Solar panels are an excellent option for renewable energy, especially in Arizona.
Along with their ability to save money on electric bills, there are also incentives available to you.
In this blog on solar panel incentives in Arizona, we’ll look at the following questions:
- Does Arizona offer solar incentives?
- Can you get solar panels for free in Arizona?
- What is the tax credit for solar energy in Arizona?
- How long does it take for solar panels to pay for themselves in Arizona?
- What is the downside to solar in AZ?
Does Arizona Offer Solar Incentives?
Arizona offers eligible you multiple incentive programs to encourage using renewable energy systems. It’s essential to research each incentive more thoroughly before installing solar systems to be aware of different eligibility requirements and expiration dates.
Solar Investment Tax Credit (ITC)
ITC gives you a non-refundable credit that covers 30% of the cost of installing a rooftop solar system. If the cost to install a solar system is $25,000, you’ll relieve a 30% federal solar tax credit of $7500 through the ITC ($25,000 x 30% = $7500).
Arizona Residential Solar Tax Credit
The Arizona Solar Tax Credit covers 25% of the cost of residential solar panels. This credit must be at most $1000 for installing a system at one residence.
Arizona Public Service (APS) Solar Incentive Program
The APS offers you a rebate of up to $1000 per kW of installed solar capacity. If eligible, you’ll receive a rebate amount based on the size of the solar system and calculated as a percent of the system’s total cost. Likewise, it must be interconnected to the APS grid and meets specific technical qualifications.
Solar Water Heating Tax Credit
Arizona offers a state tax credit for installing solar, covering up to $1000 of solar water heating system costs.
Energy Equipment Property Tax Exemption
Arizona offers property tax exemptions if your home’s value increases due to solar system installation. Solar systems increase home value due to lower monthly energy costs, reduced carbon footprint, and increased energy independence.
Solar Equipment Sales Tax Exemption
Retail solar panels and equipment and installation of solar systems in Arizona are exemptable from state sales tax.
Renewable Energy Production Tax Credit
The renewable energy production tax credit gives businesses with solar and other renewable energy systems up to $25,000 in state tax credit. The Arizona Department of Revenue requires that renewable energy systems have a minimum of 5 megawatts generating capacity to qualify.
SunWatts Renewable Energy Incentive Program
The SunWatts Program offers you a rebate for installing solar water heaters equaling $0.40 per expected the first year of kilowatt-hour savings.
Can You Get Solar Panels for Free in Arizona?
Arizona doesn’t offer no-cost solar systems, but some programs provide little to no upfront installation cost. Available solar incentives can reduce costs through reimbursements and tax exemptions for more initial savings on a solar system.
Some utility companies offer free solar panels with a solar loan, lease, or power purchase agreement (PPA) to qualifying customers to reduce costs. In these scenarios, a company will typically install roof panels for no up-front cost but will charge you for the electricity produced.
What is the Tax Credit for Solar Energy in Arizona?
You can receive a solar energy credit for 25% of the cost (or $1000, based on which is less) of buying and installing a solar device. If additional solar energy devices are installed in a later year, the cumulative credit cannot exceed $1000 for the same residence.
How Long Does it Take for Solar Panels to Pay for Themselves in Arizona?
Typically, Arizona’s payback period for a solar panel system is eight years. This can vary depending on the system’s cost and the energy it generates.
What is the Downside to Solar in AZ?
Solar systems are a good fit in Arizona, especially considering the amount of sunlight in the Valley. That said, it’s still important to consider the downsides. Solar panels can be an expensive initial investment and may require specific roof types and amounts of space. They may be less effective on cloudy days and don’t generate electricity at night.
It’s challenging to remove solar panels once installed, but most people find their home value increases and don’t see a reason to remove them. Along with these considerations, solar panels have benefits that can outweigh the cons depending on your needs and preferences.
Solar Panels Pros in Arizona
- Save money on electricity bill
- Increase home value
- Reduce federal taxes and income tax
- Lower carbon footprint
- Support local economy
- Eligibility for tax exemptions and credits toward electricity bill
- Make money back from solar
- No money down solar panel installation
Solar Panels Cons in Arizona
- Initial investment can be costly
- Less effective on cloudy days
- May still require grid electricity
- Requires a certain amount of roof space
- Difficult to move/remove once installed
- Doesn’t generate electricity at night
Learn More About The Solar Incentives You Qualify For With Our World Energy
Our World Energy is the only solar company that offers 25-year warranties, no strings attached, as well as $0 down solar options to reduce the overall installation costs.
Call us to learn more about how you can achieve energy independence for your home today.