Are solar panels worth it for Salt River Project electric customers?
Why is it that so many SRP customers are installing solar panels in 2020?
There are four main reasons why installing solar panels for homes is so popular in Arizona and specifically in the SRP territory. These reasons are:
- SRP customers still have access to the 25% state tax credit in 2018.
- SRP customers can take advantage of the 26% federal solar tax credit to install solar panels, through to at least 2020.
- SRP offers net metering.
- The SRP service territory has a lot of sunny days meaning solar panels produce a lot of electricity. In fact, Arizona has the highest level of solar irradiation in America, meaning a single solar panel can produces about 180% more than in northern states like New York.
What are SRP's Net Metering rates?
Net Metering means that the utility company is obliged to pay the customer for any power that is exported to the grid the same retail rate as it charges for any electicity used at the premises.
The calculation is simple: the kWhs delivered from the customer to SRP are subtracted from the kWh delivered from SRP to the customer, for each billing cycle. If the kWh calculation results in a net negative for the billing cycle, then SRP will credit the customer's account for the value of the power generated under their retail price plan. In plain terms, SRP offers full 1-1 net metering.
Is it the 25% Arizona state solar tax credit that makes solar panels worth it for SRP customers?
The residential solar energy credit gives eligible customers 25% of the cost of a solar system up to $1000. This basically means if you purchase a solar system in Arizona it will be $1000 cheaper with this credit.
Other incentives that will likely be available include the following: net-metering and the 26% federal tax credit. The tax credit does not have to be claimed immediately, and can be deferred for up to 20 years before use. The credit can be used to reduce any federal taxes.
Combined, all these incentives make solar very worthwhile in Arizona. For example a $10,000 system will be reduced to $7,400 with the 26% tax credit and then the (up to) 25% State tax credit will take a further $1000 dollars off, bringing the cost from $10,000 down to $6,400.
The 25% state tax credit is not what makes solar panel worth it, it's just a piece in the puzzle. It is the generous 25% State tax credit in combination with the 26% Federal Tax Credit and Net Metering that together make solar a very worthwhile investment for SRP customers.
How much will solar panels save the average SRP residential customer?
If I enter the details for a SRP customer that has a power bill of $266 per month into the best online solar panels calculator it tells me that I need a 15.44kW solar system that will produce 24,181 kWh's per year and that this system will likely return the owner a $103,475 profit even after repaying the capital over 25 years.
Zero-down financed solar system estimate for a SRP customer
Monthly savings year one $78
Zero-down financed solar system cashflow
|System Size||15.44 kW|
The above cash flow projection assumes a solar system that offsets 100% of power usage, a finance rate of 3.99%, a financing period of 20 years, a minimum utility charge equivalent to 10% of bill without solar, and a utility cost inflation rate of 4.5% p.a.
Estimated system size 15.44kW (100% usage offset)
Pay Back Period
7 Years 3 Months
Est. Cost/WattEstimated Cost Per Watt
(after 26% tax credit and local incentives)
Annual Power Generation
Your total savings over the life of the system are estimated to be $103,475
|Estimated south facing roof space required||1,029 sq-ft|
|Levelized cost of power from this system over 25 years||4¢ cents/kWh|
|System cost reduction by upfront incentives||-$10,375|
|Average cost of utility power over 25 years (if you don't get solar)||24¢ cents/kWh|
|Equivalent Return on Investment (IRR)||14.1%|
|Monthly Savings year 25 (for 100% energy usage)||$764.93|
System prices are estimated based on the average reported cost of systems installed in the past year. Pay Back Period and Equivalent Return on Investment are calculated based on a 100% cash purchase. Estimated Cost Per Watt is calculated after claiming all applicable incentives. This estimate assumes you are able to take full advantage of potential tax benefits.
Cash Flow graph - Cash Purchase of this system
Residential Solar and Wind Energy Systems State Tax Credit
Solar and Wind Equipment Sales Tax Exemption
State sales tax will not be applied on qualified solar systems. Exempts sales tax from being applied to RECs
Energy Equipment Property Tax Exemption
Solar system adds no value to property for tax assessment purposes.
Customers will be credited at a specific rate for net excess generation but they don't have to receive the full retail amount.
Salt River Project Battery Storage Incentive Program
$300/kWh-DC up to $3,600 (12 kWh)
Residential Renewable Energy Tax Credit
Please keep in mind that the best source of up-to-date information on incentives are the solar installers who specialize in your area. If you still are unsure about the eligibility criteria of some of the solar incentive programs, please discuss with the solar installer representative who may contact your shortly, or visit the solar incentives discussion forum where the most common questions are likely to have already been answered.
Detailed information about your estimate
|System Size (for 100% usage offset)||15.44 kW|
|Annual Power Generation||24,181 kWh|
|Pay-back time (assuming Cash purchase)||7 Years 3 Months|
|Internal Rate of Return (IRR) on Investment||14.1 %|
|Total Upfront Incentives and Rebates||-$10,375|
|Net Cost of System after rebates and incentives||$26,681|
|Total Cost of Utility Power Avoided over 25 years||$142,245|
Please note that the investment return figures do not include the possible increase in property value.
A solar system generating 24,181 kWh per year will save you money AND make the world a nicer place
on average per year
Reduces CO2 emissions
metric tons per year
Equivalent to planting
Equivalent to driving
less per year
CO2 emissions calculation based on the electricity generation and emissions data for your state in 2015 as published by the US Government Energy Information Administration.
How much power do solar panels installed in the SRP territory produce?
The amount of power produced by solar panels across the SRP service territory varies depending on the location and local climate.
Typically, Arizona has the highest level of solar irradiation. As any Arizona resident will know, Phoenix is sunny on average 299 day a year, resulting in one of the highest levels of solar potential in the nation. For these reasons, solar installed in Arizona can produce as much as 180% more electricity than in other states like New York.
You can enter your details below to see the typical power production where you live and also get pricing from local solar companies if you wish.
See power production and also get pricing from local solar companies
How much does solar panel installation cost in Arizona?
The cost of installing solar panels in Arizona will vary with; brands of solar panels and inverters you choose, the installation company you choose to install, the relative ease or difficulty of installing solar panels on your home and of course the amount of solar panels installed.
Arizona has a very competitive retail solar installation market with companies fighting hard for your business. This is why it's important to shop around and research solar companies in your area. The best way to check out if your choosing the right company is to read reviews of solar companies in Arizona.
It is common to see really good systems, using good brands of equipment being sold for around $3.60 per watt before state and federal tax credits for cash sales without finance being required.
However, the average cost of a solar system in Arizona in 2020 is $3.73 per watt which for a standard 5kW residential solar system costs $18,650 before the state and federal tax credits and $12,055 after both tax credits are received.
Who are the best solar companies that service my local part of the SRP territory?
As the SRP territory covers a number of cities there are different solar companies operating locally in each as well as some that cover the whole territory.
If you are up to the stage of wanting quotes from solar installers you can get a system sized for your house and up to four quotes from installers that service your area for free online by entering your zip code below.
See my solar panel installation cost from your local installers
How much electricity will solar panels produce where I live?
How do I get accurate solar quotes that take into account my power usage with SRP?
To do this they need to know your power usage patterns. This will allow you to come up with the amount of solar panels you would ideally want to make your power bill zero. See below for ways that you can get hold of your power usage data either for your own analysis or to share with a solar company that you wish to have quote your home.
Once you determine the right amount of solar panels you then need to measure your roof to see how many panels will actually fit on your roof. Most solar companies can measure roof spaces online using tools that are similar to Google Maps (but are more accurate).
The www.solar-estimate.org website is the leading solar marketplace in America and allows you to both do an accurate online estimate of your needs yourself and, if you wish, request quotes from solar companies through one interface.