Is Solar the Right Investment for You? A Financial Deep Dive for Arizona Homeowners

When you think of Arizona, the sun is likely one of the first things that comes to mind. With near-constant sunshine, it's easy to assume that solar panels would be a no-brainer for homeowners seeking to reduce their energy bills. But is solar the golden investment it appears to be, or could there be better financial alternatives? In this article, we’ll explore why installing solar panels may not always be the best financial choice, especially when you consider the broader picture of costs, savings, and alternative investment opportunities.

The True Cost of Solar: Upfront Costs vs. Savings

The average cost of a solar panel system in Arizona hovers around $28,426, which can be reduced to approximately $19,898 after applying the federal solar tax credit . While these numbers are lower than in other states, they still represent a significant upfront investment.

When breaking down potential savings, the math becomes less favorable:

• Summer savings: Average $400 per month
• Fall, Winter, Spring savings: Around $150 per month

Total annual savings are estimated at $2,800. But with an upfront cost of $40,000 (before incentives), it would take more than 14 years to break even.

The Alternative: Investing the $40,000 Elsewhere

Consider the alternative: investing that $40,000 in a diversified portfolio that earns a 7% annual return. Over 14 years, that investment could grow to $108,720—substantially higher than the $40,000 you’d save from installing solar panels. The opportunity cost of choosing solar over a financial investment may not be immediately apparent, but it can be significant.

Is Financing Solar a Smart Move?

Many homeowners choose to finance their solar systems to avoid the upfront cost. However, financing comes with added expenses. A $40,000 loan with a 5% interest rate over 15 years would total $56,880, adding $16,880 in interest costs to your investment.

Worse still, if your monthly loan payment is higher than your energy savings, you’re effectively losing money every month. For many homeowners, this means losing $167 a month, or more than $2,000 a year.

Leasing Solar Panels: More Complicated Than It Seems

Leasing solar panels is often seen as a lower-cost alternative to financing or purchasing outright. However, leased systems come with their own issues:

• No added home value: Since you don’t own the system, your property doesn’t increase in value.
• Complex sales process: Transferring a solar lease to a new buyer can be complicated, potentially deterring buyers and lowering the appeal of your home.

The Bottom Line: Should You Go Solar in Arizona?

For most Arizona homeowners, the financial benefits of solar may not outweigh the costs, especially when factoring in leasing or financing. However, purchasing a system outright could yield long-term savings if you're planning to stay in your home for 15 years or more.

Want a deeper dive into the numbers and factors behind this decision? Read the full blog on our website.

Before making a decision, consider your unique financial situation and long-term goals. Solar may not be the "sure thing" it's often marketed as—but with the right planning, you can make a choice that works for you.