Solar Panels In Arizona — How Much Can You Save?

It should come as a surprise to no one that so many people ask about the worth of solar energy in Arizona. After all, it’s the sunniest state in the United States, so it feels like a no-brainer to ask about it.

Solar Panels In Arizona — How Much Can You Save?

In fact, many utility companies based in Arizona have tax rebate schemes in place when they install solar panels.

Arizona has a sales tax exemption, and they’ll remove the property tax for how much solar adds to the home value. For all these benefits, how can you not be interested in installing solar panels in your Arizona home? 

This article will explain exactly how solar panels work and why the incentives should matter to you. 

Grid-Tied Solar Systems

Solar energy is getting more popular around the world as so many people want to save money as well as the planet’s resources.

But first, you might want to have a better understanding of how solar energy works, especially for a grid-tied system, which is the most popular way to utilize solar energy in Arizona.

Installing Grid-Tied Solar Systems

Now, before you go to contact someone to install a grid-tied system, you need to get a local permit.

Once you’ve got this permit, you’ll be able to get in contact with a professional solar specialist to install your grid for you, as they’ll hook your utility grid to your solar system.

Typically, the grid-tied solar system has roughly the same equipment used for installation. You’ll notice that you’ll need suitable solar panels that fit the size of your roof. You’ll also need some frames to mount the panels on the roof. 

You’ll find that they also use string or micro-inverters to convert DC to AC, and they have DC and AC cables that run through junction boxes.

Included are safety devices and circuit breakers, and then net-meter equipment is used to measure the power that goes in and out of your utility grid.

They also include lead-acid or lithium iron phosphate batteries to store any energy, which is essential if you have an off-grid solar system.

All of this equipment is essential for the installation of your grid-tied system, as your solar panel arrays can be fitted with micro-inverters or string inverters.

These are needed for all grid-tied installations to convert the voltage of DC into AC which is used by many homes.

They’ll be connected to each back plate of your panel, and there have been comments that micro-inverters are much more efficient than string inverters are.

Most residential systems will use string inverters and will convert AC/DC energy for a group of two to ten panels connected with one another.

But How Do Grid-Tied Systems Work?

Truthfully, the grid-tied system does have an easy-to-understand process, which will be made easier once I explain it to you.

See, the roof-top solar panels will collect energy from the sun, which will then be routed to the DC junction box. This will then go through a DC isolator, which will then go through the string inverter. 

Once it meets the string inverter, it will go into the solar power meter, which is converted through the AC circuit breaker.

The AC heads through the consumer junction box which is measured on a net meter as it powers your house. But the measurement of the net meter will also go between the grid and the consumer junction box.

When looking at net metering equipment, it’s important to note that the equipment measures the flow of both directions of current through the utility grid.

This benefits the modern grid-tied solar systems. Thus electricity can then be produced during peak periods and then sent back to the power grids.

You’ll have noticed that home appliances can make use of solar-generated power before it comes from the utility grid. It does this because it automatically takes power from the grid if the solar panels are in the shade or when it becomes nighttime. 

Placement Of Your Solar Panels

When looking into solar panel installation, there are a few factors that you need to consider. The output generated by your solar panels can be determined by the tilt angle and the direction.

If you have any shade nearby, then that can also have a significant impact on the efficiency of your home. 

There are numerous factors that can reduce your solar panel output, including the amount of energy produced by the sun which is measured in peak hours.

You may also find that if there’s any shade covering the panels, the amount of power output generated can go down. You can also lose some power if you don’t clean your panels, or if you use low-quality panels.

There’s an added loss if the panels are placed too close together as they will lose power due to overheating. But the most important factor when losses are considered is the orientation and the tilt angle of your panels.

Calculating The Placement, Tilt, And Angle

Your ideal direction for your solar panels will be when they’re pointing to the Northern hemisphere in the south. As long as they’re pointed in a southern direction, they should be able to get optimum sunlight.

Don’t worry if you can’t point them south for some reason, instead, if you have to, point them in the east or west. In this case, the worst scenario would be pointing your solar panels to the north, as they need direct sunlight to get optimum solar output.

But if you have a normal roof tile, then you could point north. But that’s only because of the way the roof is angled, as a general rule, pointing north should be a last resort.

You’ll also need to consider the amount of tilt needed for your solar panels. 45 degrees is a suitable angle that can provide decent power generation for the whole year when you have a normal roof mounting. 

Some panel frames have an adjustment setting for their tilt angles, which can help you increase your output over each season.

Take an example of a summer setting, which would be the latitude of your location but subtract fifteen degrees.

However, in the winter it would be your location’s latitude adding fifteen degrees. Keeping this formula in mind, you should be able to maximize your output through the seasons. 

If you want a better example, let’s say that you have a house in Phoenix. Using this formula, your angle during the summer would be 18.45 degrees, while in winter, it would be 48.45 degrees. 

Solar Tracking Or More Panels?

To make the entire process easier for you, consider installing solar trackers so that your panels will always face the sun’s rays. By utilizing solar tracking, you can improve your output by 40%.

But keep in mind that these tracking systems cost 25% of the installation price for a domestic solar system, so it won’t be as cost-efficient.

Solar Panels In Arizona — How Much Can You Save?

Should your house need more energy, just install more panels which will cost less than a solar tracking system in the long run. Ideally, before you install your solar system, identify the peak sun hours of your location to see how much power your panels will generate.

If you want to do this, calculate both your irradiance and average annual energy consumption. That way, you’ll know how large of a solar panel array you’ll need.

Measuring Your Home Energy

While it’s frustrating and tedious to have to measure the energy consumption of every appliance in your house, it does have to be done to get an accurate reading of how much energy your house uses.

Luckily, it’s an easy task for most of your appliances. However, you will need to look out for your refrigerator and freezer, as your assessment will need to be done differently from your other appliances.

After all, refrigerators and freezers have compressors and motors installed too. Compressor motors have surge currents upon start-up, and they’re always larger than the power they actually used when they run. Sometimes, the compressor doesn’t even start and won’t even consume power. 

If you’re struggling to calculate your power consumption, look for last year’s electric bill. You’ll see what has used the most power, and it will be easier to assess that way.

Size Of Solar Panels

When you’re installing your panels, you’ll need to calculate the sizes needed. Many domestic solar panel installations are between 225 and 415 watts.

You should check the Global Solar Atlas to find out the peak sun hours for your city, and then check the energy your home uses. 

Truthfully, if you contact a professional solar installer, they can give you fully accurate numbers. So you only need to calculate if you want to know a rough estimate of how much you need.

Of course, you can also do everything yourself and save yourself half the price of getting a professional. However, you will still need permits, technical advice, and paperwork to have your solar panels installed.

So, to give yourself peace of mind, you should contact a qualified professional to install your solar system. After all, the savings can’t account for the peace of mind of knowing everything will be working correctly after installation.

The Financial Side Of Solar Panels

Now that we’ve done an in-depth description of solar installation for domestic properties, let’s talk about the financial side of solar panel installation.

Due to the amount of sun exposure you get in Arizona, it’s no surprise that it’s been getting so much more popular in the state. In fact, you may find that the government will offer tax credits for homeowners who install solar panels to reclaim the costs of installation.

Federal Tax Credit

The federal tax credit was established by the government so homeowners could reclaim some of the costs of their solar system.

Thankfully, this is fairly easy to do. Put in your tax return for next year and how much income tax you already pay and adjust it dollar-for-dollar. 

If you’re confused, here’s a little example for you. Say that your federal solar tax rebate is $2000. Your tax overall comes to $5000. However, due to your rebate, your tax liability will only be $3000 instead of $5000.

In fact, the solar tax rebate in 2021 would have been 26%. If your solar system price was $17000 then it would have been a simple calculation of 17000 multiplied by 26%. Using this calculation, you would get $4420 as part of your rebate to offset your federal taxes.

Originally, when the federal solar tax credit was introduced in 2019, it was at 30%. However, with each year, they have been reducing it by 4%. Now, in 2022, the solar power system rebate will only get you a 22% rebate.

This credit will be expiring in 2024 unless the government decides to extend it. There is still a chance that they will continue to extend this scheme as President Biden had previously expressed a long-term commitment to renewable energy schemes.

Arizona Solar Incentive Programs

There are a number of solar incentive programs that have been introduced in Arizona. Due to the reputation of Arizona as the sunniest state in the United States, it has put in place a variety of different incentives to encourage owners into looking into solar power. In fact, let’s take a look at some of the options in place right now.

Residential Solar Tax Credit

The residential solar tax credit will reimburse you 25% of your solar panel installation costs. The limit of this reimbursement is £1000 and is thus worth having. Like with the Federal tax credit, you can claim it on next year’s income tax.

Sales Tax Exemption For Solar Equipment

There’s an exemption for homeowners buying solar power systems that prevent them from having to pay sales tax. So you can save 5.6% of your installation costs. 

Property Tax Exemption For Energy Equipment

Solar power costs can add to the value of both the property and the overall value of your home when they assess property taxes. The program that utilizes this exempts the cost of your solar system installation from your tax.

As a general rule, adding solar panels to your home can increase its value. There are numerous sales statistics that show how solar panels can increase the value of a home from 2% to 3%.

You’ll also find there are tax exemptions in place that will encourage new owners to buy it should you ever want to sell your home.

Buyback Rates In Arizona

Utility companies have their electricity buyback rates set by external regulatory bodies. Previously, Arizona companies would use the Net Metering system for the Export Rate model.

While Net Metering would track the movement of the power going through the grid, it would end with the customer getting credits that could be received when needed.

The Export Rate balances the powers generated by the grid to those used against the grid and will pay the homeowner for each kWh used, which is then deducted from the final bill.

There are two great examples of buyback from utility companies. The Arizona Public Service Electric will offer you a buyback of 9.405 cents per kWh. While Tucson Electric Power will offer you 7.81 cents per kWh.

Solar Panels In Arizona — How Much Can You Save?

The way electricity is charged has been changing in many states, with Arizona being one of them. The actual rate is set according to the demand of the grid at peak hours.

Thus, when the demand for electricity is high, it will be higher according to the board. If you consume less electricity during peak hours, a large solar system can supply your home’s needs without having to draw from the grid.

Payback Time In Arizona

Arizona is a sunny state, so you can save a lot of money by utilizing your solar system. Typically, your payback period will occur over eleven years.

You can calculate the payback period for your solar installation by dividing the installation cost by the savings per year. When including the solar installation cost, make sure that you deduct your tax credits and rebates before you commit to dividing.

Using Solar Panels In Phoenix

If you want to utilize solar panels for your home in Phoenix, let me give you an example of how your costs would look in Phoenix, Arizona. Specifically, we’ll also take a look at the amount you would get from payback costs.

Say you live in Phoenix, Arizona. Your system rating would be 5kW for your solar system, and your installation cost would be $10,000. You then take away the 22%.

This would be $12,200 with your federal tax credit. Along with your peak sun hours, you will have 2710 hours per year. Therefore, you would need to multiply this amount with the 5kW solar system rating you’re using which is 13,550 kWh. 

If you include your average electricity for your state, it will be 11.29 cents per kWh. Then you’ll have an annual saving of $1530 by multiplying your solar generation by the cost of kWh.

Then your solar payback period will be your solar cost divided by your annual savings. Your solar cost, being $12,200 will be divided by $1530. So it should only take you roughly eight years to get your solar payback.

How Much Does A Domestic Solar System Cost In Arizona?

As of 2021, the installation cost for a home solar system was around $3.61 per watt, which would be an average of $18,050 for a 5kW system if you don’t have any rebates or incentives.

On average, 1049 kWh would be used each month on average, which can then be translated to 34kWh per day on average. You get peak sun hours of 7.5 per day, and the solar output required to cover the full amount of kW used would be 12.42 kWh. 

A Few Questions About Solar Power

There are of course some questions that everyone has about solar power. After all, before investing you want to make sure that you can cover all of the costs and issues that may arise from investing. 

What Happens When The Power Goes Out?

Questioning when the power goes out is valid. After all, you want to know that there are emergency situations in place. In fact, when you have a grid-tied system, it will automatically become disconnected from the main line.

That way, any powerline workers will be protected from any injury. When this happens, it’s referred to as anti-islanding. Islanding itself is utilized when a power system operates while the grid is down, which is incredibly dangerous.

Is Solar Power Worth It?

At the current time, I would say that solar power is worth the investment due to the number of government rebate schemes offered.

While the future of solar power is uncertain, it’s definitely worth it in Arizona due to how much sunlight is available. Not only is it worth the money, but it’s also a renewable energy that can be a huge benefit to the planet’s resources. 

How Long Do Solar Panels Last?

As a vital question, before you invest you want to know how long your solar panels will last. Most installers guarantee that they’ll continue working between twenty-five and thirty years, but they can last long after the warranty if they’re installed perfectly and with great quality.

There have been some reports that they’ll last four around fifty years, which isn’t too unheard of. 

While your output may reduce over time, it is only between 0.5% and 0.8% each year. You’ll find that your manufacturer will give you the specs regarding its warranty conditions, and will typically mention a 90% output after ten years and 80% after twenty years. 

But you will also find that the warranties also extend to the equipment used, so if your inverter fails within a specific period, you can have it replaced for free.

Unlike solar panels, these inverters don’t have as long a lifespan but still have a guarantee period between twelve and fifteen years. However microinverters can last for just as long as your solar panel, so they will have a longer warranty period. 

If you are worried about replacing your inverter, look into micro inverters as they can help maximize the power output too.

Final Thoughts

As you can see, there are so many reasons to invest in solar panels and solar energy while living in Arizona.

As the sunniest state in the United States, they offer so many benefits for investing, and it can also reduce the impact of energy use on the environment.

With the government hoping to improve its stance on cleaner energy, it’s likely that you will gain more benefits from implementing solar energy and installing solar panels on your home. 

If you’re curious about installing solar panels, feel free to contact a local professional to get a gauge on how much it will cost you to install.

Joe Danner