and more studies are needed to determine accurate figures nationwide. According to a recent Zillow study, in no cities do residences drop in value when the owner has purchased solar panels outright (leasing may be another story).
How to Determine Your Solar Installation Costs
Solar Panel Cost Calculator
Google’s Project Sunroof is a great resource to help estimate the costs for your specific home and solar project. This tool uses Google Earth images to assess your personalized solar quote by viewing your roof’s shape and determine local weather, two key factors to determine solar costs. Project Sunroof then asks for your electric bill information to help estimate how many solar panels you’d need and what the cost would be. You can then compare funding options for your project.
Arizona is a leading state when it comes to solar energy, with more than 3.6 GW of solar power already installed. Just over 6 percent of Arizona’s electricity comes from solar energy, and over 530,000 homes are currently solar-powered. State residents currently benefit from the Residential Solar and Wind Energy Systems Tax Credit, as well as the federal ITC.
There is no better time than now to switch to clean solar energy, as the ITC and other money-saving incentives are still available. Talk to installers in your area to get started on your solar energy system!
Frequently Asked Questions
The average cost of solar panels in Arizona is $2.94/watt. Prices have gone down in recent years and will likely continue to, but the same can’t be said for incentives and tax credits.
In short, yes. Solar energy is a steadily increasing market that is only expanding. As a resident of one of the sunniest states of the union, there’s plenty of sunlight to harvest and incentives to help ease the investment. Plans are highly customizable these days, so you’re sure to find one to fit your needs.
This is determined by several factors, including the solar panels’ wattage, size of your home, and your average energy usage, as well as how fully you want to cover your electrical needs. If you use an average of 10,400 kWh of electricity per year, then an estimated 28-34 250-watt solar panels will cover your electrical needs.
Panels tend to last between 20-25 years. After that period, they may still produce electricity, but their production will likely slow down. Solar panels are quite durable and require little maintenance- just an annual cleaning and inspection to keep them running smoothly.
Take some time to research your panels’ warranties, ensuring they’re well-covered for defects and environmental damage.
You can- but it comes with some risks. Home solar kits cost considerably less than professional installation, but quality, workmanship, and proper installation are not guaranteed in the same way, so be sure to research how reputable the manufacturing company is.
Most installers are highly experienced, licensed, certified, and familiar with the installation process. Solar panel warranties usually cover work that is done by licensed professionals, so think about it before committing to the DIY method. A professional’s experience comes with a higher price tag, but it may be worth it in the long run.