Joshua Bartlett
Author Archives: Joshua Bartlett

Why Have Solar Power Subsidies in the United States?

solar-power-subsidies

Does the US still need solar power subsidies when solar is so popular?

Without getting into too many of the nitty gritty details, energy subsidies exist in order to help get new or struggling technologies off the ground and able to compete on their own, and solar power subsidies are no exception. The reason new technologies need help is simple: money.

According to a recent study, energy subsidies have been around since at least 1789, when our country placed a tariff on the selling of any British coal entering America. Since that time, federal money has flowed to industries such as coal, natural gas, oil, nuclear, and renewable energy.

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Do I Need Snow Guards for Solar Panels?

snow-guards-for-solar-panels

Ever experienced a solar panel avalanche? Then read on to find out if you need snow guards for solar panels.

Although people living in warmer climates would never consider how snow could impact their solar experience and even ask the question if they need snow guards for solar panels, those residing in the northern regions of the US must always consider their weather when it comes to anything exposed to the elements. Failure to take mother nature into consideration often has dire consequences and how you handle your solar installation is no different.

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What Are Some Good Solar Panel Cleaning Tools?

solar-panel-cleaning-tools

If it’s time to spruce up your solar panels, let’s first look at the best solar panel cleaning tools.

You probably remember the moment your shiny new solar panels arrived at your home and were installed on your roof. Just like we marvel at brand new TVs with no fingerprints or smudges fouling the picture, pristine solar panels can be quite impressive. But just like that TV, solar panels will start to accumulate dust and dirt on the surface very quickly, and that is when you have to consider your solar panel cleaning tools.

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How Many Solar Panels does it take to Charge an Electric Car?

how-many-solar-panels-to-charge-an-electric-car

How many solar panels are needed to charge an electric car?

The residential solar industry has enjoyed a huge growth spurt over the last decade due to falling prices and new financing mechanisms. At the same time, electric car ownership has grown steadily, pushed forward by companies like Tesla and Nissan that are constantly researching and developing new ways to make electric vehicles cheaper and go further on a single charge.

Some electric car drivers are even installing solar on their home’s roof to charge their car. An electric car powered by clean, renewable energy? Yes, please! This idea though might leave you asking the obvious question “How many solar panels does it take to charge an electric car?”

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Is Solar Panel Removal Possible?

solar-panel-removals

For anyone asking themselves ‘Is solar panel removal possible?’ read on as we explore common reasons, routes, and issues.

It might seem like solar panel removal would be a bit of a taboo topic in a community so heavily focused on renewable energy production, but the reality is that solar panels are just like any other piece of equipment attached to your home. Just like the occasional HVAC replacement, it’s entirely possible that you will need to remove your solar panels for one reason or another at some point.

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How to Get Solar Power Without Batteries

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Installing solar power without batteries

How do you store the energy, anyway?

If you’re interested in purchasing a new solar system, then you likely have a lot of questions about how the system works and what you will need to suit your individual needs. One question that comes up often is whether or not a solar system needs a battery and how to get solar power without batteries. It’s really a trick question because although most systems don’t use batteries at all, but use the electrical grid as a sort of flexible battery storage and on demand power system. If this makes no sense, that’s fine, because we’re going to explain!

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Does Solar Panel Cooling Boost Output? (+Video)

solar-panel-cooling

Discover solar panel cooling methods that can help enhance your system’s performance.

Solar panels suffer from a somewhat ironic problem: You need more sun to generate more power, but the hotter the panels get, the less efficient the panels are. This inefficiency means that the sunniest months of the year might hold the most potential, but might not be the most productive months for your solar system. Solar enthusiasts have been searching for ways to get more power from their system for years, and solar panel cooling is a topic frequently discussed.

So, are you looking for ways to increase your solar panel output? Do you like to tinker and explore DIY projects to wring every ounce of performance from your rig? If so, then read on to explore why it is that solar panels have this problem in the first place, some ways in which technology is evolving to cope with the problem and find methods that many DIYers have used to tackle the problem on their own.

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Guide to New York Solar Panels

new-york-solar

Information about Solar Panels in New York

New York comes out very highly rated concerning the overall grade for anyone interested in purchasing a solar system. They have the solid support of the state government for now and in the years to come and they also have significant rebates, credits, and exemption policies. Read on to see how the government is practically begging you to invest in solar and make a handsome return!

#1 Overall Solar Grade

A-
Overall Grade
6 years Avg. Payback Time (For Cash Purchase)
24.2 % Estimate IRR (Return on your investment on cash purchase over 25 years)
$39,028 Your Net Profit Over 25 Years (Cash Purchase)

* Note that these are estimated values for informational purposes only, and do not take into account the full complexity of all financial projections. They also only apply to cash purchases, which means your numbers will be different if you lease your system or pay for it with a loan (factoring in interest). Also note that we are not financial advisors, so this information should not be construed as financial advice.

#2 Options for Buying Solar Panels in New York

There are three main ways to get access to a brand new solar system:  paying cash, taking out a loan, or leasing it from a third party.  Each of these methods carries its own set of pros and cons, but we’re going to dive into each and see how they look financially to determine which is best for you.

Cash upfront

Paying cash is the most straight-forward method to use to purchase your new solar system.  Using this method, you won’t have to worry about things like interest, leasing terms, or any other strings that could start to overcomplicate the installation.  Because there is no interest, cash can also deliver the highest actual return on your investment providing that you have money to burn up front.  Let’s see what purchasing a solar system with cash would look like.

For all of these examples, we will use a 5kW system that has a before-discount price of $16,900 (our average price for this area).

Starting with $16,900 you will then:

  • Take 25% off the top from your state tax credit – $4,225
  • Take 30% off of the remaining amount – $3,802.50
  • Apply your state rebate on the original purchase price – $2,000

After we deduct those costs, we arrive at $6,872.50 – Wow!

But don’t stop there because you will also be saving money on your yearly electric bills.  Your first year’s savings should be around $1,190.58 so you can take that off the top as well to arrive at $5,681.92.  So after all is said and done, you’re basically paying a third of the price for your solar panel system after the first year.  That’s pretty amazing!  Remember that your utility bills will go up a little bit over time, so your yearly savings will continue to grow as well!

To put this in terms of an investment you will:

  • Pay off your system in about 6 years
  • Make about $39,028.29 in profit over the 25-year life of your system.
  • Have about a 24% IRR on your initial investment.
Bottom Line: This is an incredible investment if you have enough cash to make the initial investment.

Leases

For those of you with little cash to spend or equity to use for a solar loan, leasing a system is still an attractive option.  In fact, more than 50% of the residential solar systems in New York were owned by and leased from a third party in 2014 (although that trend has been changing over the last few years as prices come down).  Leasing is attractive because it requires literally no financial capital other than your monthly payment.  If you qualify for the lease, you will pay a set amount per month over the entire length of your contract.  An important thing to note, however, is that because you won’t actually own the system, you won’t get any of the tax credits, rebates, or exemptions on the equipment and installation.  Your installer will get all of that money.The specifics of every contract is a little different, but with a lease, you will end up:

An important thing to note, however, is that because you won’t actually own the system, you won’t get any of the tax credits, rebates, or exemptions on the equipment and installation.  Your installer will get all of that money.  Something else to consider is that you often won’t be responsible for any maintenance, repairs, or replacements under a leasing agreement – your installer will have to take care of any issues!

The specifics of every contract is a little different, but with a lease, you will end up:

  • Paying around $600-900 per year for your system
  • Saving around $1,190 per year with your system
  • Coming out about $290-590 ahead each year, which will rise over time with increasing utility costs

Those amounts might not seem that great, but it is essentially money in your pocket just for having a solar system on your roof.  Also, you’ll come out further and further ahead as time passes.  Add to this the fact that you won’t be responsible for any upkeep on the system and you are looking at an awesome low-risk, low-reward scenario.

Keep in mind that leasing a unit can complicate things if you choose to sell your home before the agreement is up.  If your purchaser doesn’t want to transfer the lease, it could be costly to cancel.

More: Solar Leases

Loan

new-york-solar-loan-calculation

Getting a loan to pay for your solar system is an attractive option because you won’t have to put any money down up front, but you will still get to take advantage of all of the various tax, rebate, and exemption goodies available to a cash buyer.  Essentially, you will take out a loan for the entire purchase and install price of the system and start making payments.  At the end of the year, however, you’ll get the tax credits and rebates applied to your income tax bill, and you will still be exempt from paying sales tax at the time of purchase and your property taxes will not increase because of the additional home value.

Although you won’t come out quite as ahead as the cash example, we’ll crunch the numbers to see how it will all play out:

Starting with the $16,900 system cost, you’ll take out a loan for the full amount (we’ll assume it’s a 15-year loan at 5% – it’s entirely possible that you could get better terms)

From then on you will:

  • Make payments of about $129 per month on your system over 15 years
  • Earn about $99 per month in electricity savings during the first year with steady increases until you start to break even with the loan payment around year 9 (this means initially you’re paying about $30 a month for your solar panels)
  • Pay about $6,895 in interest over the course of the loan
  • Make about $32,133 in profit over the 25-year lifespan of the system (cash profit minus the interest)

As you can see, the downside to this method is that you will actually be paying an extra $34 per month for having a solar system for the first 15 years.  The huge advantage, however, is that you will be getting about $10,027 back from the credits and rebates after the first year (or multiple years if you can’t use all the credits at once).  This money means that you are “earning” an enormous upfront payment from going solar because you didn’t have to use any of your own money besides the loan payments.  In this scenario, even though it will take 15 years to pay off your system, you will never be “in the red” because of that large initial payment.

You can see that all of this makes going solar with a loan a great investment opportunity!

More: Solar Loans

#3 New York Solar Policy Information

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The state of New York has become extremely enthusiastic about renewable energy over the past couple of decades.  According to their state website, they feel very strongly about preserving the environment, acting on climate change, and keeping nature safe from pollution.  It’s always very encouraging to see this level of involvement by local governments to make sure that solar power gets a chance to shine!

Renewable Portfolio Standard

Briefly, a renewable portfolio standard (RPS) is the set of rules and policies that govern how a state handles its renewable energy. They can set targets for the future, specify how much energy should come from residential sources and more.  It’s important to have these policies in place because solar power is not usually a moneymaker for the big utility companies.  They have to spend more money on infrastructure to produce the same amount of power from fossil fuels as well as potentially pay their customers for extra energy generated from their homes and businesses.  You can see why it often takes a federal and state government to help point them in the right direction.

Luckily, New York has a grand plan for its energy policy called the Reforming Energy Vision (REV).  Within this vision, they include an aggressive RPS which includes the following by 2030:  a 40% reduction in greenhouse gas emissions, a 23% decrease in energy consumption in buildings, and a whopping 50% of electricity must come from renewable energies.  With less than 15 years until time is up, it’s clear that New York won’t be doing much to slow down the growth of solar in their state!
More: Renewable Portfolio Standard (RPS)

Electricity Prices

The price customers pay for electricity isn’t necessarily set by state policy, but the local energy landscape and regulations will affect how much people are paying on their power bills.  This price is critical because it is the utilities’ price that you will be offsetting with your solar energy system.  The higher the price-per-kWh, the more money you could be saving.  Customers in New York paid an average price of 18.28 cents per kilowatt-hour in October 2016 which is much higher than the national average of 12.45 cents and ranks 8th-highest in the country.

These prices mean that New Yorkers stand to profit nicely from installing solar compared to other states.  Also keep in mind that utility companies usually increase rates on a regular basis to keep up with inflation and costs.  In New York City, for example, Con Edison wants to increase their electric bills 5.2% in 2017.  The beauty of solar is that once you install your system, you will be mostly immune to any of these price hikes and it will only increase the return on your investment.

Net Metering

One of the most amazing things about going solar is that you have the opportunity to act like a tiny power plant for your community.  It’s possible, depending on your system size and energy use, that your system will produce more power than you are using at any given time.  The way your utility company handles this excess production is outlined in the state’s net metering rules. In New York, your utility companies are required to provide net metering availability for any residential systems that are 25kW or smaller.  For most people reading this, there will be no problems fitting in under this maximum.

As far as rating net metering services go, it all comes down to whether or not your utility allows it and then how much money the utility will give you for the power you’re producing.  New York requires that utilities pay the “full retail” price to customers for their energy. Over the course of the year, all of the excess power you generate will is tallied up and paid to you at the end of the year as an “avoided cost” payment.

Although still in the exploration phase, New York state has also started looking at more thoughtful ways of looking at net metering, power bills, and energy production in general.  If these proposed changes were to come into play, it would make a significant impact on the way customers deal with their utility companies.

More: Net Metering

Interconnection Rules

Although going solar might conjure images of secluded cabins in the woods relying solely on their own energy production without a power plant in sight, the reality is that most residential systems will need to or even be required to connect to the local grid.  Assuming that you aren’t required to hook up, it’s likely that while your system will generate enough energy for your home during the day that it won’t have enough juice during the nighttime periods to keep you running without a system of battery backups.  Also, any technical hiccup in your system could mean that you would be without power until the situation resolves.  In this way, the local grid remains in your life as the ultimate backup generator.

New York’s interconnection rules, like most others, are quite technical and the majority of the details are best left up to your installer and local utilities.  For you, just know that there are no direct insurance requirements, external disconnect switches, or net metering required.  There is also no system capacity issues as long as your system is below the 25kW threshold.  Further, you will be able to use an expedited interconnection process if your system is below 50kW (nearly everyone reading this).

#4 Financial Incentives, Rebates, and Tax Credits

We’ve already seen how enthusiastic New York is able solar at the adoption and connection level, but what about the finances?  The good news for prospective buyers in the empire state is that there is a whole host of financial incentives for going solar.  Let’s explore all of the awesome credits, rebates, and exemptions that will help you afford your system and come out further ahead on your return!

Federal Tax Credit

Before we get into state-specific information, the federal tax credit must be mentioned.  This is because it has been the single-most influential catalyst for residential solar adoption with its amazing 30% credit to your federal income taxes.  This is money straight back in your pocket off of your purchase price and on its own often makes a strong case for buying a new system.  Do remember that this credit won’t be around forever and it will soon be dropping on a yearly basis before going away completely.

More: Solar Federal Tax Credit

New York Solar Tax Rebates

NY-Sun is a program started in 2012 that aims to improve the efficiency, affordability, and reliability of the energy production systems in New York.  Part of this program allows for a state rebate of $400 per kilowatt of installed solar production.  The way this works is that each utility has “blocks” of residential solar production that they have to fill over time.  As they fill, the next block will offer slightly less rebate than the one before it so time is of the essence if you want to take full advantage of this rebate.  The current price should be good for a while, but there are no guarantees!

Another great program offered through NY-Sun is their affordable solar program.  This doubles the rebate for households earning less than 80% of the area median income that apply, helping to make solar available to not just the affluent investor.

New York Solar Tax Credits

Just like the federal program, New York state itself offers a generous tax credit for new residential systems under 25kW.  Under the terms of the credit, you can get up to $5,000 back for your solar system, assuming that it is grid connected and net metered with your local utility.  For those of you keeping count, we are really started to rack up the incentives here!  Although the credit is capped, it should be very easy to stay under the $25,000 budget for most residential applications.  This credit can also be carried forward for up to five years if you have any excess while doing your taxes.

Interestingly, this credit can also be taken in some form even if you are leasing your system by allowing lease payments to count as taxable expenditures.

Utility Based Incentives

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Some states actually mandate that utility companies pay residents for operating a solar system on their home as an incentive to adopt solar.  While not the best for the utilities, residents stand to make out like bandits if their utility finds themselves in this situation.  Unfortunately, no such payments exist in New York state.

Property Tax Exemption

Because solar power systems are technically additions to your home, it would stand to reason that they would increase your home’s value in some way.  Your reasoning would be correct, but many states, such as New York, have added an exemption on their property taxes to provide yet another incentive to go solar.  Basically, any value added by your solar system will not be added to your tax basis once property taxes are assessed for the year.  You will be able to enjoy the increase in property value when selling your home, but won’t have to worry about your taxes going up!

Sales Tax Exemption

Much like the property tax exemption, many states are also offering a sales tax exemption to provide more incentive to buy solar.  In New York, they offer a 100% exemption on any sales tax that would normally be owed on the purchase of any solar-related equipment and labor.

Interestingly, lease payments and the sale of energy from third-party systems are also exempt from state sales taxes.

General Increase in Home Value

Although solar panel installations are relatively new to the mainstream, research is suggesting that there are real value-added benefits to owning a system.  A large study by the Lawrence Berkeley National Laboratory shows that most homes could expect to add about $4/W in home value for their system.  In this scenario, it is possible to increase the value of your home for a relatively small investment and as mentioned before you will not have to pay property taxes on this extra value!

What to do next?

If you are a current resident of New York then you should be happy to see that your state offers a huge amount of incentives for going solar.  Between the credits, rebates, and tax exemptions, it’s really a no-brainer!

Remember that our pricing is only an estimate and you should look for a local installer to help give you some more concrete details concerning your individual situation.

Image Credits: CC License via Flickr – 1, 2, 3

Solar in Phoenix, AZ

solar-phoenix

To give you a running start with Phoenix solar, we've compiled this handy guide.

Going solar in Phoenix is a great choice, as there are a lot of solid incentives for those of you looking to jump into the solar market. A state that offers favorable rebates, state tax policies, and a utility company that offers incentives to their customers, combine into worthwhile savings for anyone paying cash or taking out a loan for their solar panel system.

For a broader overview see our Arizona Solar page.​

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Buying Solar Panels in Tuscon, AZ

solar-panels-tucson

Information about Solar Panels in Tucson

Tuscon, AZ has a lot of very solid incentives for its residents to go solar. Between their state energy policies and preferential tax treatment, you will find a lot of ways to save money no matter how you go about installing your new solar panel system. Read on to find out why Arizona is one of the fastest growing hotspots for solar in the US!

For a broader state overview, see our Arizona Solar Energy page.

#1 Overall Solar Grade: Tucson, Arizona

B+
Overall Grade
10 years Avg. Payback Time (For Cash Purchase)
10.21 % Estimate IRR (Return on your investment on cash purchase over 25 years)
$27,791 Your Net Profit Over 25 Years (Cash Purchase)

* Note that these are estimated values for informational purposes only, and do not take into account the full complexity of all financial projections. They also only apply to cash purchases, which means your numbers will be different if you lease your system or pay for it with a loan (factoring in interest). Also note that we are not financial advisors, so this information should not be construed as financial advice.

#2 Options for Buying Solar Panels in Tucson

In Tuscon, you’ll have access to all three major methods of purchasing solar power:  cash, purchase power agreement, and loans. Which method works best for you depends on your individual circumstances, but we’ll take a look at all three to highlight the pros and cons to each route you could take. All three options offer some type of financial benefit, but these benefits will be higher or lower depending on your selection.

Cash upfront

There are always clear benefits to paying for something up front and having cash in this situation it offers great results.  

In the purest sense, paying cash for means you’ll avoid any type of interest-bearing loan and there will be no strings attached once you’ve made the payment. You could sell your house the next week and wouldn’t have to worry about transferring a loan or lease to the new homeowner. It could also allow you for more wiggle room when you are hammering out the details with your installer.

Writing a check for $16k out of your pocket to pay for a solar system outright might sound a little scary, but let’s look at the math and see how it plays out.

  • If you use cash, you’ll spend about $16,283 up front to pay for your solar system during the first year of ownership. This is a huge upfront cost, but let’s see what happens next.  
  • When filing your federal income taxes for the year you’ve purchased your system, you’ll be able to take advantage of the amazing 30% federal renewable tax credit for $4,885. 
  • The state of AZ has an awesome tax credit of 25% up to $1,000.
  • You will be saving about $1,003 during your first 12 months electricity bill costs.
  • That takes your upfront costs down to about $9,395 that first year, big savings.

Your solar system will generate about the same amount of energy year after year in its lifetime, but the cost of generating this energy will stay mostly the same (just maintenance costs).

The energy from your local utility provider, as we’ll discuss below, will normally increase by around 3% per year on average. TEP, Tuscon’s electric company, has proposed rate increases of about 9% next year for the average homeowner. With solar, you will only be saving more and more money when your energy company raises their rates!

- Bottom Line

Looking at the cash method summary, your system will generate about $27,929 in savings over its lifetime and pay for itself after about 10 years of operation.  rom that point, you’ll be making money each and every year!  From an investment perspective, you’ll be earning something like 10%+ over the lifetime of your system, which is not too shabby.

Leases

For those of you that do not have access to a lot of cash, don’t want to obtain a loan to purchase a system, or for whatever other reason do not wish to actually own your solar panel system leasing is an option that can provide the least amount of hassle on your journey towards solar. When you lease a solar system, someone else (usually your installer or utility company) will actually own all of the equipment installed on your home. They will install it, monitor it, service it, and replace any parts that fail due to normal wear and tear.

Because you won’t be responsible for the system after it’s installed, leasing can be the least stressful option to go solar. But because someone else owns the equipment, you won’t get the full financial benefits of going solar such as the tax credits and rebates.

In Tuscon, the local utility company, Tuscon Electric Power, actually has its very own residential solar leasing program. Under their terms, you will pay a small fee to have your system installed and then you will pay a fixed cost on the system over the duration of your lease based on your previous 12 months of usage.

- Bottom Line

This will allow you to get the non-financial benefits of solar (environmental protection, peace of mind) while still mostly breaking even on your energy costs. We’ve seen that the typical monthly electricity payment in Tuscon, AZ is about $131 per month so we can assume that this would be the average cost of a solar lease. The one financial benefit is that your lease price is locked in so as utility prices increase over time you will still keep your monthly bill about the same!

More: Solar Leases

Loan

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Taking out a loan to pay for your solar system has a clear benefit:  you won’t have to pay a large sum of money upfront. In this scenario, we’ll consider that you are borrowing money from a bank (or equity in your home in the case of an HELOC) to pay for the system, but you still get all of the tax benefits associated with solar. It’s a little counter-intuitive to think that financing a purchase like this will make you money over the long term, but because the potential for energy savings with solar increases over time there is a substantial financial opportunity.

Let’s use the $16,283 system cost from our earlier cash example. Let’s also assume for our math that we’re getting a 4.5% interest rate on our loan and it’s over 15 years. But remember how I said that you will still get the tax benefits when you take out a loan?

  • After the first year, you’ll get back $4,885  from your federal taxes and $1000 for you state taxes
  • The issue with taking out a loan is that you will have to service this loan and its interest each month. Because of this bill, you’ll probably spend about $129 a month on your loan payment. This is $1,500 per year.  
  • Your savings for the first year will only be about $1,003, leaving you with about a $41 per month cost for your solar energy over the first year. Don’t forget that your electricity bills will tend to increase over time and you will end up paying relatively smaller amounts for your energy. 

- Bottom Line

Looking at it from this angle, you’ll pay about $6,138 in interest on the loan, and bank about $21,719 in savings with this system over the 25-year lifetime, simply by installing it and paying for the loan. It’s almost like printing money.

More: Solar Loans

#3 Solar Policy Information

A bit of good news for anyone living in Arizona is that their state government is relatively enthusiastic about endorsing solar energy production in the state. The bad news is that the utility companies in the state are actively fighting against the friendly solar policies now in place. These utilities, including the Tuscon Electric Power company, are attempting to make going solar less attractive to citizens by lowering the amount of money paid for excess electricity fed back into the grid and increasing minimum charges on power bills.

Renewable Portfolio Standard

A state’s renewable portfolio standard (RPS) can be defined as the policy that outlines exactly how much production energy the government wants utilities to generate from renewable sources by a certain date. Basically, this is a way for the state government to set out a goal for renewable energy and force their utility companies, who might not otherwise be incentivized, to start investing in renewable sources. For anyone interested in going solar in Arizona, it’s great news for your that your state has an RPS because it means that the government is enthusiastic about solar power generation.

Arizona’s RPS was passed in 2006 and outlines a plan for the state to generate 15% of their total energy production from renewable sources by the year 2025, with 30% of that coming from distributed energy technologies (basically on-site energy production like a home solar unit). Of that 30% mandate, half should come from residential sources alone!  This isn’t the most ambitious policy, but it is definitely a step in the right direction and a firm foundation for the future. We would love to see them update their plan with more ambitious goals, a longer timeline, or a greater requirement for residential solar.

We would love to see them update their plan with more ambitious goals, a longer timeline, or a greater requirement for residential solar.

Electricity Prices

The price you pay for your electricity matters a lot when discussing solar power because this is the cost that you will be offsetting by installing a solar panel system. On average, citizens of Arizona pay about 12.7 cents for each kilowatt-hour on their electric bill, while those living in Tuscon should be paying closer to 11.5 cents depending on their usage levels. The US average, meanwhile, is about 12 cents. This means that you are usually paying a smaller amount than the rest of America for your electricity.

It also means that you will be saving an average of $1,114 per year on your electricity bill in Arizona with a 5-kilowatt system.

It is also important to remember that utilities tend to increase their prices by about 3% per year nationally, but some areas can see increases of much, much more. The good news for you is that the electricity you are producing with your home system won’t cost any more to you as time passes, but you’ll be able to increase your utility savings every year during the life of the system.

Net Metering

As an owner of a solar panel system, you are basically the owner of your very own power plant. What this means is that your home will obtain its energy from your solar system first and then draw any extra power required from your normal utility company. If you have a powerful system or you are very frugal with your energy use then you might actually be generating more kilowatt-hours than you are using.

In this scenario, net metering is extremely beneficial to you because it will allow any excess power to be given back to your cities electrical grid. It also creates a system in which you can be paid for the excess electricity you generate. Because solar panels generate most of their energy during the daytime, it is essential that you are able to use this system of give-and-take in order to keep your home reliably powered.

In Arizona’s state net metering policies, you’ll see no limit to the amount of people that can plug into the system and they will actually pay you for any excess energy that you deliver to the grid. Of course, there are a few odd exceptions, but generally, the utility company will pay you the retail rate (what you would normally pay them) for any power you generate. Excess energy will be credited throughout the year and any remaining credits will be paid on your last monthly bill of the year as an avoided cost payment.

For anyone in Tuscon, please keep an eye on your local battle over net metering and be sure to submit your opinion to any local politicians that can help keep net metering safe!

More: Net Metering

Interconnection Rules

These rules determine how exactly someone can connect their solar panel system to their local electrical grid. There are a lot of technical details in these rules that may or may not apply to you, but we’ll go over a couple of the most important aspects.

Unfortunately, Arizona does not yet have an officially supported and mandated interconnection policy at the moment. They instead have drafted some proposed rules and have asked state utilities to follow their interconnection document as a guideline for their policies. In practice, most of the utilities have adopted similar rules based on this outline.

Tuscon Electric Power (TEP) established its own interconnection rules that go over the specifics of their service area. Generally, the customer must submit an application showing that their system conforms to electrical code, adheres to their local specifications, and includes a disconnect switch. Be sure to discuss these details with your installer and be sure that you are confident that you are conforming to any requirements that your local utility mandates!

#4 Financial Incentives, Rebates, and Tax Credits 

When solar first arrived in many states and governments were starting to endorse solar energy production by mandating RPS policies a lot of different rebates started popping up from local utilities trying to ensure that they met their quota.  Arizona’s utilities were no different, but as time passed and quotas started to be filled, these rebate programs started to dry up a bit.

Rebates and Other Incentives

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In Tuscon, you are likely serviced by Tuscon Electric Power for your electricity needs and while their TEP Residential Solar Program started in 2015 was created to help provide leasing options for its citizens, the program is currently not accepting any new participants in for foreseeable future.

In Arizona, there are only a few utilities left that are offering any kind of rebate and most are located in rural areas. Here are some of the most significant ones listed below just in case you are planning on making a move in the future.

Tuscon, AZ Tax Credits

Tax credits in Tuscon are a solid offering. Overall it rates very highly in terms of tax implications for a new solar system. Let’s take a look at how you can save money on your taxes and more easily afford to purchase a system that provides clean, renewable energy for decades!

Arizona State Tax Credit

Although there are no state or local rebates in Tuscon, the state itself provides an awesome credit for would-be solar buyers. This credit will be equal to 25% of the cost of any solar device purchased, up to a maximum of $1000 for each residence. You can reach this maximum through multiple installations or all at once on a big solar panel system, but you can never exceed the lifetime maximum. You can also carry this credit forward for up to five years if you owe less than the credit amount.

This is nice icing on the federal tax credit cake that we’ll check out below!

Available Federal Tax Credit

As per usual, anyone that takes the jump into solar will enjoy the residential renewable tax credit. This amazing subsidy by the US government will allow for a 30 percent federal tax credit for any costs relating to the purchase and installation of a new solar system for your home. This allows you to shave 30 percent right off the top of your purchase price if you are paying cash or taking out a loan for your system. Remember that if you lease your system you will not get this credit. It will instead go to the owner of the panels that you are leasing from!

Tax credits are not deductions, but rather a dollar-for-dollar credit that is reimbursed to you for your purchase. This is truly an awesome opportunity that you should take advantage of before it starts to decrease after 2019!

Property Tax Exemption

Here is another area that Arizona rates very highly. According to their Energy Equipment Property Tax Exemption policy, citizens are exempted from paying property taxes on any equipment that provides energy to the home through renewable means.  This can include solar panels, but also things like geothermal electric, solar pool heating, hydroelectric, and even anaerobic digestion!

You will receive a 100% exemption if you make a purchase in any of the eligible categories. Remember though, that even though these devices are considered to add no value to the property for tax purposes, it will definitely still add value to your home for the purposes of selling it!

Sales Tax Exemption

According to Arizona’s Solar and Wind Equipment Sales Tax Exemption, you will currently pay NO sales tax on any eligible equipment related to solar energy. This is an excellent benefit because sales tax on a $15,000 system would be $1,215 under Tuscon, AZ’s current tax rate of 8.1%. This is a pretty sizable discount!

General Increase in Home Value

We discussed earlier that your property taxes will not increase due to the installation of your solar system because it does not count as added home value, but a good solar panel installation has been shown to demand a $4 per watt price premium over similar homes!  Looking at the numbers, that means a 5-kilowatt solar system could be adding as much as $20,000 to the value of your home while paying no additional taxes on your property. This makes for a sound financial investment for those of you living in Tuscon. Assuming you pay cash for your system, you could come out way ahead if you sell your home just for the increase in value alone.

Assuming you pay cash for your system, you could come out way ahead if you sell your home just for the increase in value alone. This type of return lumps solar into the category of any other home improvement that can increase the value of your home such as bathroom renovations or additions.

What to do next?

For those of you in Tuscon looking to go all-in with solar, I think that the numbers presented in this article make a compelling argument for you to take the plunge. Depending on your current financial state, you stand to come out way ahead in a short amount of time from a home value perspective. Factoring in the lower energy bills and peace of mind that comes from doing your part to help the planet and ensure a safe future for your children, it’s an easy decision.

Arizona currently ranks 5th in solar capacity in the US and it shows no signs of slowing down. As solar prices continue to drop and more people learn about the benefits of installing a solar panel system on their home, the solar environment just gets better and better!

As always, we highly recommend that you reach out to a local installer to give you an actual solar quote for your unique situation. All of our information here are estimates based on state averages.

Photo Credits: CC License via Flickr – 1, 2