A Guide to Arizona Solar Incentives (2022)


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. 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.

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.

Installing solar panels offer a way to generate clean, abundant solar energy for your home, but they could lighten up your wallet, as well. And 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:

Arizona Solar Incentives 2022

Federal Solar Tax Credit

The Solar Investment Tax Credit (ITC), also known as the Federal Solar Tax Credit, allows you to claim 26% of the total cost of installing a solar energy system on your federal taxes. Any residential solar energy systems installed after December 31, 2022, will only be eligible for a 22% tax credit. 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. 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. 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. 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 percent to your installation cost.

Do Solar Panels Increase Home Values in Arizona?

According to Zillow, the answer is yes! In Arizona, the average home value in June 2022 was around $450,000. 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. 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.

Does Arizona have Net Metering?

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

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 Buyback Programs in Arizona

Solar buyback programs are another way to describe the net metering or net billing opportunities that utility companies make available. While there is no state-level program, TEP, APS and UNS are the major players in providing electricity to your home. These companies and many other Arizona electric companies offer a net billing credit for your excess solar energy at a lower rate.

Often, solar buyback programs mean a dollar-for-dollar solar buyback in return for credits. However, in Arizona, the utility companies set the rate for the solar credit and it’s lower than the retail price of electricity. Over the last 10 years, prices have fallen 50% for the cost of solar in Arizona, making it an affordable choice.

Does Arizona have a solar rebate?

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.

Making Solar Affordable in Arizona

In a year, Arizona has about 300 sunny days. I know what you’re thinking: that’s almost a year’s worth of opportunities to generate clean solar energy for your residence. And guess what? Solar panels still work on cloudy days, even in light rain. This is when you might need your power the most. Together with the sunny days, that’s a full year of generating solar energy in excess for your home. It’s time to live abundantly and go solar!

Fortunately, the state of Arizona has your back when it comes to going solar. There are so many Arizona solar incentives and rebates that shave off the cost. If you want to save a bundle with your solar panels, contact ADT Solar today!

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