Are solar panels worth it in Arkansas?

7 factors to consider before getting solar panels in Arkansas

ConsumerAffairs has heard from thousands of solar customers who have already gone through the installation process, including several from Arkansas. Here’s what to consider before making the switch.

1. Solar panel installation costs
2. Your energy consumption
3. Arkansas solar incentives
4. Net metering buyback rates
5. How long you stay in your house
6. How you pay
7. The solar company you hire

1. Solar panel installation costs: $10,000 to $30,000

Average solar panel costs in Arkansas are comparable with the national average. Before the federal solar investment tax credit (ITC), a typical residential system ranges from $13,350 to $26,700. That price drops to $9,345 to $18,690 after the full 30% tax credit.

Most installers set the price according to the system's wattage, with a typical cost between $2.50 and $5 per watt. “Cost per watt” is a little like looking at the price per square foot when you buy a house. It helps you compare the value of solar energy systems in different sizes. In Arkansas, the average cost per watt is $2.67.

Average solar installation cost by system size in Arkansas

2. Your current energy consumption

It’s smart to get your electrical loads as low as possible before going solar. That way, you can get a smaller system, which will be cheaper overall. If you have older electrical appliances, upgrade those before investing in solar panels.

You get the most out of solar if most of your appliances are electric. If you also have an electric vehicle, solar panels will save you even more. (This may seem obvious, but solar panels generate electricity. They won’t help you save on gas bills.)

Homeowners with solar panels typically save $20,000 to $90,000 over 25 years.

A typical Arkansas household needs a system with a capacity of  11.19 kW to offset its electricity needs with solar energy. You might need a larger or smaller system, depending on your current energy consumption.

3. Arkansas solar incentives: federal and state

Arkansas has few statewide solar incentives. Consequently, the federal solar investment tax credit (ITC) is the most significant incentive for most homeowners going solar. The ITC provides a 30% tax credit on your total system costs, including equipment, labor and permits. It will drop to 26% in 2033 and 22% in 2034.

Any unused portion rolls over into the next tax year, which surprised some people we talked to. For instance, a rep told Terry in Vilonia that the tax credit would make solar panel installation more affordable.

“What they left out was that amount does not come all in the first year. Your solar tax credit can only be the amount that you owe for federal that year, which for us was around $5,000,” Terry said. “Lie of omission is not illegal, although, I believe that for some of us on a tight budget need to know all the details.”

» GREENEST STATES: Arkansas ranked 39th in 2024

4. Net metering in Arkansas: retail buyback rate

Arkansas recently changed its net metering policy. Homeowners can no longer bank excess electricity within a billing cycle. Instead, they can only use what they generate in real time and sell any extra at a lower rate. These changes may impact the financial benefits of solar installations, potentially leading to fewer people adopting solar energy in the state.

It’s smart to check with your local utility provider about current rates. Another solar customer we talked to, Curt in Benton, was excited to go solar in 2021. “We were told that the net metering rate would be 1:1, and that the cost for the loan would offset the standard electric bill we were used to paying,” Curt told us. “However, we later found out when receiving our bill from the utility company that they do not have a 1:1 net metering rate and instead it is around 40%.”

5. How long you plan to stay in your house

It takes years for electric bill savings to make up for the initial cost — about 9.5 years on average in Arkansas. If you sell your house and move before then, you might not fully realize the financial benefits of your solar investment.

A Zillow study found that, on average, houses with solar panels sell for 4.1% more. Let’s say you spend $25,000 putting solar panels on a house that costs $400,000. It might sell for $16,400 more in a few years, according to Zillow. But, you miss out on some of that $67,139 in total avoided utility costs over 25 years.

Solar panels last 25 to 30 years.

In other words, don't get solar panels just because you want to sell your house soon. Consider a home improvement project with a better return on investment, like remodeling the bathroom or kitchen, instead.

6. How you pay

It’s great if you can pay for the whole thing upfront. Of course, cash isn’t always an option. That’s when loans, leases and other agreements come into play.

• Loans: Solar loans work like any other type of loan. They have relatively low fixed interest rates. Once you pay it off, you own your system outright.
• Leases: Leasing panels is one way to get the benefits of solar energy without the high upfront cost. A solar lease works like a car lease — you get to use the panels but don’t own them. Leasing can be good if you have limited savings. Solar lease agreements typically last 20 to 25 years.
• Home equity loans or lines of credit (HELOC): Eligible homeowners can borrow against equity in their house to finance a solar panel system. These often have variable interest rates, meaning monthly payments can increase over time.

7. The solar company you hire

In the best-case scenario, it’s easy, and you’re happy with your system’s performance. In the worst-case scenario, you end up paying thousands for mid-tier solar equipment from a company with poor customer service and no follow-up or support.

One of the most common complaints is related to pushy sales reps who make promises that can’t be delivered. That’s why it’s so important to thoroughly research and verify claims made by sales teams before making a decision. Use The National Renewable Energy Laboratory’s PVWatts Calculator to estimate how much electricity a solar panel can produce over a year on your house — just type in your address. Project Sunroof is a free solar savings estimator powered by Google Earth imagery.

Monthly costs: solar payments vs. savings

Think of going solar in terms of your monthly costs. Given rising energy costs in Arkansas and elsewhere, financing solar panels makes sense as long as your monthly loan payment is less than what you would be paying the utility company anyway.

Is my house a good candidate for solar panels?

Going solar ends up being worth it for many homeowners as long as their house is a good candidate to support the panel installation. Here’s what to think about before you commit:

• How much sunlight do I get? Solar panels need regular exposure to sunlight to produce the most energy possible. Arkansas averages 3.5 to 4 peak sun hours each day. However, lots of shading — like trees or tall buildings above your roof — makes your solar system less efficient.
• What is the size and angle of my roof? Arkansas (and the rest of the United States) is in the Northern Hemisphere, so solar panels perform best on south-facing roofs. The worst place to install would be on north-facing roofs, especially if those roofs have a high pitch. For example, if the only place you can install is a north-facing roof with a 30-degree pitch, your costs will likely go up by 30% to 40%.
• What is the condition of my roof? If you have to replace your roof, do that before you install solar panels. Solar panels are designed to last up to 30 years, so you want your roof to last just as long. Otherwise, it could cost thousands to remove the panels, fix your roof and reinstall the panels.

Pros and cons of solar panels in Arkansas

It’s a common misconception that solar panels will completely eliminate your monthly power bill — but this is not always the case. Still, you’ll likely pay less than you would for traditional utility bills. 

Benefits of solar panels in Arkansas

Donald in Gassville said he went solar to save money in the future. “Also, the system looks good in the house,” he added.

• Cheaper energy bills: The average homeowner in Arkansas uses a lot of power, which adds up to a lot of savings when you switch to solar. Going solar now means that your monthly energy expenses will be more predictable (and very often significantly lower). Solar panels also protect you from future energy cost increases.
• Better for the environment: Traditional energy sources like coal and natural gas release carbon dioxide and other harmful pollutants into the air. Solar panels generate electricity from sunlight, a clean and renewable energy source. Installing solar panels on your roof helps the environment primarily by reducing greenhouse gas emissions and dependence on fossil fuels.
• Higher home resale value: Installing solar panels can significantly increase a home's value. According to the study mentioned above, houses with solar panels sell for 4.1% more on average. The exact increase in value varies by location, with homes in active solar markets sometimes seeing even higher boosts.

Drawbacks of solar panels in Arkansas

Curt in Benton was excited to go solar but had a negative experience with a solar company. He said reps misled him about Arkansas’ net metering rate and overall costs.

• Solar equipment is expensive: Even with rebates and other financial incentives, the price typically starts between $10,000 and $30,000. It’s even more expensive if you want a solar battery for energy storage. Solar battery costs are generally between $7,000 and $18,000. Getting a solar battery might be strategic if net billing rates continue to decline in Arkansas. That way, you can store energy at home instead of tapping into the local grid when you need to.
• Potential roof leaks: The installation process involves drilling holes into the roof to anchor the panel mounting systems. If not done correctly, this can lead to leaks or structural damage.
• Energy production varies: Solar panels are dependent on weather conditions and seasonality. Solar panels still work on cloudy days, but less available sunlight does affect how efficiently they produce energy. Snow cover may also temporarily reduce efficiency until it's removed or melts off.

» MORE: Solar energy pros and cons

Find solar companies in Arkansas

A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for Arkansas’s top solar companies to learn more.

Bottom line: Is going solar in Arkansas worth it for you?

Going solar in the Natural State isn’t just a green move; it's often a smart money move. With electricity costs continuing to rise, more homeowners find solar power is financially worth it in the long run.

Solar costs vs. savings: Arkansas and nearby states