Is Solar Worth It in Arizona? Why Homeowners Should Think Twice Before Installing Panels

In a state blessed with over 300 sunny days a year, installing solar panels seems like a no-brainer. But the math—and the market—tell a different story.

For Arizona homeowners, solar isn’t just about cutting electric bills. It’s a financial decision that impacts resale value, long-term flexibility, and your bottom line. And in most cases—especially when panels are financed or leased—it’s not the slam-dunk investment it’s made out to be.

Let’s break it all down.

The True Cost of Solar Panels in Arizona

The average solar panel system in Arizona costs about $40,000 before incentives and rebates. After applying the federal solar tax credit, that price typically drops to around $28,000–$30,000, but the upfront cost is still significant.

Estimated utility savings:

• Summer (June–September): ~$400/month = $1,600/year

• Fall–Spring (October–May): ~$150/month = $1,200/year

• Total annual savings: ~$2,800

Break-even point: ~$40,000 ÷ $2,800 = 14.3 years

That’s assuming consistent usage, no system issues, and no drop in panel performance over time.

Opportunity Cost: What If You Invested the $40K Instead?

If you invested $40,000 in a diversified portfolio earning a conservative 7% annual return instead of installing solar, you'd have:

• $108,720 in 14.3 years

• Nearly 4x the value of solar savings over the same period

This is a classic case of opportunity cost. The money you tie up in panels could be earning compound returns elsewhere.

Financing Solar? The Numbers Get Worse

Most homeowners don’t pay upfront—they finance through 15–20 year loans.

Example:

• $40,000 loan at 5% = $56,880 total cost

• Monthly payment = ~$400

• Monthly energy savings = ~$233

• Monthly net loss = -$167, or over -$2,000/year

You’re not saving money—you’re creating a long-term liability.

Federal Tax Credit Expiring Soon

The federal solar tax credit (ITC) currently allows homeowners to deduct 30% of the system cost from their taxes. But here’s what most people miss:

🛑 This credit is set to expire on December 31, 2025.
Unless extended by Congress, systems installed after that date may not qualify—significantly impacting the return on investment.

Roof Warranty Risk

Another hidden cost? Installing solar panels typically voids your roof warranty, unless the solar installer formally assumes the responsibility. Many homeowners don’t find this out until they’re facing costly roof repairs—and neither will your buyer.

The Deal Breaker: Resale Headaches with Leased or Financed Panels

Here’s where it gets even trickier—when it’s time to sell your home.

If your solar system is financed or leased, the buyer must either:

• Qualify and agree to assume the lease or loan

• Or require you to pay it off before closing

This often results in:

• Fewer offers

• Lower sale prices

• More days on market

Agents are increasingly advising buyers to avoid homes with leased or financed solar altogether. It’s viewed as a liability, not a perk.

Appraisal Confusion

Even when owned, solar panels are often undervalued by appraisers—or ignored entirely. If the system is leased or financed, the value is generally considered negligible or negative.

Leased Solar Panels: More Monthly Bills, No Added Value

Leasing seems simple, but the drawbacks are significant:

• No added value to your home

• Fixed monthly costs similar to (or higher than) your electric bill

• Difficult lease transfers that can derail sales

Just because the system reduces your electricity bill doesn’t mean you’re saving. You’re likely swapping one payment for another, and gaining little equity in return.

Incentives and Solar Battery Costs

Arizona does offer benefits like:

• State income tax credit (up to $1,000)

• Property tax exemption for added solar value

However, many homeowners also opt for battery storage systems to support energy usage outside of peak hours. These can add $12,000 to $22,000 to your system cost—pushing your break-even point even further out.

APS & SRP Solar Programs: Shrinking Incentives

Arizona’s major utility providers—APS and SRP—offer limited support:

• Net metering payouts have dropped

• Peak-time usage charges are rising

• Extra fees for solar users can offset savings

The landscape is evolving, and not always in favor of homeowners.

When Solar Might Make Sense

Solar may be worth it if you:
✅ Pay cash upfront (however you miss out on opportunity to have that cash grow with other investments)
✅ Plan to stay in your home 15+ years
✅ Have extremely high energy usage
✅ Do not plan to refinance or sell

Otherwise, the cost, complexity, and resale issues likely outweigh the benefit.

Final Take: A Smart Investment, or a Costly Commitment?

Solar panels can seem appealing—but for most Arizona homeowners, they:

• Don’t offer the savings you expect

• Hurt your resale value if financed or leased

• Void your roof warranty unless transferred

• Could cost more long term due to rising battery and financing expenses

• Come with fewer incentives starting in 2026

If you're considering solar or already have it and are planning to sell, talk to me first. I'll walk through the real numbers, resale impact, and what buyers actually care about today.

Sometimes, the brightest financial decision...is to not install solar.