Will Solar Replace My APS Bill?

One of the most-used ploys by solar companies includes the phrase “solar will replace your electric bill”! Although that would be nice, there is a lot more to it. Being the most abundant energy source on earth, solar is a great (and cheap) source of energy. In sunny Arizona with temperatures reaching over 100 degrees, many homeowners have thought about getting solar panels, but are unsure due to these outlandish claims. Many people are sick of APS rate hikes (you can read that blog here) and are looking for new ways to save. 
When it comes down to it, solar does not actually replace your APS bill. You still have to pay APS every month even if you receive a credit from your solar panels. 

Will solar replace your electric bill? Lets find out!

Why Do Solar Companies Say This?

Companies state that solar can replace your electric bill because solar can often cover a large chunk of your bill. Of course, your solar panels will be producing their own energy which lowers your APS bill, but a well designed solar system in Arizona will produce more energy than you actually used during the winter, accumulating credits on your APS bill each month. 

These credits will be stored and used in reserve during the summer months where your panels won’t be producing enough energy to offset your electricity use (thanks, air conditioner!). Those credits will almost always get used up in the summer and ideally net 0 out for the year. 

Billing

You will have a new bill from the solar company if you finance your panels, plus an APS bill. The tax credits that help make solar “free” only apply when you actually file your taxes. Even though you may have solar panels on the house, you will still be connected to APS’ power grid. Without this connection, you would not have electricity if your solar panels are not generating enough (rainy days, night, etc.). But, the new bill from the solar company will be less than what you pay APS every month. 

APS currently requires people that have solar panels to use their Time of Use Rate Plans (more on that here!). These plans have more expensive on-peak hours from 4pm-7pm and lower rates the rest of the day. This means that any extra energy needed from 4pm-7pm will be more expensive. ​

What Are Credits?

Any energy that goes unused is bought by APS. There are two different options for how you receive these credit amounts, and what these amounts will be. 

1. Resource Comparison Proxy Export Rate
One option that APS has is the Resource Comparison Proxy Export Rate plan, where credits roll over month to month and accounts with over $25 receive a check at the end of the year (below $25 rolls over). The credit amount will depend on what buyback rate you were placed on when you applied for your solar system. (more on APS.com). The APS buyback rate has dropped each year by about 10% since 2017- always on September 1st. This buyback rate is hovering around 8 cents a kWh. This can be locked in for 10 years, but if you choose to purchase more solar panels or move the solar panels you will lose the locked in rate.

2. Renewable Energy Net Billing

Another option that APS has is the “Renewable Energy Net Billing” plan. Any remaining credits will still roll over to the next month, but the amount depends on the on-peak or off-peak rates throughout the seasons. 
Overall, if your solar panels are producing more electricity than you are using, you sell it back to the grid and receive a credit on your bill. The credit from your bill will then (hopefully) cover what you used with APS for the rest of the day. 

Solar Tax Credits

There are currently a few options for solar tax credits in Phoenix. According to The City of Phoenix website, “solar energy systems installed between 2022 and 2032 are eligible for a tax credit worth 30% of the cost of the system and its installation. At this time there is no maximum amount that can be claimed”. This federal residential solar energy tax credit can be claimed on your federal income taxes during the same tax year as your solar installation. 
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Another tax credit that can cut the initial solar installation costs is the Arizona Department of Revenues Income Tax Credit. This is only available for residential solar devices and offers a solar tax credit of 25% of the installation costs up to $1,000. This credit is to be claimed on your state income taxes during the same year as your solar installation. 
These tax credits can be combined with any other solar incentives offered by the federal government, state, local government, or APS. As always, you need to owe back enough in taxes to get the full benefit of these refunds. 

Is Solar Right For Me?

​Solar is a great way to save money on your electric bills each month. Whether you lease, finance, or purchase your solar panels outright, solar can be a great investment if you are looking to stay in your home for years to come. 
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Green ID Phoenix can help you make sure that solar is right for you. With over 10 years in the Valley, we understand that nobody wants a pesky sales person in their home, so we created a way to send you a free digital quote here. Simply upload your utility bill, and we will send you a no obligation quote for you to review on your own time. 

We know that solar can be tricky, with tax incentives, batteries, installations, and dealing with APS. If you have any questions, feel free to give us a call at 602-926-1650.