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Solar Incentives and Rebates in Arizona

Peak Sun Hours (PSH): 7.5 - 7.9
Cost of Grid Power: $0.13/kWh
Number Of Installations: 164,236

What’s the Cost of Solar in Arizona?

Cost of Grid Power

Arizona's electricity prices average $0.13/kWh, just below the national average of $0.14/kWh.

Arizona ranks second only to California for solar power generation. About 7% of Arizona's power comes from solar, and nearly a third of that is small-scale, including residential.

Cost of a Solar Install

Cost of a typical 7.8kW PV install in Arizona from 2007-2018

A graph of falling prices for a typical 7.8kW PV install in Arizona from 2007-2018.
Figures include design costs. Data from Berkeley Lab.

The average cost of a 7.8kW (equivalent to saving about 230 trees a year) solar power system starts around $27,000 in Arizona. Before any incentives, in the first year you’d save about $1,600, compared to if you had been paying the normal rates for the energy you used. These savings can continue for well over 25 years, improving with inflation.




Just How Much Can I Save With Solar in Arizona?

This depends on may factors such as your system size, power output, and financing. Here are the main ways you can finance your home solar power system, and the kinds of returns you may expect to see:

Out-of-Pocket

From our example above, the homeowner purchased a 7.8kW system to offset their energy bill. Overhead cost was $27,000, with a significant proportion returned in the first year through incentives, rebates, and savings, then paying itself in full over eleven years.

Most solar power systems have a warranty lifetime of 25 years. In that time, between incentives and paying lower rates you could make a profit of around $31,000 - significantly more than the up-front cost of the system!

Even with occasional maintenance or part replacement, that is a massive savings. Solar panel power output falls on average 0.8% per year, so with a little TLC and load management you can extend the life of your system well beyond the warranty’s expiration date, continuing to save indefinitely.

Solar Loan

Whether or not you can afford the up-front cost of the install, you may want to consider a Home Equity Line of Credit (HELOC). With equity in your home, or good credit, you may qualify for a 15-year solar HELOC with fixed rate of 4% or lower.

Starting with that same 7.8kW system costing $27,000 but with zero up-front cost, accounting for incentives, credits, rebates, and annual energy savings starting around $1,600, you could see a revenue surplus of about $6,900 at the end of the first year.

Save that money though. Your loan payments will likely exceed your power savings by about $70/month for the 15-year term. Once the loan is paid off, you can expect to save about $2,100 a year. Over 25 years you could expect to make about $20,400.

Power Purchase Agreement

With a Power-Purchase Agreement (PPA) the homeowner leases their roof to an outside party, usually a power company. Generally PPAs feature a fixed price per kWh, with either a fixed term or an annual escalator.

With a PPA, the cost of installation, repair, and maintenance to the homeowner is usually $0.00. For that 7.8kW system, with a PPA you could expect to save about $3/month on energy. Over 25 years, you could see over $5,200 in revenue - without accounting for inflation. That’s technically an infinite return!

PPA’s can be complicated, as you are effectively ceding at least some control of your home to the third party, but they are an excellent way to get into solar because they have no overhead.



What Incentives are Available in Arizona?

Data from DSIRE. For more info visit: https://www.dsireusa.org/

Name Implementing Sector Program Type Administrator DSIRE ID
Qualifying Wood Stove Deduction State Personal Tax Deduction 2
Solar Rights State Solar/Wind Access Policy 16
Solar & Wind Equipment Certification State Equipment Certification 30
Solar and Wind Equipment Sales Tax Exemption State Sales Tax Incentive Department of Revenue 119
Qualified Environmental Technology Facilities Credit State Industry Recruitment/Support 226
Mandatory Photovoltaic System Cost Analysis State Line Extension Analysis 269
Solar Design Standards for State Buildings State Energy Standards for Public Buildings 316
Energy Efficiency Standards for State Buildings State Energy Standards for Public Buildings 331
Appliance and Equipment Efficiency Standards State Appliance/Equipment Efficiency Standards 1559
Energy Equipment Property Tax Exemption State Property Tax Incentive Arizona Department of Revenue 1683
Solar Construction Permitting Standards State Solar/Wind Permitting Standards 2950
Property Tax Assessment for Renewable Energy Equipment State Property Tax Incentive Arizona Department of Revenue 2984
Net Billing State Net Metering 3093
Energy Efficiency Standards State Energy Efficiency Resource Standard 4488
Southwest Gas Corporation - Smarter Greener Better Solar Water Heating Program Utility Rebate Program Southwest Gas Corporation 5369
Renewable Energy Tax Credit for International Operations Centers (Corporate) State Corporate Tax Credit 5487
Renewable Energy Tax Credit for International Operations Centers (Personal) State Personal Tax Credit 5488
Phoenix City - Municipal Code 232 Residential Solar PV System Permit Local Solar/Wind Permitting Standards 5931
Tucson City - Solar Farm Permit Requirements Local Solar/Wind Permitting Standards 5932
Pima County - Solar & Wind Permitting Requirements Local Solar/Wind Permitting Standards 5933
Arizona Public Service (APS) - Energy Information Services (EIS) Utility Energy Analysis Arizona Public Service (APS) 14197
Salt River Project (SRP) - Renewable Energy Credits (REC) Utility Other Salt River Project (SRP) 14206
Tucson Electric Power - EnerNOC DemandSMART Program Utility Energy Analysis Tucson Electric Power 14211
Southwest Gas Corporation - Industrial Services Utility Energy Analysis Southwest Gas Corp., Arizona Div. 16008
Southwest Energy Efficiency Project - Arizona Energy Efficiency Guide Other Training and Information Southwest Energy Efficiency Project 16147
Sulphur Springs Valley EC - Energy Assistance Utility Energy Analysis Sulphur Springs Valley Electric Cooperative, Inc. 16837
Salt River Project (SRP) - Save With SRP Biz Utility Energy Analysis Salt River Project (SRP) 17280
Sulphur Springs Valley EC - Energy Savings Program Utility Energy Analysis Sulphur Springs Valley Electric Cooperative, Inc. 18160
Salt River Project (SRP) - Small Business Solutions Rebate Utility Energy Analysis Salt River Project (SRP) 18936
Salt River Project (SRP) - Energy Savings and Rebates Utility Energy Analysis Salt River Project (SRP) 18938
Tucson Electric Power - PowerShift Utility Energy Analysis Tucson Electric Power 18968
Southwest Energy Efficiency Project - Arizona Utility Energy Efficiency Programs Other Other Southwest Energy Efficiency Project (SWEEP) 19148
Columbus Electric Cooperative - Renewable Resources Arizona Other Other Columbus Electric Cooperative 21074
Tucson Electric Power (TEP) - Commercial Energy Solutions Utility Energy Analysis Tucson Electric Power (TEP) 21903
Salt River Project Battery Storage Incentive Program Utility Rebate Program Salt River Project 22077



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