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.
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.
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:
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.
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.
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.
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|