Your 2020 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 2020 **
Solar leasing is now available in Arkansas, opening up more options for you to go solar! Read on to explore the entire savings, policy, and incentive picture for home solar panel installation 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.
What you'll find on this page:
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:
Arkansas's Renewable Portfolio Standard
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…
Arkansas's Solar carve-out and SRECs
Without an RPS, there can be no solar carve out. Just another way Arkansas is lagging behind the best states for solar.
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…
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, and you get credited at full retail electricity rates when you are producing more solar electricity than you are using.
Net metered systems can be up to 25 kW large for home solar in Arkansas. That’s about 80 panels, way more than enough to cover your electricity needs, even if you’re housing a few families and several wandering souls.
In 2019, the Arkansas legislature also allowed solar leasing to be available, opening up more options for you to go solar. Unfortunately, they also decided that the state public utilities commission can determine whether offering net metering represents an "undue burden" on non-solar customers, which is a dog whistle that utility-backed legislators use to indicate support for imposing new fees and reducing compensation paid to solar owners. If you're thinking of going solar in Arkansas, maybe do it soon, before they change the deal on you.
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.
Arkansas Solar Incentives
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 26% of your total system 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:
The availability of state solar incentives for residential solar systems was sourced from the Database of State Incentives for Renewables and Efficiency, utility company websites, and the state public utility commission.
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!
Arkansas Solar 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.
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.
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.
Low-income Solar Programs
Grade: FLearn more about low-income solar programs available in the U.S.
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.