Arizona: A Guide to Residential Solar Energy

There’s never been a better time to go solar in Arizona. As the country’s sunniest state, Arizona’s major cities see an average of 82% sunshine each year. State residents are also eligible to receive various incentives, not to mention the incredible savings potential in annual energy costs. Arizona solar residents continue taking advantage of solar’s many benefits – the state ranks fifth in the nation for annual solar installations in 2024 on the Solar Energy Industries Association quarterly analysis. The Grand Canyon State also consistently ranks in the top 10 places for solar installations.

Like every other state, Arizona has a unique set of incentives, benefits, and challenges when it comes to investing in solar panels for houses. This guide helps homeowners understand all that is important regarding Arizona solar, including rebates and incentives, cost to install solar panels in Arizona, and finding a solar contractor.

Arizona Solar Panels: Incentives, Rebates, and Other Savings

There are currently nearly more than 20 incentives for homeowners to increase the value of their property by installing solar panels for houses in Arizona. Find details about each program at the state’s Database of State Incentives for Renewables & Efficiency (DSIRE).

Arizona Solar and Wind Energy Systems Tax Credit

Installing solar paneling for homes will increase property value for homeowners who have invested in their houses, and Arizona is investing right back in them. Each year, Arizona homeowners can get up to a $1,000 credit per residence, available to taxpayers who install solar panels for their houses. 

More specifically, you get 25 percent back on your purchase in the form of a tax credit, up to $1,000. So if your purchase was $4,000, a quarter of that would come back to you.

Find all the details at DSIRE’s profile for the program.

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Energy Equipment Property Tax Exemption

Since 2006, the Arizona Department of Revenue has exempted homeowners from paying taxes on the added value of their property caused by installing any solar energy devices, equipment, or components.

In order to qualify, you must provide your county assessor with documentation affirming the actual purchase and installation of the eligible equipment. Be sure your experienced contractor has a grasp of what that process entails. Ask who will be filing the paperwork and handling the process to completion.

Find all the details at DSIRE’s profile for the program.

Solar and Wind Equipment Sales Tax Exemption

Solar equipment requires a substantial upfront investment, and sales tax makes the total cost even more expensive. Arizona’s Department of Revenue offers a sales tax exemption on various solar products and installation.  

City sales tax may still apply with a rate between .5% and 2%. Your contractor will be able to provide you with your specific tax liability in your city. 

Find all the details at DSIRE’s profile for the program. 

Solar Panel Cost Calculator

Want to learn more about how much it could cost to get solar panels on your home? This is the place to start.

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Arizona Net Billing

Unlike many other states, Arizona discontinued its net metering policies in 2016, but residents can still enjoy cost savings from the energy their homes produce. 

Net metering refers to energy companies offering credits for the solar energy homes generate at full retail value. Arizona’s net billing, in comparison, offers credits at an “excess generation rate” that is less than full retail value. The rate varies by the utility company, but expect an excess generation rate anywhere from 65% and 90% of retail. 

Arizona’s excess generation rates are updated every year and decrease. Fortunately, the rate may not decrease by more than 10% each year, and you lock in your rate for 10 years at the time of solar purchase and installation. 

Find all the details at DSIRE’s profile for the program.

Other Arizona-specific solar energy programs include:

• Town of Buckeye – Green Building Incentive
• City of Scottsdale – Green Building Policy for Public Buildings
• Mohave Electric Cooperative ‒ Renewable Energy Incentive Program
• Sulphur Springs Valley Residential Energy Efficiency Rebate
• Residential Energy Efficiency Rebate Program
• Duncan Valley Rebate Program

Of course, you want to get the most out of local rebate programs as well as federal ones, like the temporary Residential Renewable Energy Tax Credit, which applies to up to 30 percent of your installation until 2032.

Cost to Install Solar Panels in Arizona

Total costs for solar panels and installation in Arizona will vary and depend on a variety of factors, including home size and orientation, roof condition and pitch, and your household’s energy consumption habits. The type of solar panel will also affect your project cost — the higher the panel’s output, the higher the price. 

Solar Panels in Arizona

Arizona is consistently ranked as one of the best states for solar.

• Price varies based on panel type

• Rebates and incentives will further lower this price

• Average time to recoup solar investment in AZ is 9-10 years.

Average Cost for 1,900 sq.ft. home:

$14,786 to $18,072

An Arizona home that is 1,900 square feet will require approximately 17 solar panels and a system size of 6.3 kW.

The cost range for both equipment and installation is $14,786 to $18,072. The payback period, or the time it takes to recover your upfront investment, is 9.5 years. 

Is Now a Good Time to Install Solar Panels in Arizona?

With Congress’s extension of the ITC or Solar Federal Tax Credit in August 2024, homeowners can receive a tax deduction of 30% of their solar purchase and installation costs from 2024 to 2033, after which it drops to 26%. Major state-level incentives explained above do not currently have expiration dates, so Arizona households should not feel pressured to meet specific deadlines to qualify for solar incentives.

Even so, rate changes in net billing in the state may influence how soon you decide to go solar. Because excess generation rates are expected to decrease each year, the longer you wait, the fewer credits you will receive on your monthly energy bills for the electricity your home produces and adds to the grid. 

How to Get Solar Installed on Your Arizona Home

Protect your solar investment by selecting a high-quality and pre-vetted professional installer. You will appreciate someone who can offer expert advice on the best type of panels for your home to meet your household’s energy needs. Your installer should also be well versed in current incentives at the state and local levels to help you take advantage of as many cost-saving opportunities for which you qualify. 

You will also benefit from selecting a professional with longevity and a proven track record. Solar is a long-term investment, and you want a contractor who will still be in business should any issues arise several years down the road.