Arizona Solar Panel Incentives

Arizona residents know all about the heat the Grand Canyon state can carry. In fact, summer temperatures can climb up to 120°F in Arizona.¹ That means homeowners are left with little choice but to run their AC regularly to keep their families comfortable. Most Arizona residents pay about 17% over the national average in monthly electricity expenses, totaling about $181 a month.²

While Arizona’s electricity rates are still about 5% less than the U.S. average at 11.29 cents per kilowatt-hour (kWh), they’re still high. Partially, this is because of how the U.S. power grid generates electricity. Renewables, like solar, are often a cheaper means of producing electricity, as well as a cleaner option.³

Solar panels can provide clean, abundant solar energy for your home, but they could lighten up your wallet, as well. As a trusted solar company in Arizona, we help homeowners take advantage of solar incentives in Arizona to save money on their solar panels. Here is our list of solar incentives that make solar panels in Arizona worth your while:

Federal Solar Tax Credit

The Solar Investment Tax Credit (ITC), also known as the Federal Solar Tax Credit, allows you to claim 30% of the total cost of installing a solar energy system on your federal taxes. This coupled with the Arizona Solar Tax Credit will greatly reduce the initial cost burden of installing solar panels for homeowners in Arizona.*

Arizona Solar Tax Credit

The Arizona Residential Solar Tax Credit offers homeowners an additional tax credit for installing a rooftop solar system.⁴ This AZ solar tax credit allows you to claim 25% of the cost of installing a solar energy system, with a $1,000 maximum limit, for a personal income tax deduction.

Arizona Energy Equipment Property Tax Exemption

Solar panels could increase your home value in Arizona, but we’ll talk more about that later. For now, let’s keep talking about the tax benefits of solar panels in Arizona. In this state, the energy equipment property tax exemption accounts for 100% of the added value of a solar energy system, including solar batteries.⁵ Subsequently, the valuation of your solar panels will not cause your property taxes to rise.

Arizona Solar Equipment Sales Tax Exemption

The next cost-saving solar incentive is the solar equipment sales tax exemption in Arizona.⁶ Thanks to the solar equipment sales tax exemption, solar energy systems are exempt from Arizona’s sales tax which brings a saving of 5.6% to your installation cost.

Do solar panels increase home value in Arizona?

According to Zillow, the answer is yes! In Arizona, the average home value in June 2022 was around $450,000.⁷ Even if solar panels increase your home value by 3% (less than the national average), that still accounts for an increased property value of $13,500.

Solar Rights Laws in Arizona

Additionally, Arizona has solar rights laws that prevent a homeowner’s association from banning solar system installation on a home.⁸ Essentially, this protects the private property rights that every residence has to solar access. It also dissolves any claim that potentially restricts a home’s use of solar energy.

Arizona Net Billing

Unfortunately, Arizona does not offer net metering but does, however, require utility companies to offer a net billing program. The difference between net billing and net metering is that with net billing the utility company does not have to give you credits that amount to the retail rate of energy. They are allowed to credit you at a lower rate and that number is up to them.

While net billing differs from net metering programs, homeowners have access to a number of solar incentives and programs that can help reduce the cost of installing solar panel systems.

A Glimpse At Net Billing in Arizona

• Tucson Electric Power (TEP) has the Resource Comparison Proxy Export Rate. This rate is currently set at 7.81 cents per kWh and adjusted annually for average market costs for solar.
• Arizona Public Service Company (APS) has the Renewable Energy Riders to provide credits on your electricity bill. For qualified rooftop solar installs, the rate of the credit is 9.4 cents per kWh.
• UniSource Energy Services (UNS) has an export compensation rate of 9.32 cents per kWh.

Contact your utility provider to find out more about their specific net billing program and see if your home solar system qualifies. For extra help, contact one of our Solar Energy Specialists for a free solar consultation.

Solar Rebates

In Arizona, the only statewide financial incentive for going solar is the Arizona residential solar tax credit. Other than that, local utilities may offer their own programs to make going solar more cost-effective.

Rebates or other financial incentives can be used to go solar, boost your solar system with a solar panel battery backup, or do other upgrades that can help make your home green.

Contact your local Solar Energy Specialist to find out more!

Mohave Electric SunWatts Renewable Energy and Rebate Program

Solar rebates are available for Mohave Electric Cooperative (MEC) customers through their SunWatts Renewable Energy and Rebate Program. The solar rebate entails a cents per watt, up to a maximum system size of 50 kW. The incentive cap is $2,500. Additionally, solar energy systems that include solar battery storage are eligible for a rebate for the battery too.