Cost Of Solar Panels In Arizona

There is a lot of misinformation about the cost of solar panels in Arizona on the internet. This article will clear everything up, and will teach you exactly how much solar costs in Arizona.

Saving money on energy bills is why homeowners go solar. The long term savings of solar are typically between $10,000 and $100,000, but sometimes more. However, you must get a good deal from an honest solar company to make solar worth it in Arizona.

This article will teach you what fair pricing is for solar panel installation and solar battery installation. Additionally, we will teach you the average cost of solar panels and solar batteries in Arizona.

When you get a quote for solar power, the solar consultant will request your most recent electricity bill. The bill shows us your energy usage in the home for the past 12 months. We use this data to customize the size of every solar system installation we do. By size, we are referring to the amount of solar panels installed.

To power your home and save the most amount of money, you must have the correct amount of solar panels on your roof. The size of the solar system is the main factor in the cost of solar panels in Arizona.

Cost Of Solar Panels In Arizona – Important Concepts

There are some important terms and concepts you must understand before we discuss solar panel cost in Arizona.

Price Per Watt (PPW)

Price per watt is the industry standard term used to discuss the price of installing solar on your home. Calculating price per watt is simple. Take the total cost of the solar system and divide it by the size of the solar system in kilowatts (kW).

The size of the solar system is calculated by multiplying the amount of solar panels times the wattage of solar panels. For example, say we are using 370 watt solar panels and installing 18 of them on your roof. To calculate the system size we multiply 370 times 18 to get a total of 6,660 watts or 6.66 kilowatts (kW).

The total cost of the solar system will be the total loan or lease amount, or the total cash amount. Say that we paid $30,000 for the 6,660 watt system mentioned above. That means our price per watt is $30,000 divided by 6,660 for a total of a $4.50 price per watt.

The equation for Price Per Watt is: Total Cost (Dollars) ÷ System Size (Watts) = Price Per Watt

Elements of a Solar Loan, Lease, or Cash Price

The total cost of a solar loan or lease has the following elements:

Solar Installer Cost + Solar Installer Profit + Sales Commission + Dealer Fee = Total Solar Loan Cost

When paying in cash, the dealer fee is removed. This is why there are significant price discounts for customers that buy their solar panel system with cash. The total cost of a solar system when paid in cash is:

Solar Installer Cost + Solar Installer Profit + Sales Commission = Total Solar Loan Cost

These are elements in a solar loan when considering the amount of money that will be paid over the course of the loan term:

Sales Price + Sales Commission + Dealer Fee + Interest = Total Amount Paid Back to Finance Company for a Solar Loan

Solar Installer Cost and Profit

The way that the residential solar industry works is that the solar installers are separate from the solar salespeople. The solar installer handles the project management side of the business, which includes the inspection of the roof, design, applications, permitting, and installation of the system. All of the solar installer work occurs after the sale is made.

Solar sales teams and consultants are given what is known in the industry as a price per watt “red line”. The red line is set by the solar installer and cannot be changed. It protects the solar installer’s fixed profit margin.

The red line covers all the solar installer’s operating, labor, material, and tax costs. Further, it includes a fixed amount of profit to guarantee the company will be solvent and viable into the future.

When you are buying a residential solar panel system, you are always dealing with a solar salesperson. Salespeople do not have the authority to change the redline. The only way they can change the total price of your system is by lowering the sales commission.

Red lines in Arizona typically range from $1.80 per watt to $2.80 per watt.

Sales Commission

The solar installer cost, solar installer profit, and dealer fee are fixed and cannot be changed. The only element that can be changed in a negotiation for your solar panel system is the sales commission.

Residential solar sales is unregulated. This means that there are no limits or standards in place for the amount of sales commission that can be added to a solar deal. Because of this, it is very common for homeowners to get ripped off and pay far too much for solar. This happens when the homeowner trusted the wrong salesperson and/or did not receive multiple quotes.

You must understand that the solar salesperson is solely responsible for setting the sales commission. To attract the best sales talent, sales companies typically do not set commission limits on their salespeople. So, customers can get ripped off by dishonest salespeople that work for seemingly reputable solar companies.

In summary, solar sales people can charge you whatever they want. It is your responsibility as the consumer to educate yourself on fair pricing. You must research the cost of solar panels in Arizona yourself. Do not expect your solar salesperson to do that for you.

Let’s illustrate how a sales commission works with a redline in Arizona. If the red line is $2.00, a solar system sold at $3.00 PPW includes $1.00 per watt in commission. If the system size is 10 kW (10,000 watts), the sales commission is $10,000.

Loan Dealer Fees

The most popular option for purchasing solar panels is through solar loans. The most popular solar loan companies are: Concert Finance, Dividend Finance, GoodLeap, Mosaic, Sunlight Financial, and Sunnova.

Dealer fees are often hidden from customers because they are substantial and difficult for customers to accept. A dealer fee is an extra fee added by the finance company. Dealer fees are expressed as a percentage of the total loan amount. The finance companies make their revenue on the dealer fees and the loan interest payments.

So, a 25% dealer fee means that 25% of the total loan amount is a dealer fee. For example, if the total solar loan amount is $40,000, a 25% dealer fee means that $10,000 of the loan is fees added by the finance company.

The equation for dealer fees is: Total Loan Amount * Dealer Fee Percentage = Total Dealer Fee

For a list of current dealer fees, see this page on Loan Options & Dealer Fees. Keep in mind that dealer fees change often, so this link may not be 100% accurate at the time you access it.

Price Per Watt Before and After Fees

When discussing price per watt, people in the solar industry differentiate between price per watt before fees and price per watt after fees. The fees being mentioned are the loan dealer fees. Solar salespeople are paid based on the price per watt before fees.

So, in the above example, a solar system is sold at $3.00 PPW on a $2.00 redline with a 10 kW system for $10,000 in commission. The $3.00 PPW in the example is the price per watt before fees. Solar salespeople use the price per watt before fees metric because they do not make commission on the dealer fees.

In the same example, if we add a 25% dealer fee, the price per watt after fees will be $4.00. As you can see, $1.00 PPW was added because $1.00 represents 25% of a system priced at $4.00. Thus, the customer’s total loan amount will be $40,000 instead of $30,000 because of the addition of the 25% dealer fee.

How Much Does Solar Cost In AZ?

First, we will discuss fair pricing for a solar system that does not include any extras. Extras such as solar batteries and home improvements are often included in solar loans, and they increase the price per watt significantly.

If your quote for a solar system without extras has a price per watt that is above the amounts below, there is too much sales commission added. You need to shop for more quotes from different companies.

For a solar system without extras, these are the ranges for a fair deal in Arizona:

• Solar Loans and Leases: $3.40 to $4.20 price per watt.
• Cash: $2.40 to $3.20 price per watt.

Cost Of Solar Panels In Arizona – Loans and Leases

The table below shows the fair and average cost of solar panels in Arizona for loans and leases. Remember, this pricing is for solar systems without any extras.

Also, keep in mind these prices are BEFORE Federal and Arizona tax credits. To calculate the pricing after tax credits, use the following equations.

Federal Tax Credit: Total System Cost * 0.30

Arizona Tax Credit: $1,000

Total System Cost After Tax Credits: Total System Cost – (Total System Cost * 0.30) – 1,000

Cost Of Solar Panels In Arizona – Cash Purchases

The table below shows the fair and average cost of solar panels in Arizona for cash purchases. Remember, this pricing is for solar systems without any extras. Also, keep in mind these prices are BEFORE Federal and Arizona tax credits.

Cost Of Solar Panels In Arizona – Solar Batteries

It is not customary for solar salespeople to make much commission off the sale of solar batteries in Arizona. The commission on the sale of a battery should only be between $0 and $1,000 per battery.

The problem that homeowners run into is that solar salespeople and solar installers often refuse to itemize the quotes they provide. The customer is given one total price for everything, including the solar panel system and any extras. This makes it difficult to determine how much commission has been added to a solar battery.

Much like a red line, solar installers give the salespeople a bottom price for batteries. The bottom price includes the cost of the battery from the manufacturer, labor for installation, permitting costs, and profit. The salesperson is then allowed to add commission on top of the bottom price.

For example, the LG Chem battery has a bottom price of $12,500. The salesperson then sells the battery for $13,500, making $1,000 in sales commission from the battery.

List of Bottom Pricing for Solar Batteries in Arizona

Below is a list of the typical bottom pricing for popular solar batteries in Arizona. You can use this list, and the other information in this article, to determine if you are receiving a fair price on a solar battery.

Keep in mind these prices are BEFORE the new Battery Storage Technology Tax Credit that is 30% of the total battery cost. Remember, this new battery tax credit only applies to batteries that are purchased after January 1, 2023.

• Generac PWRcell M3 Battery (9 kWh Capacity): $14,300
• Generac PWRcell M4 Battery (12 kWh Capacity): $17,300
• Generac PWRcell M5 Battery (15 kWh Capacity): $20,300
• Generac PWRcell M6 Battery (18 kWh Capacity): $23,300
• LG Chem RESU10H Battery (9.6 kWh Capacity): $12,500
• Two (2) LG Chem RESU10H Batteries (19.2 kWh Capacity): $19,000
• Tesla Powerwall 2 Battery (13.5 kWh Capacity): $15,500
• Two (2) Tesla Powerwall 2 Batteries (27 kWh Capacity): $22,500
• Three (3) Tesla Powerwall 2 Batteries (40.5 kWh Capacity): $29,500
• Enphase IQ Battery 3 (3.36 kWh Capacity): $7,000
• Enphase IQ Battery 10 (10.08 kWh Capacity): $12,000