MY HUSBAND AND I CAN now say we survived our first Arizona summer. When we moved from Portland, Oregon, to Phoenix, we weren’t sure how we’d cope with the abundant sunshine. There was also another unknown: How much would it cost to keep our home comfortable when the temperature outside soared?
We heard stories about residents in our retirement community paying upward of $350 a month for electricity during the summer season. Since we’re living on a fixed income, we began researching ways to help control the cost of cooling our home.
Our first step? Having 19 solar panels installed on the roof. While the initial cost was steep—$15,000—we felt confident that, over the 30-year lifespan of the panels, we’d eventually recoup our costs.
Next, we replaced many of the 40-year-old light fixtures in our home. We installed LED fixtures which, in addition to being energy-efficient, give off far less heat than incandescent bulbs. We had a smart thermostat installed as well. By signing up to participate in an energy-savings program through our electricity provider, the thermostat and its installation were free.
Once the thermostat was installed, it took my husband and me a few days to compromise on temperature settings. Like most couples, we differ in our temperature preferences. I tend to tolerate heat better. We ultimately settled on keeping our home at 78 degrees during the day and 74 degrees while we slept. While those settings would have been uncomfortably warm for us in Oregon, 78 degrees felt refreshing on a 114-degree day in Arizona.
Over the course of the summer, we also adjusted our daily schedule to align with the lower electricity rates we get during certain hours of the day. On weekdays, our rates are substantially higher between 4 p.m. and 7 p.m. This means making a concerted effort to run most of our appliances either early in the day or late at night.
How did our finances fare during our first Arizona summer? Since our solar panels were installed in January—but we didn’t move into our home until May—we accumulated nearly $150 in credits toward our summer electricity bills. This meant our first bill with a balance due didn’t arrive until August.
During July and August—the two hottest months in Arizona—our electricity cost averaged about $3.50 per day. We were so pleased with the reasonable cost, we decided to have two small air-conditioning units installed in our garage and utility room—two areas of our house that weren’t cooled by our large rooftop unit. Even with the addition of those units, our average electricity cost is still well below $4 per day.
We suspect that, by November, we may achieve a “net zero” electricity bill. During the winter months, our utility plan changes over to a different schedule of hourly rates. Between 10 a.m. and 3 p.m., our electricity use will be charged at a “super off-peak” rate. That rate is currently less than the crediting rate from our utility provider for the solar energy we produce. By strategically running our appliances during those daytime hours—combined with less extreme outdoor temperatures—it’s possible we may even rack up a few dollars in credits to use next summer.
This was really good planning Kristine, I read an article some time ago about ‘working class’ families having to find an extra part-time job to pay utility bills in Arizona as utility bills were north of 4, 5 or 600usd per month.
We kinda did the opposite of what you did. We lived 32 years in Dallas, where there is plenty of sun & heat, then moved to Tacoma, WA in retirement.
Solar is probably a good investment now in Dallas, but it wasn’t when costs were much higher. But we routinely spent more than $300/month on electricity, and eventually closer to $400.
in Tacoma, our “problem “ with electricity is that it is so abundant (primarily hydroelectric) and inexpensive. 97% of our electricity is carbon-free. We got a rough estimate of the costs of installing solar, but then realized we’re spending less than $50/month on electricity (we’re in a newer house with good windows, insulation, etc.). But in your situation, solar makes a lot of sense, especially as to long-term predictability.
Enjoy the heat!
It’s interesting how inexpensive your electricity is in Tacoma. In Portland, we were paying about $60/month. Our furnace and hot water heater were both gas, so we could never figure out why our bill was that high. The house was just over 1000 square feet.
We love the warmer weather. Having spent almost my entire life living in cold and rainy climates, I was ready for a change!
Thanks for very practical suggestions for saving money on electricity, Kristine. They warm my frugal heart.
Thanks for the kind comment!
It’s too late because you have already installed the solar panels. However, prior to installing solar panels on one’s house it is prudent to do the following comparison. Installation cost of $15,000 less 51% tax credit(26% Federal and 25% state of Arizona) and less monthly savings invested at an average conservative rate of investment return that you can comfortably maintain over life of solar panels(approx 25 years) VERSUS investment of $15,000 in the market at an average conservate rate of investment return over approx 25 year period(life of solar panels). The difference, especially if large either way, will tell you whether or not the investment in solar panels will make you better off overall.
It would be a pretty complicated calculation for sure. Just for clarification, the “25%” Arizona rebate is only up to a maximum amount of $1000, so perhaps not as lucrative as it sounds.
There are so many variables one would have to consider. For one, the amount of money we are credited for the energy we sell back (from our panels) can vary from one year to the next. How much our electric rates will increase over the next 25 years is unknown.
I think, in the end, we felt the upfront costs for the panels were worth it simply because they would allow us more stability in our utility costs than if we didn’t have them.
Reading this author’s article first gave me chills up my spine followed by an acute anxiety attack!
Wow: all the detailed math work involved and “extra” attention and expense involved in cutting down on electricity expenses! That caused the spine chills.
Then the anxiety provoking thought : “what have I been doing wrong all this time not worrying about utilities costs”
I guess I just won’t worry. I’ll just keeping on paying the utilities by automatic withdrawal to my bank account and not worrying about timing my actions at home to economize on electricity.
After all, a man’s and woman’s home is their most welcomed comfort zone to do what he/she/they want.
To the author: please don’t do a follow-up article on best economizing on water utilities expenses. Don’t pour cold water on that topic! I can not withstand one more acute anxiety attack.
I do apologize for setting off your anxiety. Hopefully you will recover!
In Arizona you’ll probably recoup the solar panel costs in 15 years or less. My understanding is that electricity there is mostly expensive nuclear plants.
Since we installed the panels prior to living down here full time, it’s difficult to know the actual length of time it will take to recoup the costs. I’ve heard at least 40% of Phoenix area electricity is produced via nuclear power.
Good read. I realize you said “upwards of $350” for I assume non-solar assisted bills, but I wonder what the actual payback time would be to recoup your $15,000 investment. Would the best case scenario be ~ 5 years?
It’s really difficult for us to know how long it will take to recoup the cost of the solar panels because we never spent a summer in our home without the panels. For me, the biggest benefit is just knowing our utility bills will (hopefully) remain relatively stable for the next several years.
Impressive, thanks for sharing. Regarding EVs, I can’t say you should own one and the early Nissan Leafs did very poorly in heat but Teslas are very popular in Tucson. I see Hyundai and VW ev vehicles too but they are less distinctive and harder to spot.
That’s interesting about the Teslas. I’ve only seen one of them in our area. For us, because we live in a small, age-restricted community, we don’t really use much gasoline. I fill up my small car once a month because most days we only drive five miles or less. Now that the weather is cooling off, we ride our bicycles to the grocery store (about a mile away) and to the various fitness facilities in our community (between 1 and 2 miles from our home).
Did you consider an in home battery storage system for use in peak demand periods vs. selling excess power to your utility in your decision?
Also, at my age 72, with our shorter expected time remaining in our current home compared with you, it seems to me to not justify the initial financial cost for us. Solar does seem to be a good long term choice for both our country’s security and the quality of our environment. If I was 20 years younger I would guess solar panels would would be a better financial decision for me and might financially work like a inflation indexed bond as I only expect utility rates to go up.
I have a good friend that while building their forever and final home had a geothermal HVAC system installed and while the cost was 3X+ the cost of a traditional system (mostly from drilling three wells and the related closed loop system) their utility usage is about one third of mine and he got a 30% federal tax credit that applied to both regular tax and AMT tax. They are very happy with their choice of geothermal.
We thought about the battery storage systems, but when we learned the cost of them, we declined. The other issue was that the battery systems weren’t readily available when we installed our system (due to ‘supply chain issues’).
We are planning on staying in this home as long as we can. Of course, there are never any guarantees about the length of time we’ll actually stay.
How well the solar panels serve us remains to be determined. The one hesitation I had is that I’m sure solar technology will only continue to improve at a rapid pace over the next decade. Our panels will probably be ‘old tech’ in just a couple of years. But, if they continue to allow our utility bills to remain relatively stable over the next two decades, I’ll be happy.
Thanks for your additional comments. I hope you will have the opportunity to keep the Humble Dollar readers updated on your experience with your home solar system.
Best, Bill
I will try to write an update about our system once we’ve gone through a winter with it.
Wow. That’s very impressive. Bravo to you!
Thanks! We were surprised (and pleased) to find out our utility costs in Arizona are lower than they were in Oregon. Our Arizona house is twice as large as our Oregon home and we didn’t have air conditioning in Oregon.
Kristine,
Thanks for the interesting article. Are there any tax incentives associated with the solar panel installation to help reduce the cost? I like your metric of $/day of electricity usage. I checked ours for 2022 YTD and we are a little over $4 per day. So we have some work to do!
I like that our utility provider does a $/day calculation. We didn’t have that in Oregon. Now that the weather in Arizona is cooler (highs in the 80’s, lows in the 60’s), our average cost is down to $2.40/day. I suspect by the time winter rolls around and we can take advantage of the ‘super off peak’ prices, we may be paying $1.50 a day.
Thanks Rick. Yes, there are federal tax credits available for solar panel installation. Some (maybe all?) states also offer credits. We opted to pay a lower cost for the panels up front and allow our installation company to ‘redeem’ our credits. There were a few reasons we made this particular decision. Anyone considering installing solar should calculate the optimal method for paying for their system as there are MANY options!
That’s impresive. Bet you drive an EV, too. Payoff sounds good in exchange for the intial outlay.
Nope–no EV’s for us. The batteries wear out much faster in hot climates. When you live somewhere where the average high temperature in the summer is well over 100 degrees, EV’s aren’t a popular option.
Arizona actually ranks 11th in EV registrations in 2022 with 40,740 which was a 42% increase over 2021. California dwarfs all other states with 563,070, followed by Florida with 95,640 and Texas with 80,900.
https://afdc.energy.gov/data/10962
https://electrek.co/2022/08/24/current-ev-registrations-in-the-us-how-does-your-state-stack-up/
Very interesting!