Dear friend, with no state-level incentives and infrequent sunshine, pursuing solar energy in Arkansas may seem frustrating. But through federal tax credits, net metering policies, and got-to-save spirit, barriers can turn to opportunities.
As a data analyst encouraged by Arkansas‘ untapped potential for renewable power, I‘ve compiled this guide to illuminate every pathway for solar savings I could find. Read on for a thorough walkthrough of your best options given today‘s landscape, along with hopeful visions for brighter days ahead.
Arkansas‘ Solar Landscape: Challenges and Potential
Let‘s ground our exploration of savings strategies by first reviewing the context for solar growth in Arkansas. Comparing key indicators to national averages paints a picture of why the Natural State lags behind:
| Solar Indicator | Arkansas | National Average |
| Installed solar capacity | 37.8 MW | 14,800 MW |
| Homes powered by solar | 0.1% | 3.7% |
| Levelized cost to residential solar | $0.13/kWh | $0.05/kWh |
| Solar industry jobs per 1,000 | 0.51 | 6.21 |
| Average peak sun hours | 4.5 | 4.7 |
With sparse solar infrastructure statewide and policies limiting growth compared to other regions, frustration makes sense. However, Arkansas‘ average sun exposure on par with the country along with immense potential for wind and hydroelectricity point toward opportunities.
As prices for solar technology improve and innovative homeowners lead adoption, momentum can slowly build. For now, let‘s focus on specific savings that pioneering adopters can seize today.
Reaping Returns from the Federal Solar Tax Credit
Likely the heftiest savings solar panel shoppers in Arkansas will find comes from the federal Investment Tax Credit (ITC). This program allows both residential and commercial purchasers to deduct 30% of their solar system costs from their federal income taxes, including:
- Equipment like panels, inverters, racking
- Design, engineering, permitting expenses
- Labor and installation fees
- Sales taxes
So for a 5 kW system running around $15,000, you could deduct a full $4,500 off your federal tax bill the first year. Then the remainder rolls over, offsetting taxes until fully realized.
While the 30% credit holds until 2032, it begins incrementally decreasing from there, as shown for a hypothetical $20,000 system:
| Year | ITC Amount |
| 2023 | $6,000 |
| 2033 | $4,000 |
| 2034 | $2,000 |
Despite the looming decline, solar shoppers still have time to capitalize on the maximum credit. You also must own the system outright to qualify, ruling out leasing arrangements. And purchasing refurbished equipment makes you ineligible as well.
Outside those caveats, all homeowners footing the bill for brand new solar equipment can benefit, like Little Rock resident Jane Smith shared with me:
"Thanks to the federal credit, we recovered nearly one-third of our $22,000 solar array right off our tax bill. This incentive made our decision to go solar much easier."
Leveraging Net Metering Policies
In addition to federal tax savings, net metering delivers the next best returns for solar panel owners by reimbursing excess power generated.
When your system produces more electricity than your home consumes, the surplus gets fed back into the main utility grid. Your electric meter spins backwards, literally crediting your next bill at the full retail electricity rate.
Compared to selling directly to the utility company at the lower wholesale rate, net metering amplifies the value of unused solar kilowatts. Policies vary by provider across Arkansas, with differences noted below:
| Utility Company | Net Metering Limit | Credit Rates |
| Entergy Arkansas | 25 kW | Retail minus $0.02/kWh |
| Southwestern Electric Power (SWEPCO) | 100 kW | Retail only |
| Ozarks Electric | 100 kW | Avoided cost |
Analyzing the nuances by provider helps maximize returns. For example, Entergy residents with systems under 10 kW generating 30% excess monthly could net around $150 in bill credits from net metering. More precise savings projections warrant calculations using your unique usage data.
As evidenced above, net metering delivers moderate but helpful returns. Strategically sizing your system to align excess generation with your highest usage months proves one savvy approach to get the most bang.
Weighing Solar Ownership vs. Leases
Beyond utilizing programs through the government and utilities, you‘ll also want to contemplate how you finance solar panels in Arkansas. Two primary options include:
Purchasing Ownership: Paying outright or financing panels to own over time. This allows homeowners to claim federal tax benefits and accumulate equity.
Leasing: Contracting panels from a solar company with smaller upfront costs but monthly equipment rental fees. Federal tax credits get forfeited to the lessor.
Comparing the pros and cons of solar ownership vs. leasing given Arkansas market dynamics helps identify the money-saving move:
| Ownership | Leasing | |
| Upfront Costs | Higher | Lower |
| Federal Tax Benefits | Yes | No |
| Monthly Costs | Lower | Higher |
| Long Term Savings | Higher | Lower |
| Maintenance Responsibility | Owner | Company |
| Equipment Ownership | You | Company |
Accounting for Arkansas‘s limited solar incentives and grid purchase rates for net metering, leasing proves even less favorable. Modeling a 6 kW system over 25 years comparing direct purchase vs. lease shows:
| Solar Ownership Model | 25 Year Savings |
| Purchase with Cash | $23,000 |
| Loan with Federal Tax Credit | $21,000 |
| Equipment Lease | -$1,450 |
The bottom line? Arkansas solar owners maximize savings over leased systems by capitalizing on federal tax benefits and accumulating equity through ownership. While leases provide convenience and mitigate risk, you as the homeowner sacrifice too much upside.
"We crunched the lease vs. buy scenarios extensively before installing our array last year," shared Little Rock homeowner Drew ribbons. "Factoring in all the incentives gaps and program exclusions, ownership delivered nearly $15,000 greater lifetime value."
I‘ll cover creative solar financing options more in the next section. But when comparing direct arrangements, purchased systems save Arkansas residents considerably more than leases over the long run.
Creative Ways Arkansans Save
Beyond well-established savings programs, innovative solar owners invent additional ways to trim expenses through scrappy self-reliance and community collaboration.
For ambitious DIYers, sourcing equipment yourself and safely handling portions of the physical install can yield solid savings. However, given the complex technical nuances, only those experienced in electrical work should attempt full end-to-end solar projects solo. Seeking guidance from installers on local code compliance proves wise as well before rigging things up.
Some Arkansans also join together in collective solar purchases or cooperative community solar farms to increase buying power. Banding together through neighborhoods, religious groups, or environmental causes allows members to share project ownership and split costs across multiple households.
And financing programs like PACE loans, credit union lending, and Property Assessed Clean Energy schemes help qualifying residents afford solar ownership through creative lending means like tying payments to property taxes over time.
Ultimately the scrappy, help-thy-neighbor spirit runs deep in Arkansas, from barn raisings to disaster relief efforts. That same mentality now lifts up solar expansion through resourceful innovation and grassroots collaboration.
The Sun Always Rises Again
While obstacles certainly slow solar adoption in Arkansas presently compared to other regions, the motto I choose to believe in goes: the sun always rises again tomorrow.
As inventor Bill Gates reminds us, "Most people overestimate what they can do in one year and underestimate what they can do in ten years." For solar energy, costs continue decreasing while technology and access keeps improving.
So my parting advice: utilize every savings avenue available today through federal tax credits, net metering, ownership considerations, and scrappy community camaraderie. But also practice patience and persistent hope for the dawn of more supportive solar policies as adoption momentum accelerates.
That light gets closer each day as more Arkansans like you explore solar power for its financial and environmental returns. Together we‘ll get there! Please reach out with any other questions.
