Your 2019 guide to getting solar panels for your home in Arkansas
This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Arkansas home. Since there's a lot to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!
** What's new for 2019 **
Like most states, Arkansas has initiated loan programs and other initiatives that reward energy efficiency in residential and commercial construction. Renewable energy programs, however, are notably lacking. From the lush delta and river valley to the breathtaking beauty of Ouachita and the Ozarks, Arkansas has a whole lot of natural beauty to protect. Legislators here are squandering a valuable opportunity to do just that by continuing to ignore the ever-developing potential of solar power. In fact, in early 2013, they failed to get a renewable energy bill out of a committee on energy, and it the issue hasn’t yet come up again.
More recently, Arkansas has been considering an end to the state's one positive aspect for solar-interested homeowners: its net metering rules, which provide ful credit for all solar electricity generated by home solar systems in Arkansas. Without net metering, there would be almost no financial benefit to installing solar panels. For now, there is! Read on to learn more about solar power in Arkansas.
Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,000/kW! This is paired with the Arkansas solar incentives you see below.
The Solar Strategy section is focused on the 3 ways of paying for solar in Arkansas, so you can decide which is best for you. We've created a tool that asks you a few questions and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we provide detailed analysis of how each works.
The Policy Information section contains all our latest research on the rules set by lawmakers and the Public Utilities Commission, which determine how easy it is to go solar in Arkansas. These policies and rules govern everything from renewable energy mandates to interconnection, and have a huge effect on the viability of solar.
Finally, the Solar Incentives section includes information about money-back rebates and grants, tax credits, and tax exemptions for going solar in Arkansas.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your Arkansas Solar Strategy|
|Comparing Solar Investment Options|
|Paying Cash for Solar in Arkansas|
|Solar Loans in Arkansas|
|Solar PPAs in Arkansas|
|Solar Purchase Payback Time in Arkansas|
|Arkansas Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in Arkansas
Figuring out the best way to go solar in Arkansas can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.
We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:
How to pay for solar panels in Arkansas
The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan. The good news for Arkansas homeowners is prices for solar have come down in recent years, leaving you wiht a couple decent options for solar savings—even without good policy and incentives in your state. As long as net metering holds, you can save money with solar in Arkansas.
The average Arkansas homeowner needs about 7,000 kilwatt-hours (kWh) of electricity per year to power all the appliances and devices you use. That electricity costs over $1,500 per year, and it can mostly be generated by solar! A system sized to produce about that much energy would include about 32 325-watt solar panels, and could save you $1,300 this year. And as the utility company raises rates, your savings increase!
As you can tell from the chart, paying cash for solar results in the largest overall savings in 25 years, but the downside is that buying a solar system with cash requires a big up-front investment. If you're more interested in saving the planet than saving a ton of money with solar, you can take a solar loan or home equity line of credit (HELOC) to pay. You'll end up with smaller overall savings, but the big positive is the solar tax credit you get in year 1, saving you thousands in taxes in year 1, putting you ahead from the start.
Read on to find out more about each option for paying for solar in Arkansas.
Option 1: Paying cash for solar
If you have the cash to spend and you like to be in control of your finances, paying cash for solar can be a good thing. The up-front cost is large, but the 30% Federal tax credit and electricity savings bring your first-year costs way down. After 14 years, you'll own the system free-and-clear, and you'll enjoy at least 11 more years of worry-free operation, because the panels of your system are warrantied for 25 years!
In our example, you put down nearly $33,000, but by the end of year 1, incentives and energy savings will erase a bunch of it. Over 25 years, your system will have produced more than $23,000 in income.
That might sound like a great deal of savings over the years, but it pales in comparison to the potential returns from other states. That's not because Arkansas lacks sun—it's because the state has cheap electricity prices and no statewide incentives for solar. The internal rate of return on a solar investment here is just 6%, which is pretty darn okay compared to some other long term investments, anyway.
Here’s how the numbers pencil out for an Arkansas solar purchase with an average-sized 10.4-kW rooftop solar system:
- Installing a typical 10.4kW solar system should start at about $33,000. Don’t worry – even without state incentives, you can still knock a big chunk off the price right off the bat.
- Since the feds calculate their incentive based on actual out of pocket costs, no state incentives means a bigger federal solar tax credit. Subtract $9,900 (30% of $33,000 for a new price of $23,100.
- After the tax credit, subtract your first year’s energy savings, which we estimate to be about $1,300. That brings your cost after the first year to $21,800.
- By the time your system pays itself back in year 14, you’ll be seeing over $1,850 per year in savings until the end of your system’s life.
- When all is said and done, our 25-year estimate shows a total net profit of $23,000!
- And don't forget... your home's value just increased by more than $23,000, too (your cost after the tax credit)!
- In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil-fuels. In fact, the energy you’re not using has the carbon equivalent of planting 216 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Arkansas. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Option 2: Using a loan to pay for solar
If you feel comfortable financing a big purchase, taking a loan to pay for solar is a great idea. That's because the system will be protected by 25-year warranty that ensures it will produce electricity, which in turn saves you money every month, making it easier to make loan payments for 15 years and earning you the right to free electricity after the loan's paid off! A solar panel system is essentially an income-generating asset.
A solar purchase like this will make sense for you if you can qualify for a solar loan or home-equity line of credit (HELOC) for $33,000, with a fixed rate of 5% or lower and a 15-year repayment period. It works great for people who can take advantage of the federal 30% solar tax credit, which can actually earn loan-takers a good deal of savings in the first year. Note: some solar loan companies want you to pay the loan down by the amount of your tax credit after your receive it. This is great for people with the tax apetite, and helps lower monthly loan payments, but if you're taking a solar loan because you're hoping for overall savings, a HELOC or other loan is preferable.
Here’s how the numbers pencil out for an Arkansas solar purchase with a loan:
- Installing an average sized 10.4-kW solar system should start at about $33,000. That's how big your loan will need to be to cover it.
- The electricity you'll save in the first year of operation would have cost $1,300, but your loan payments will total $3,000, for a difference of $1,700, or about $140 per month.
- That's not so bad when you consider your tax savings for the year will be $9,900! You'll come out nearly $8,200 ahead in year 1, which should help ease the burden of loan payments for a few years, at least.
- When your loan’s paid off in year 15, you’ll start see over $1,600 per year in savings until the end of your system’s life.
- For our 25-year estimate, you'll end up with a final net savings of $10,700, after all the payments and tax credit are calculated.
- But the future is going to look a little brighter, since your system will mean green for the environment. It'll be like planting 216 trees every year!
Keep in mind, the numbers above are based on an average home in Arkansas. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Option 3: Buying the electricity, not the panels with a Power Purchase Agreement (PPA)
Arkansas does not offer solar Power Purchase Agreements or leases. Perhaps it would be a good idea to contact a solar advocacy organization and ask them to fight for solar in your state!
Arkansas Solar Policy Information
Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.
State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Georgia—are doing so poorly.
Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Arkansas:
A Renewables Portfolio Standard (“RPS”) basically requires utilities in the state to source a percentage of energy from renewable sources by a given date. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for you in the form of solar power rebates and performance payments when you switch to solar.
Sadly, we have no RPS here in The Natural State. Even more unfortunately, the pattern we’ve seen elsewhere is repeated: no RPS means no state or utility backed incentives for solar power…
What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS). If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.
An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner. Read more about Renewable Portfolio Standards.
RPS solar carve out
Without an RPS, there can be no solar carve out. Just another way Arkansas is lagging behind the best states for solar.
What's a solar set aside? A solar set aside guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.
Some states have higher alternative compliance fees than others, and some states have more progressive alternative energy standards and deadlines than others do.
For instance, New Jersey has an overall RPS of 22.5% by the year 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!
Arkansas Electricity Prices
Arkansas pays an average of 10 cents per kilowatt-hour (“kWh”) of electricity. That’s more than three cents below the national average of 13.6 cents/kwh. In fact, we pay less for electricity here than almost anywhere else in the country. We know you like paying less now, but the long term costs of cheap electricity are through the roof. Remember where all that cheap energy comes from. Fossil fuels. Lots and lots of dirty-burning fossil fuels. When the inevitable environmental costs start to mount, monthly electricity bills are going to rise, and SRECs are likely to be putting even more money in your pocket.When that happens you’re going to feel pretty darn smart for making the early switch to producing your own clean, efficient solar power. Just remember to thank us…
Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.
The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.
Arkansas Net Metering
Statewide (for now)
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and to make sure you get credit for any surplus. Net Metering is offered in Arkansas through all utility companies. Provisions apply to solar thermal electric, photovoltaics, wind, biomass, hydroelectric, and geothermal, and in virtually all sectors: residential, commercial, industrial, government, institutional, and non-profit organizations. Systems can be up to 25 kW for residential applications and 300 kW for commercial use. The net excess of power generated by the customer is applied as a credit to the next month’s bill; any excess remaining at the end of a 12-month billing cycle reverts to the utility company. That’s pretty cool, because it means you can generate tons of electricity in the long summer days and use that electricity in the winter. You don’t have to worry about the size of your system exceeding your summer usage, you can size it to replace your entire year’s electricity needs.
What is net metering? Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.
The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.
Arkansas Interconnection Rules
Arkansas’ net metering law includes basic interconnection requirements, but does not establish any set any actual interconnection rules beyond those basic safety compliance requirements. As a result, there is no standard interconnection process here. The net metering law does not address insurance requirements. Sadly, the law does require a redundant external disconnect switch, though many inverter-based systems (as yours almost certainly will be) can qualify for an exemption if other safety shutdown features are in place.
Arkansans: All hope is not lost! If you’re ready for some personalized assistance to see just how you can make the sun work for you, get in touch with us and we’ll have an expert contact you in a jiffy.
Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.
Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.
Solar Incentives in Arkansas
Next to high electricity prices and net metering, solar incentives have traditionally been the most important factor for whether home solar power makes financial sense in a state. In the past, some states with otherwise lousy policy had tremendous incentives that drove down the up-front cost of going solar so much that homeowners could save oodles of money even without net metering or a good RPS.
These days, the big incentive most people can get is the Federal Solar Tax Credit that earns you 30% of your costs back after just 1 year. State incentives play less of a role than in the past, but some really good ones are still out there, ready to help homeowners go solar and save money before you know it.
Let's see how Arkansas measures up:
Arkansas Solar Power Rebates
Arkansas has no solar power rebates or performance payments. That’s right, none! We get a decent amount of sun here (as much as most of Florida) but all that potential is currently being wasted. If an RPS were implemented with mandated levels of renewable energy production, we can guarantee the utility companies would offer incentives to help you make the switch to solar. How do we know? It’s worked everywhere that’s passed an RPS! That doesn’t mean it won’t get passed in the future, or that another state won’t decide to allow Arkansas solar production to count for their state. You’ll want to ensure you use a certified installer so that when the time comes, you can reap the rewards. By having your system already installed, you will be able to take advantage of the highest initial rates too!
How do solar rebates work? Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.
The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.
Arkansas Solar Power Tax Credits
The legislature hasn’t been much help bringing down the cost of solar power here either; they won’t give you a tax credit for switching to clean, renewable energy production, but they sure will charge you extra tax to get a tattoo or electrolysis.
About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.
(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)
The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.
Solar Power Performance Payments
With no RPS and no solar carve out, utilities in Arkansas don’t have a reason to offer payments above the going electric rate for you to produce solar power.
Explanation of performance payments: Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!
Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.
Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.
We've got a great article if you like to read more about what SRECs are and how to earn them.
Property Tax Exemption
Unfortunately we’re behind the curve on taxes altogether, with neither a sales tax nor a property exemption in place. Legislators are missing an easy one here; we’ve seen tax exemptions help support solar power conversion elsewhere, even without large utility incentives. Luckily Arkansas is a pretty sunny state, so the lack of tax exemptions doesn’t really hurt you much in the overall picture.
About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Some argue that solar power adds approximately 20 times your annual electricity bill savings (if you own the system and are not leasing). Other studies seem to indicate a home price premium about equal to solar panel cost, minus any incentives like the federal solar tax credit.
For many average-sized solar power systems on a house, that can mean adding $20,000 to your home value. And if you don't believe us, believe the bean counters: Many banks and solar financing companies now offer traditional style equity-based home loans for installing solar. An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!
The availability of a property tax exemption for solar energy was sourced from the Database of State Incentives for Renewables and Energy Efficiency. Grades in this category are basically all-or-nothing. Either you got it or you don't. Thankfully, many states have "got it.".
Sales Tax Exemption
Without a sales tax exemption, we Arkansas residents pay more up-front for our solar installations. Make sure the quote you get includes sales tax, so you know in advance the total cost of the system, particularly if you are comparing quotes from two different installers.
What's the deal with solar power sales tax exemptions? When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).
The consensus on Arkansas solar power rebates and incentives
State legislators are missing a golden opportunity; Arkansas gets plenty of sun, and solar power could saving almost all of us money here. But without the right incentives in place, it’s still more expensive than it should be to set up a residential solar power system and start saving all that cash (and stop burning all those fossil fuels). Until we have at least some meaningful incentives in place, we can’t give Arkansas anything but a failing grade on solar policy.