Is Solar Worth It In Arizona? Solar Panels Savings Az

Updated on November 22, 2022

There’s a lot of activity in the solar energy in Arizona – hardly surprising as it’s officially the sunniest state in the U.S.

This post takes a look at solar worth in Arizona, exploring installation costs, the amount of sun energy you can expect and estimated payback periods for a solar installation.

In general, solar is worth installing in Arizona. Several utility companies have rebate schemes for solar purchases. The combination of the Arizona sales tax exemption, removal of  property tax for solar added home value, and the Federal Solar Tax Incentive help to make solar worth it in Arizona, with a payback period of 11.5 years.

Questions answered:

  • How many kWh of solar energy does a typical Arizona home require?
  • How are solar panels installed and how long it takes
  • How much does it cost to install solar power in Arizona?
  • What maintenance costs will there be for a solar power system in Arizona?
  • How much power in kWh can solar produce in Arizona?
  • How to size solar panels for an Arizona home

Can you save money with solar panels in Arizona?

Solar energy is expanding around the globe. It makes sense, saves the panet’s resources and saves the homeowner money!

I’m going to look at all the basics before getting into the detail of solar in Arizona:

Note: If you don’t need to know about solar PV systems, you can scan the Page Menu and jump to the section that interests you.

Renogy Solar – for all your solar supplies.

What are the main components of a solar energy system?

What are the main components of a solar energy system?

Main elements of solar power system Arizona

Local permits are required to install a grid-tied solar system, which is by far the most common kind of system home-owners need. A grid-tie solar power system hooks up to the utility grid and is best handled by a professional solar installer.

Typical grid-tie solar system equipment

  1. Suitably-sized solar panels and frames for roof mounting
  2. String inverter or micro-inverters for converting DC to AC
  3. DC and AC Cable runs and junction boxes
  4. Safety devices and circuit breakers
  5. Net-meter equipment (measures power in and out of the utility grid)
  6. Lead-acid or lithium iron phosphate Batteries for energy storage (essential if installing an off-grid system)
Typical grid-tie solar system equipment

Roof mounting is the usual way for installing fixed solar panels

The YT video below follows a solar PV system installation team as they work and and lasts about 12 mins. It gives an insight into the process from start to finish, so it’s a good insight into the equipment installation for a solar panel system installed on roof rails.


The solar panel arrays mounted on this home were fitted with micro-inverters. These work in a different way a central, or a string inverter. They convert the voltage from DC to AC at the panel level.

Inverters are need for every installation to convert the DC voltage generated by solar into the AC needed by homes.

Micro-inverters are connected to each panel back plate and are much more efficient than central or string inverters. The majority of residential solar system still use string type inverters, which does the AC/DC conversion for a group of 2 to 10 panels connected together.

How long do solar panels last?

Solar panel makers generally give guarantees of between 25 to 30 years. Amazingly, good quality solar panels can continue working for years after the warranty expires – 50 years of reasonable production is not uncommon.

Output watts does reduce slowly as the solar cells get older, but the rate is slow, at only 0.5% to 0.8% each year.

The specification sheet provided by the manufacturer gives warranty conditions, often specifying 90% output after 10 years of use, and 80% after working for 20 years.

Equipment warranties for related equipment are also given, which means if one of the working parts, such as an inverter fails within a certain time, it is replaced free of charge.

Inverters don’t have a long life like solar panels do, but often come with a guarantee period between 12 to 15 years. Microinverters and power optimizers can last as long as solar panels, so they enjoy a longer warranty.

Micro-inverters are a good solution for installation subject to temporary shading  and help to maximize power output.

How does a grid-tied solar system work?

Grid-tie Solar Power Connection Diagram

Grid-tie Solar Power Connection Diagram

What other components are needed for a domestic solar system?

The black arrows in the diagram above indicates the  DC voltage flow before converting to AC. The red arrows show the AC voltage. The green arrows indicate that power can also flow from the power grid into the home in the usual way.

Note: Net Metering equipment measures the flow of current both directions in and out of the utility grid. This is the huge benefit of modern grid-tied solar power systems. The electricity produced during  peak periods is put back into the power grid.

Home appliances make use of power generated by solar before using power from the utility grid, but automatically take power from the grid if the solar panels become shaded, or in the night when solar production is zero.

How does the federal tax credit work for solar panels in Arizona?

How does the federal solar tax credit work?

The federal solar tax credit was set up by the government so home-owners can reclaim part of the installation cost of a solar power system.

It’s easily done – you simply enter the amount in next year’s tax return and the amount of income tax you pay is adjusted ‘dollar-for-dollar’.  So if, for example, your federal solar tax rebate is $2000 and your tax comes to $5000,  then your tax liability is only $3000.

Worked Example: The solar tax rebate in 2021 is still 26%. If the solar power system price was $17000, your tax rebate is worked out like this:

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17000 x 26% = $4420 – this is your rebate to offset federal taxes

The rebate was originally set at 30% in 2019, decreased to 26% in 2020 through 2021 and is due to go down to 22% for solar power systems installed 2022.

The federal tax credit will expire in 2024 unless the government votes to extend it. This will probably happen, as President Biden has often expressed strong long-term commitment to all renewable energy initiatives (April 2021).

Information Source: Federal Solar Tax Credits

Arizona Solar Power Incentive Programs

Arizona is the sunniest state, so should be the perfect place to invest in domestic solar power. There are some incentive programs implemented at the State level to make solar power very attractive for homeowners:

Residential Arizona solar tax credit

This credit gives you back 25% of the cost of your solar panel installation. The limit is $1000, so well-worth having. Like the Federal Tax Credit, it is claimed on income tax the following year.

Credit for Solar Energy Devices

Solar Equipment Sales Tax Exemption

This program exempts the homeowner from paying sales tax on the purchase of a solar power system, so this represents another saving of 5.6% of the installation cost.

Arizona Solar Tax Incentives

Energy Equipment Property Tax Exemption

The cost of solar power adds value to property and normally the whole value of the home is included when assessing property taxes. This program exempts the cost of a solar power system installed in Arizona from this tax.

Arizona Energy Equipment Property Tax Exemption

What are the solar buy-back rates in Arizona?

Utility companies run electricity buyback programs and the rates are set by regulatory bodies. The state has moved away from Net Metering to a system known as the Export Rate model.

Net Metering tracks power going into and out of the grid, and the customer ends up with credits that can be drawn on when needed.

The Export Rate model balances the power generated against power used from the grid and pays the homeowner for each kWh. This amount is then deducted form the homeowners final bill.

Here are example buyback rates from two utilities (good from Oct 1 2021):

  • APS: Arizona Public Service Electric is 9.405 cents per kilowatt-hour (kWh)
  • TEP: Tucson Electric Power rate is 7.81 cents per kWh

The way electricity is charged is changing in many states and Arizona is no exception. The actual rate can be set according to how much demand is made on the grid during peak hours, when demand is high and rates are expensive.

This means that if a homeowners uses more power in the peak demand window, the rates per kWh will be higher across the board.

It pays to consume less during peak hours, or have a large solar system that can supply the home’s needs without drawing on the grid.

What is an average payback time for solar panels in Arizona?

Solar can save money in sunny states and Arizona is no exception. A typical solar payback period is about 11 years.

How can you calculate the payback period for solar panels in Arizona?

The calculation is quite easy – basically, divide the solar installation cost (deducting any tax credits and rebates) by the savings per year.

Historical irradiance database websites, such as Global Solar Atlas, show the irradiance value for any geographic location.

This is needed to calculate the solar power system output. The value of irradiance, or sun energy, is measured in kWh/m2/day or year – it’s also known as Peak Sun Hours.

Are solar panels worth it in Phoenix, Arizona?

Solar Payback Calculation For A 5kW Solar Panel System Phoenix, Az:

Are solar panels worth it in Phoenix, Arizona?

Average solar payback period Phoenix Arizona?

The following calculation includes the Federal Solar Tax Credit but ignores State incentives.

  • Location: Poenix Arizona
  • Solar power system rating: 5kW
  • Solar system installation cost = $10000 – 26% federal tax credit = $14580
  • Irradiance at Phoenix = 2710 Peak Sun Hours per year
  • Power generated by solar panel system  = 2710 x 5kw = 13550 kWh
  • Arizona average electricity = 11.29 cents/kWh
  • Annual savings = solar generation x kWh cost = 13550 x 11.29 = $1530
  • Solar payback period for Phoenix Az = solar cost/annual savings = 14580/1530 = 9.5 years

Does adding solar panels increase house value in Arizona?

Home value obviously varies from state to state. Is solar power worth it from house value point of view in Arizona? Based on sales statistics it seems to be obvious that it does, but of course there may be other factors to take into account.

This is the way I look at it: If a home’s value doesn’t go up after having solar installed, why would the state bother to introduce a property tax exemption to cover solar power?

In fact, most reputable sources maintain that adding solar panels increase an Arizona home value by 2% to 3%.

What Factors Affect Solar PV System Efficiency?

Are solar panels worth it in all U.S. states? Power output generated can be affected by several things, some we can control and some we can’t control.

Sola panel tilt angle has an effect, so does shading from nearby structures and trees. Some other elements we don’t have control over are environmental, like clouds, fog and rain.

Here’s a list of the main factors than can reduce solar panels output:

  1. Sun’s energy (Irradiance) measured in peak sun hours. This determines solar panel output.
  2. Shading Level. Solar panels work best in open situations when their surfaces aren’t shaded.
  3. Maintenance (Cleaning). 15% of the losses can be avoided by twice-yearly cleaning.
  4. Using high quality solar panels ensures optimum output wattage.
  5. Orientation. Solar panel array direction should be as close to due South as possible (in Northern Hemisphere).
  6. Tilt Angle. The best title angle for optimum output is 45 degrees (fixed panels).
  7. High Temperature Losses. Space around panels is necessary to minimize over-heating losses.

What direction is best for solar panels in Arizona?

The most efficient direction for solar panel array to point in the Northern hemisphere is South. However, it’s not disastrous if this isn’t entirely possible for some reason. Professional solar stallers can find many ways around such problems.

Solar panel arrays can also be pointed Southwest, or South East and yes, even point towards the East or the West. Pointing solar panels North isn’t a great idea, because direct sunlight gives the best solar output.

As a general rule, roofs with normal tilt angles can generate considerable power pointing North, because of diffuse light. It’s just not the perfect orientation for maximum output watts.

What is the best tilt angle for solar panels in Arizona?

What is the best tilt angle for solar panels in Arizona?

What title angle is best for solar panels in Arizona?

45 degrees is quite a good tilt angle, giving decent power generation year round, for the common fixed panel roof mounting.

Some solar panel array frames incorporate tilt angle adjustment, which can increase output over the seasons. The setting for such a system in summer would be the geographic location latitude minus 15 degrees.

The winter setting will be the location latitude plus 15 degrees. This will help greatly to maximize the solar output throughout the seasons.

For Phoenix Az this give a summer angle of 18.45° and in winter ideal tilt angle would be 48.45°.

The table below shows the difference in power output over 12 months for a solar system in Phoenix, Az when installed at a tilt angle of 57 degrees (optimum for Phoenix). The comparison is with flat-mounted panels.

Peak sun hour values 12 months in Phoenix Arizona – power output Vs Tilt

Irradiance for Phoenix Arizona by month (kWh/m2/day – Peak-Sun-Hours)




























57 °














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Solar-tracking can be installed so that the solar panels face the sun’s rays constantly and can improve solar output by as much as 40%.

The downside is that such tracking systems cost about 25% of the installation price and for small domestic solar systems is not very cost effective.

If the home needs more energy, it’s often better to add more panels, which would cost less cost than a sun-tracking system.

You need to know the peak sun hours value in your location to calculate how much power a solar panel system will generate. The irradiance and your average annual energy consumption is what you need to calculate the solar panel array size.

How to measure your home energy use in Arizona

Trying to asses each individual appliance to measure overall energy consumption is a tedious job.

For many appliances it’s relatively easy. For fridges and freezers, the assessment needs to be approached in a different way because these appliances incorporate compressors with motors.

Compressor motors experience surge currents when they start up, which are always bigger than the power used when running.  At other times, the compressor doesn’t run at all and consumes no power.

By far the easiest way to calculate a home’s power consumption is to find it on previous year’s electricity power bill.

How many solar panels do your need for a home in Arizona?

How to calculate solar panels size

Solar panels used in modern domestic installations are rated between 225 to 415 watts. When entering panel sizes into the calculator below, remember that the power rating should be entered as kilowatts, not watts, i.e. 275 watts is entered as 0.275 watts.

I previously talks about the different losses inherent with solar electric PV power systems and the calculator makes allowances for the average losses automatically.

Visit the site Global Solar Atlas, and read off the irradiance peak sun hours for your city.

Enter this value with the energy your homes uses per year, and the calculator will show you how many solar panels you would need to supply all your home’s needs..

Important Note: The calculator is an estimate for guidance only – a professional solar installer can give very accurate numbers.

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How many solar panels do you need for your home in Arizona?

Solar panels Arizona cost

Solar Panels










Permits & Inspections


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Big savings are possible, up to 50% of the cost by installing the system yourself. You would need help with the permits, paper-work and get technical advice for coordinating grid connections.

Many people have installed their own solar power systems, but installation costs are going down all the time. It’s often much easier and gives peace of mind to let a qualified solar installer carry the load.

What happens to solar when power goes out?

A grid-tie solar power system is automatically disconnected when the power goes down. This is to protect power workers that could be working on the line.

This safety measure is called ‘anti-islanding‘. Islanding is when a solar power system operates when the grid is powered down, which is a dangerous situation.

What do home solar power systems cost in Arizona?

Average installation costs for domestic solar power in Arizona is $3.61/watt (2021), which makes the average cost for a 5kW solar system $18050, without rebates or other incentives.

Home Energy Consumption & Solar Statistics For Arizona


Average kWh used per month

Ave kWh used per day

Peak-sun-hours per day

Solar output required to cover  100% energy used (kW)

Installation price Per Watt ($) 2021







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Is Solar Worth It In California?

Is Solar Worth It In Your State?

Related Questions

Is solar worth it right now?

With a typical U.S. payback time of 11.6 years, solar is well-worth it for 2021 through 2023. After that, no one knows if incentives and rebates will still apply.

There’s a good chance that government commitment to renewable energy installations will ensure financial incentives for home solar for some years to come.

Is solar power worth the money?

Solar power does make sense and is worth the money, given that communities are committed to renewables as a way to save money and also the planet’s resources.

The decisive factor is the solar payback period, which is the number of years it takes for the savings in electricity to equal the cost of power during the same period. Arizona payback time is close to the U.S. average of 11 years.


Government Guide – Solar Tax Rebate:

Guide To Federal Solar Tax Rebate

Arizona State Solar Information

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