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Navigating Solar Rebates in Arizona: Understanding the 2023 Landscape

Sabrina Lopez
Sabrina Lopez
October 24, 2012
2 min read

[Originally published on October 24, 2012, | Updated on January 24, 2024 - 2 min read]

Understanding utility solar rebates and their impact on the cost of solar electric systems is vital for anyone considering solar energy in Arizona. Let's demystify what these rebates mean in today's context and how they affect you.

A decade ago, the situation was quite different. Major utilities in Arizona, like SRP, TEP, and APS, offered significant rebates as part of their renewable energy goals. These rebates have evolved substantially over time.

Current Solar Rebates and Incentives in Arizona (2023)

  1. Utility-Specific Solar Export Credits: Arizona's three largest utility providers (APS, TEP, and SRP) provide a solar export credit, similar to net metering. This credit compensates homeowners for unused electricity generated by their solar system. The rates, as of 2023, are approximately:

    • APS: 9.4 cents/kWh
    • TEP: 7.8 cents/kWh
    • SRP: 2.8 cents/kWh 

  1. Federal Solar Tax Credit (ITC): This national incentive allows a 30% deduction on total system expenses, which can significantly reduce the cost of installing solar panels. For example, a 10 kW system costing $33,000 would get a $9,900 tax credit. This credit is available until 2034, with a gradual phase-out planned.

  2. Arizona State Residential Solar Tax Credit: Arizona offers a state solar tax credit, allowing residents to receive a 25% credit on the total cost of their solar system, up to $1,000. This credit can be carried over for up to five years if it exceeds the taxes owed. 

  3. Property Tax and Sales Tax Exemptions: Arizona provides exemptions on property tax for the increased value due to solar installations and sales tax exemptions on solar equipment. These exemptions help reduce the overall expense of going solar.

Implications of Rebate Changes

A drop in utility rebates, like the hypothetical 10-cent drop discussed earlier, means that the upfront cost for the consumer could increase. However, with the current state and federal incentives, the overall financial burden of installing solar systems in Arizona is significantly mitigated.

For example, a drop from 50 cents per watt to 40 cents in rebates could mean a $500 increase in the upfront cost for a 5 kW system. But with the available tax credits and exemptions, this increase can be offset, making solar still a financially viable option.

The Evolving Solar Landscape

The solar industry has rapidly changed over the past decade, significantly reducing manufacturing and installation costs. The incentives and rebates have adapted to these changes, focusing more on long-term benefits than immediate ones.

Conclusion

Understanding the current landscape of solar rebates and incentives is crucial for homeowners in Arizona. While the specifics of rebates might have changed since 2012, the combined effect of state and federal incentives still makes solar a cost-effective and environmentally friendly choice.