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Solar + Battery vs. Solar Only in Arizona

Does adding battery storage improve your solar ROI? Analysis of TOU arbitrage value, net metering export losses, and backup power economics.

Adding a 13.5 kWh battery to a solar system in Arizona changes the economics in three ways: it enables time-of-use (TOU) arbitrage, reduces export losses under unfavorable net metering policies, and provides backup power during outages.

The solar system alone produces a 25-year NPV of $14,954. Whether a battery adds to this depends entirely on your utility's rate structure. Arizona has 3 major utilities with TOU rates, creating real arbitrage opportunities.

Battery Economics: Arizona Public Service (APS)

$8,400
Battery Net Cost
$2
Daily Arbitrage
$575
Annual Value
-$2,881
25-Year Battery NPV

For Arizona Public Service (APS) customers, battery storage has marginal economics with a 25-year NPV of -$2,881. The limited peak/off-peak spread means TOU arbitrage alone doesn't justify the cost. Backup power value and future grid services programs could improve the case.

Combined System Value

ConfigurationNet Cost25-Year NPV
Solar only (7 kW)$11,740$14,954
Battery only (13.5 kWh)$8,400-$2,881
Solar + Battery$20,140$12,073

Frequently Asked Questions

Is solar + battery worth it in Arizona?
With Arizona's average utility rate of $13.2¢/kWh and solar irradiance of 1,750 kWh/kW/yr, the 25-year NPV for a 7 kW solar system is $14,954. Battery value depends on your utility's TOU rate structure.
What incentives are available for solar + battery in Arizona?
The federal IRA provides a 30% ITC for solar and battery installations (through 2032) and up to $2,000 in 25C credits for heat pumps. Arizona also offers a state credit worth up to $1,000. Income-qualified households may receive additional point-of-sale rebates through the HOMES and HEAR programs.
How long does solar + battery take to pay back in Arizona?
Solar panels in Arizona pay back in approximately 8 years. Battery payback depends on TOU rate spreads. Heat pump payback ranges from 5-12 years depending on current fuel costs and local electricity rates.

Other Comparisons for Arizona

Solar vs Grid›Heat Pump›Full Electrification›

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