Cost of Solar, Financing, Lease Options
How much does solar energy cost?
An average residential solar system costs between $15,000-$25,000 after solar rebates and solar incentives. Considering that you will probably spend over $72,000 in electrical bills over the next 25 years, this can be a small price to pay. Some companies even offer solar lease options in which you pay no out-of-pocket expenses for the installation.
The exact cost of solar will depend on the applicable Arizona solar rebates and utility incentives available in your area and the type of solar installation you chose. Using a qualified installer who is familiar with the local incentives and permitting process will ensure that you get the most from your investment.
Are there any government tax incentives or rebates?
One of the great elements of solar power in the U.S. is that there are large number of tax incentives and rebate programs that exist to make it easier to afford solar power for your home. The solar installer that you select will be up to date on all of the applicable incentives based on where you live but below are some of the basics:
- Federal Tax Credit: Investment Tax Credit (ITC) allows individuals to deduct 30% of the cost of a solar system from individual federal income taxes;
- Individual State Rebates: Many states offer cash rebates that are either flat amount or are based on the size of your solar power system – check out the U.S. governments Database of State Incentives for Renewables & Efficiency for more information on the rebates in your particular area;
- Property Tax Exemptions: Many states also specifically exclude the value a solar energy system from your your annual property taxes… for example, if a new solar power system adds $30,000 to the value of your home, that $30,000 will be exempted from the total assessed value and your property taxes will not increase as a result of the new system.
- Municipal and Utility Rebates: In addition to the federal and state incentives, many local municipalities and utilities will offer rebates on top of everything else…please check out Database of State Incentives for Renewables & Efficiency for any incentives in your specific area.
What are the current Arizona solar rebates and how do they work?
While solar energy systems are still being developed to reach their full potential in the US, the success of solar in Arizona would not have been possible were it not for the enormous solar rebate and incentive programs put in place by the state government. Some, but not all, of the incentive programs offered to residential and commercial customers include:
- Businesses are eligible for a rebate of up to 10% of the installed cost of a system.
- The state’s largest utility, Arizona Public Service (APS), offers homeowners an incentive of $0.60 per installed watt of DC capacity (for example, $2,400 for a 4 kilowatt system) for residential grid-tied solar systems and $1.75 per installed watt of DC capacity (for example, $7,000 for a 4 kilowatt system) for commercial grid-tied solar systems. There are a multitude of incentive programs for multifamily housing units, some of which include free compact fluorescent light bulbs and installation of their fixtures only costing $15, as well as rebates for energy efficient household items such as washing machines, refrigerators, and dishwashers.
- As of May 4th, 2012, the state’s second largest utility, Salt River Project (SRP), offers homeowners an incentive of $0.50 per installed watt of DC capacity ($2,000 for a 4 kilowatt system) up to a maximum of $6,750. The SRP’s Residential Energy Efficiency program also offers incentives for homeowners in hopes that it will encourage customers to utilize energy efficient household appliances.
- In 2011, funding for upfront incentives for the Renewable Energy Credit Purchase program through Tucson Electric Power (TEP) was exhausted. Extra money was received to see the fiscal year through, but since then incentive programs have decreased in terms of the amount consumers qualify for. As of June 11, 2012, customers can receive $0.55 per watt as long as they have a 20 year warranty on their systems. If the system has less than a 20 year warranty it must receive the 10, 15, or 20 year performance based incentive.
- For commercial customers, SRP offers a rebate up to $1.35 per installed watt of DC capacity for systems 30 kilowatts and smaller; APS offers a rebate up to $1.75 per installed watt of DC capacity for systems up to 30 kilowatts; and TEP offers a rebate up to $2.00 per installed watt of DC capacity for systems 50 kilowatts and smaller.
- In addition to the numerous rebate programs available through the state of Arizona, there are also a tremendous multitude of local utility programs offered throughout the state. For further information on the local rebate programs,, please click here.
- On top of the utility rebate, most Arizona residents are also eligible to receive a $1,000 tax credit for installing solar power.
To see how Arizona solar incentives might work for a residential solar system, please see the chart below:
Does Arizona have any tax incentives to adopt solar power?
Arizona exempts the value of a renewable energy source from a property owner’s property taxes. Unlike other home improvements, you will not have to pay increased property taxes even though the value of your home will increase with the installation of AZ solar panels. Arizona also offers a 25% tax credit on up to $1,000 of solar technology installed on a residence is available to homeowners. However, keep in mind that this is a one-time tax credit and the homeowner is restricted from additional tax credits on future solar expenditures on the same residence.
Is Arizona a “net metering” state?
On top of the state subsidy, the entire state of Arizona has a net metering policy which means that you only pay for the net amount of electricity that you use. With net metering, homeowners with solar installed are able to “bank” the excess electricity their solar system generates and receive credit up to 100% of their electric use bill at the full retail electricity price that they can use later. Again, making it cheaper to afford solar panels for your home.
In fact, Arizona has one of the best net metering laws in the country. Excess generation is rolled over month to month, and any surplus is returned annually to the consumer at the avoided cost rate. Not all Arizona electric utilities offer net metering, it is necessary to check with the utility serving a specific address to determine if net metering is available as an option. Net metering requires special inverters that are capable of delivering power into a utility, and the utility will want to approve of the inverter and other safety related equipment in order to protect their equipment, personnel, and other customers.
If I can not afford an up front payment for a solar power system, are there financing options to help me?
Yes, our solar partners offer a variety of great solar financing options to help offset some of initial installation costs. In some cases, your monthly payment will be less than the amount of savings on your electric bill. Low interest rates are available and the solar system increases the value of your home. Again, the your solar installer will have all of the details on the available solar financing options but make sure you ask about the following:
- Home Equity Loans: borrowing against the equity of your home;
- Solar Lease: leasing the solar panels for a fee over a set length of time; and
- Power Purchase Agreement: an arrangement similar to a lease arrangement where the solar provider/installer secures funding on their own for the solar project, installs the solar system in your home/office building and then sells the electricity from the solar system to the home/building owner at a fixed contractual price for a set length of time.
**Click here to get a free Arizona solar assessment from pre-certified installers in your area!**