Is Solar Worth It in Arizona in 2026?
Arizona gets more usable sun than almost any state in the country — about 211 sunny days a year and roughly 1,787 kWh of production per installed kilowatt annually in the Phoenix area, among the highest production figures in the US. Pair that with electricity rates that have climbed 73 percent since 2005, and you'd expect Arizona to be the easiest solar decision in America.
It still can be a good one, but 2026 changed the arithmetic. The 30 percent federal tax credit that used to cut thousands off an Arizona install ended for systems completed after December 31, 2025. On top of that, Arizona hasn't had true net metering since 2017 — the export credit you get for surplus power is now a fraction of the retail rate, so the old "sell it all back" pitch doesn't hold up. Arizona still keeps a 25 percent state tax credit, a sales tax exemption, and a full property tax exemption, and the sun here is genuinely excellent. The honest 2026 story: solar in Arizona pays off best for homes that use most of what they generate — especially with a battery — and worst for homes counting on selling surplus power at yesterday's rates. Run your own numbers before you sign anything.
Arizona Electricity Prices
Solar is a bet against future utility bills, so the first question is where Arizona rates are headed. Here's the multi-decade history from federal EIA data.
Full Arizona electricity price data (1990–2025)
| Year | Arizona (¢/kWh) | US avg (¢/kWh) |
|---|---|---|
| 1990 | 9.0 | 7.8 |
| 1991 | 9.1 | 8.0 |
| 1992 | 9.6 | 8.2 |
| 1993 | 9.7 | 8.3 |
| 1994 | 9.3 | 8.4 |
| 1995 | 9.1 | 8.4 |
| 1996 | 9.0 | 8.4 |
| 1997 | 8.8 | 8.4 |
| 1998 | 8.7 | 8.3 |
| 1999 | 8.5 | 8.2 |
| 2000 | 8.4 | 8.2 |
| 2001 | 8.3 | 8.6 |
| 2002 | 8.3 | 8.4 |
| 2003 | 8.4 | 8.7 |
| 2004 | 8.5 | 9.0 |
| 2005 | 8.9 | 9.5 |
| 2006 | 9.4 | 10.4 |
| 2007 | 9.7 | 10.7 |
| 2008 | 10.3 | 11.3 |
| 2009 | 10.7 | 11.5 |
| 2010 | 11.0 | 11.5 |
| 2011 | 11.1 | 11.7 |
| 2012 | 11.3 | 11.9 |
| 2013 | 11.7 | 12.1 |
| 2014 | 11.9 | 12.5 |
| 2015 | 12.1 | 12.7 |
| 2016 | 12.2 | 12.6 |
| 2017 | 12.4 | 12.9 |
| 2018 | 12.8 | 12.9 |
| 2019 | 12.4 | 13.0 |
| 2020 | 12.3 | 13.2 |
| 2021 | 12.5 | 13.7 |
| 2022 | 13.0 | 15.0 |
| 2023 | 14.0 | 16.0 |
| 2024 | 14.9 | 16.5 |
| 2025 * | 15.3 | 17.3 |
Source: US EIA, average residential retail electricity price. Values in cents per kWh. * 2025 is preliminary.
Arizona households paid about 15.3 cents per kWh in 2025 (EIA preliminary), up roughly 73 percent since 2005 — a steeper climb than many states, driven by a fast-growing population, heavy summer AC demand, and the cost of building out generation and transmission to keep pace. Over just the last decade, the pace has settled to about 2.4 percent a year. That's a meaningfully high starting rate for a state with plenty of sun, and it's the number that makes self-consumed solar power valuable even without a lucrative export credit.
The Arizona Sun, Month by Month
At 33.3°N latitude, Phoenix sits low enough that the sun stays high nearly all year, which is why Arizona's monthly production curve looks flatter than almost anywhere else in the US.
Arizona monthly solar production data
| Month | kWh per installed kW |
|---|---|
| Jan | 134 |
| Feb | 133 |
| Mar | 159 |
| Apr | 168 |
| May | 168 |
| Jun | 157 |
| Jul | 145 |
| Aug | 148 |
| Sep | 151 |
| Oct | 151 |
| Nov | 139 |
| Dec | 135 |
| Year | 1787 |
Source: NREL PVWatts typical-year estimate (Phoenix), per installed kW at latitude tilt.
May is the strongest month (about 168 kWh per installed kW), driven by long days and skies that are usually clear before the summer monsoon moves in. February is the slowest (about 133 kWh per kW) — still a very respectable number by national standards. Notice that June, July, and August don't spike the way the calendar-day sunshine count might suggest: monsoon humidity and afternoon storm clouds trim output right when air conditioning demand peaks, and extreme heat itself derates the panels (more on that below). The result is a curve that's unusually flat year-round rather than sharply peaked in summer, which makes Arizona production easier to predict across the seasons than in most states.
That heat derate is worth quantifying, because it cuts against the sunny-days marketing pitch. Silicon panels are rated at 25°C (77°F), and they lose about 0.4 percent of output for every degree Celsius above that. Phoenix roof surfaces routinely hit 149 to 167°F in July — tens of degrees hotter than the air temperature — which knocks real-world summer output down by roughly 10 to 25 percent on the hottest days, even as the panels are bathed in more raw sunlight than almost anywhere else in the country. Good roof ventilation and rack-mounted panels (standoff from the roof deck rather than flush-mounted) reduce the effect by letting air move underneath, so ask your installer about mounting method, not just panel brand.
What Solar Costs in Arizona in 2026
Arizona installs run about $2.11 to $2.29 per watt as of mid-2026 (EnergySage local market data), with some variation by city — Glendale trends a bit lower, Phoenix and the statewide average a bit higher. A typical whole-home system in Arizona is larger than in many states, often around 13.5 kW, reflecting both good sun and high AC loads; that size runs roughly $26,000 to $36,000 before any credits.
| System Size | Typical 2026 Cost | Roughly Offsets | Fits |
|---|---|---|---|
| 5 kW | $10,550 to $11,450 | ~8,900 kWh/yr (~$114/mo at 15.3¢) | Smaller home, lower usage |
| 8 kW | $16,900 to $18,300 | ~14,300 kWh/yr (~$182/mo) | Average Arizona home |
| 12 kW | $25,300 to $27,500 | ~21,400 kWh/yr (~$273/mo) | Large home, heavy AC use |
Those "offsets" figures assume you use the power as it's generated. If a meaningful share gets exported instead, remember it's credited at Arizona's much lower net billing rate (covered below), not the retail rate — so your real savings depend heavily on your usage pattern, not just system size. Always compare price-per-watt across at least three quotes, since installer overhead varies more than equipment cost.
Estimate Your Arizona Payback
The calculator below is set to Arizona's average electricity rate and typical Phoenix-area sun production. Enter your own monthly bill to see an estimated system size, payback period, and 25-year savings. Arizona rates have grown about 2.4 percent a year over the last decade — a reasonable starting point for the inflation field, though you can drag it up or down to see how sensitive your payback is to future rate growth.
Arizona Solar Incentives in 2026
Here's what changed and what survived.
- Gone — the 30 percent federal credit: The federal Residential Clean Energy Credit ended for installations completed after December 31, 2025, with no phase-out. If a quote still nets out 30 percent off the top, it's using outdated assumptions.
- Still here — the Arizona state tax credit: A 25 percent state income tax credit on the cost of a solar or wind energy device, capped at $1,000 total per residence no matter how many devices you install (ARS §43-1088). Unused credit carries forward up to 5 years. Claim it on Arizona Form 310.
- Still here — sales and property tax exemptions: Solar equipment is exempt from Arizona sales tax, and the value panels add to your home is assessed at zero for property tax purposes (ARS §42-11054/§42-11064). You do need to submit purchase and installation documentation to your county assessor at least 6 months before the notice of value in the first year — don't skip this step or you may miss the initial exemption window.
- Partially — leases and PPAs: Third-party-owned systems can still capture a separate federal business credit (48E) through 2027, but it belongs to the leasing company, not you. It may lower your monthly lease payment, or it may just pad their margin. Ask directly and compare against a cash or loan purchase before assuming a lease is the better deal.
There's no separate Arizona cash rebate program for panels; utility-level rebates from APS, SRP, and TEP were phased out years ago, though some utilities occasionally run battery-storage incentives worth asking about.
Net Billing in Arizona (Not Net Metering)
This is the part of the Arizona pitch that most needs updating. Traditional net metering — where exported power is credited at the full retail rate — ended statewide in 2017, when the Arizona Corporation Commission (Decision No. 75859) replaced it with "net billing."
For APS and UniSource customers, exports are credited through the Resource Comparison Proxy (RCP), a rate recalculated periodically from a 5-year average of avoided utility-scale solar costs, and it can step down by up to 10 percent a year under ACC rules. APS's current published RCP schedule runs roughly 6 to 9 cents per kWh depending on your interconnection year — whatever rate is in effect when you connect is locked in for 10 years. That's a meaningful detail: two neighbors with identical systems installed a few years apart can have different export rates for a decade.
SRP, a public power utility not regulated by the ACC, runs its own program. Its Time-of-Use Export Price Plan pays a flat 3.45 cents per kWh for exports in 2026 — roughly a third to half of what APS pays. All of these numbers sit well below Arizona's roughly 15.3 cent retail rate, which is why exporting surplus power in Arizona is a weak trade compared to using it yourself or storing it in a battery for evening use. Confirm your exact current-vintage rate on aps.com or srpnet.com before you sign a contract — these are utility tariffs and they do get revised.
SRP's Demand Charge: A Distinct Arizona Trap
If you're an SRP customer, there's a second wrinkle beyond the low export rate. SRP's Customer Generation and Average Demand plans add an on-peak demand charge — roughly $9.16 per kW — billed on your single highest on-peak usage interval each month. That charge applies regardless of your solar production, and it's layered on top of the already-low 3.45 cent export credit.
In practice, this means a single poorly timed high-draw event — an AC compressor kicking on, an EV charging, an oven and dryer running at once, all during SRP's on-peak window — can spike your bill even though solar is offsetting your total monthly kWh. This is unique to SRP's non-ACC-regulated tariff design; APS customers don't face the same demand-charge structure. If you're on SRP, ask your installer or SRP directly how to shift high-draw appliances outside the on-peak window, and size any battery with peak-shaving, not just backup power, in mind.
How to Go Solar in Arizona
Work through these steps in order before you commit.
- Pull your last 12 power bills and calculate your average monthly usage — Arizona's flat production curve means a single summer bill won't tell the whole story the way it might elsewhere.
- Find out which utility serves you. APS/UniSource RCP rates and SRP's flat export rate plus demand charge lead to very different solar economics, so this single fact changes your whole calculation.
- Confirm your roof has at least 10 to 15 years of life left before installing; if it's older, replace the roof first; see our roofing guide for what to check.
- Get at least three quotes and compare price per watt, equipment, and warranties — make sure every quote reflects 2026 reality, with no phantom federal credit baked in.
- Ask each installer to model your bill with realistic self-consumption versus export, not a best-case "sell everything at retail" scenario.
- File Arizona Form 310 for the state tax credit, and submit your property tax exemption paperwork to your county assessor within the required window.
- If you're on SRP, ask specifically about the on-peak demand charge and whether a battery makes sense to avoid it; if you're on APS, ask which RCP vintage rate you'll be locked into for the next 10 years.
For the fundamentals of how panels work, sizing, and buying versus leasing, read our main solar panels guide — it covers the technology in depth, while this page focuses on what's specific to Arizona. Wiring changes for a new system also touch your home's electrical panel and service capacity, so it's worth understanding that side too.
Sources
Figures on this page are 2026-current and drawn from primary sources. Federal credit repeal: IRS — Residential Clean Energy Credit and Congressional Research Service IN12611. State tax credit and exemptions: Arizona Governor's Office of Resiliency, DSIRE #118, DSIRE #119, DSIRE #4043, and Arizona Revised Statutes Title 42. Net billing: APS RCP Plan of Administration, APS Renewable Energy Riders, SRP Time-of-Use Export Plan, SRP Customer Generation, and UniSource RCP. Cost data: EnergySage Arizona and EnergySage Arizona Incentives. Sunny days: Current Results. Rate history: US EIA, Electric Sales, Revenue, and Average Price. Production estimates: NREL PVWatts. We review these figures every six months.