It’s a great year to go solar! Prices for installation have never been lower. We have high-quality equipment that is designed to last for more than a quarter century, with 25-year warranties for solar modules, energy conversion equipment, and racking products.
Solar electric systems installed before the end of 2019 are eligible for a full 30% federal tax credit, as well as a $1,000 Arizona tax credit.
But before you sign a contract with a solar installer, make sure that they thoroughly understand how solar can save you money, and that your installer has done their homework before giving you a quote. Read on to learn how solar has changed in Arizona, how you can put it to work for you, and how to avoid being taken for a ride by a shady solar contractor!
So How Does Solar Work?
Solar electric systems produce DC electricity when the sun shines, which is converted to AC electricity. When a solar electric system is installed on your home is connected to the utility grid, electricity moves through your home in three ways: Energy import, self-generation, and energy export. These images explain the difference between the three:
New Solar Utility Rates Require New Solar Savings Estimates
In the past, Arizona had “net metering,” which provided a one-to-one credit for “extra” solar energy sent back to the grid. With net metering, it didn’t matter how much of your solar electric system output was self-generation, and how much was energy export—at the end of your billing period, you’d be billed on your net energy usage for the month.
In December 2016, regulators at the Arizona Corporation Commission changed how new solar customers interact with the utilities that serve them. Although this policy change was gradually implemented utility-by-utility, all Arizona utilities regulated by the ACC now have solar energy export rates. (Customers who got net metering before the change can keep those rates for twenty years from the date of installation).
With export rates, customers are credited about 50-90% of retail electric rates for each unit of solar energy they send back to the grid. This export rate is locked in for ten years from the time of system installation. Because of these changes, solar energy you use in your home as it’s made is more beneficial than energy exported to the grid.
For example, if you use solar energy as it’s generated rather than importing electricity from your utility that costs 11.5¢/kWh, this is better than exporting solar energy and only being credited 9.64¢/kWh by your utility.
Some utilities (including TEP) also require solar customers use time-of-use (TOU) rates, where consumers are charged more or less for imported energy, depending on the time of day and the day of the week.
For example, here are approximate rates for new TEP solar customers (for Trico, SSVEC and Unisource rates, see the end of this post):
Although the export rate is fixed at 9.64¢/kWh, your cost for energy imported from TEP varies from about 10.7¢/kWh to about 14.7¢/kWh, depending on the time of year and time of day. If you use energy during on-peak hours (3:00pm-7:00pm in summer; 6:00am-9:00am & 6:00pm-9:00pm in winter), you’ll pay more than during off-peak periods.
For a solar installer to estimate what your savings will be, they must both understand the details of these rates and figure out what’s likely to happen for each of the 8,760 hours in a year. For each hour, they’ll need to know your energy use and how much energy your solar electric system will produce. From this information, they can figure out your expected energy import, energy export, and self-generation using modeling software. If they don’t do this modeling and include the results in the quote they give you, any financial estimates they provide will be essentially meaningless.
If you want to understand more details about about how electric bills work for new solar customers, you can explore our infographic, How Does My Solar Electric System Work with Export Rates. Read on for some tips on what a solar installer should know if they are providing you a quote for solar, as well as red flags to avoid.
What Should Solar Installers Understand and Be Able to Explain?
• The difference in value between self-generation and exported energy for your utility—this is critical to determine your estimated savings.
• The details of your new electric rate plan, including information on time-of-use rates, if applicable.
• How to obtain hourly energy use data from your utility. Without energy use data, it is impossible to precisely determine estimated savings. If you have just moved to a home, your installer may be able to use data from a similar home, but the accuracy of the estimated savings will be much lower.
• How to use energy load data and modeling to estimate the amount of self-generated and exported energy, and use that information to model your estimated savings.
• Each of the assumptions of their financial modeling.
What are Some Red Flags from Solar Installers and Solar Quotes?
• Any reference to net metering in a conversation or quote, as net metering no longer exists in Arizona.
• Lack of knowledge about energy load data (also called “8760 data”) or dismissal of need for that data.
• Overbuilding your solar electric system size to “make up for lack of net metering.” This may lower your monthly bills, but is usually a poor financial decision.
• Lack of clarity around “offset percentages.” A solar electric system designed to produce equal to 100% of your annual electricity use will not offset 100% of your electric bill. Ask your installer to provide estimates of expected monthly bills.
• Telling you that the value of exported energy after the ten-year export rate lock-in is known and/or is likely to be higher than current wholesale energy rates (typically 1-3¢/kWh).
• Claiming adding energy storage to a solar electric system will save money for TEP, Trico, APS, SSVEC, or Unisource customers. Energy storage can make sense for consumers for reasons other than savings.
• Estimates which assume large annual increases in electricity prices. Although total bills have generally been going up in Arizona, that’s mostly from increases in fixed prices and fees (which solar doesn’t help with), not the per-kWh energy rates.
Even with an appropriately-sized solar electric system, this customer will have a few medium-size bills in summer.
Now that you know what to look for with solar in Arizona, you can bypass solar companies that aren’t willing to do the legwork to provide you an accurate estimate of solar savings. In the end, you’ll find that solar can be a great investment in your home, your energy future, and the health of the world around you!
Interested in an accurate solar quote for an installation in southern Arizona? You can contact us, or give us a call at 520-207-4053.
Have questions or comments? Please share them with us below!
Additional Info: Utility Rates for Solar Customers
Each utility’s rates for imported and exported energy will be different. Here are the approximate rates for the utilities that we work with in southern Arizona. Click on each image for a link to the detailed rate.
