2026 · No Federal Tax Credit · NREL + EIA Data
Solar Panels in Arizona: Cost, Payback & ROI (2026)
Is solar still worth it in Arizona after the 30% federal tax credit expired? These pre-computed estimates use NREL PVWatts production data and current 13.5¢/kWh Arizona electricity rates for a typical home using 900 kWh/month.
Section 25D (30% federal solar tax credit) expired December 31, 2025
All numbers below reflect 2026 math with no federal residential credit. State incentives, where applicable, are noted in the section below.
Arizona Solar at a Glance
Based on a 900 kWh/month home ($122/mo electric bill at 13.5¢/kWh), 100% offset, no state rebate applied.
5.7 kW
For 900 kWh/month home
$16,768
At $2.95/W (LBNL 2024 avg)
10.5 years
Without state rebate
$1,458
Estimated annual savings
$46,626
Cumulative before rebate
$29,857
Savings minus system cost
13.5¢/kWh
near average vs. 16.0¢ U.S. avg · EIA 2025
1,900 kWh/kW/yr
excellent · 5.9 peak sun hrs/day · NREL PVWatts
Is Solar Worth It in Arizona in 2026?
Arizona's solar resource is among the best in the nation at 1,900 kWh/kW/year, essentially tied with Nevada and New Mexico. At 13.5¢/kWh, rates are moderate but system productivity is high enough to deliver strong lifetime savings. The key variable in Arizona is your utility: APS uses a residential demand-charge structure that can penalize solar without battery storage, while SRP uses a different pricing approach. Know your rate before sizing a system.
For a typical Arizona home consuming 900 kWh per month, our calculation shows a 5.7 kW system needed for 100% offset. At the current national average installed cost of $2.95/W (LBNL Tracking the Sun 2024), that's $16,768 gross before any state rebates. Year-one savings of $1,458 grow each year as electricity rates escalate — the model assumes 2.5%/year (EIA AEO 2024).
The 10.5 years payback period is moderate — within the national average range of 8–12 years. Over 25 years — the standard warranty period for most premium panels — a Arizona homeowner following this profile would save an estimated $46,626 total, for a net benefit of $29,857 after recovering the system cost.
Year-by-Year Savings Snapshot: First 10 Years
Based on 5.7 kW system, 0.5%/yr degradation, 2.5%/yr rate escalation, no state rebate.
| Year | Production (kWh) | Annual Savings | Cumulative |
|---|---|---|---|
| Year 1 | 10,800 | $1,458 | $1,458 |
| Year 2 | 10,746 | $1,487 | $2,945 |
| Year 3 | 10,692 | $1,517 | $4,462 |
| Year 4 | 10,639 | $1,547 | $6,008 |
| Year 5 | 10,586 | $1,577 | $7,586 |
| Year 6 | 10,533 | $1,609 | $9,194 |
| Year 7 | 10,480 | $1,641 | $10,835 |
| Year 8 | 10,428 | $1,673 | $12,508 |
| Year 9 | 10,375 | $1,707 | $14,215 |
| Year 10 | 10,324 | $1,741 | $15,956 |
System cost to recover: $16,768. Table shows savings without state rebate applied. Use the interactive calculator to enter your actual bill and any rebate.
Solar Incentives in Arizona (2026)
Arizona offers a 25% state income tax credit on solar costs (up to $1,000) and exempts solar from sales tax and property tax on added home value.
- Arizona state income tax credit (25%, up to $1,000)
- Sales tax exemption on solar
- Property tax exemption on added home value
- APS and SRP utility rebates (check current availability)
Incentive programs change frequently. Verify current offerings at dsireusa.org or directly with your utility before making any purchasing decision.
How We Calculate Arizona Solar ROI
These estimates use the same methodology as our interactive solar ROI calculator, applied to Arizona-specific data:
System cost
$2.95/W installed
LBNL Tracking the Sun 2024
Solar production
1,900 kWh/kW/yr
NREL PVWatts v8
Electricity rate
13.5¢/kWh
EIA Residential Rates 2025
Rate escalation
2.5%/year
EIA Annual Energy Outlook 2024
Panel degradation
0.5%/year
NREL (Jordan & Kurtz, median)
System lifetime
25 years
Standard warranty period
No Section 25D (federal residential solar credit) is included — it expired December 31, 2025. State incentives are not reflected in these pre-computed figures; use the interactive calculator to enter specific rebate amounts.
Calculate With Your Actual Numbers
The figures above use statewide averages. Enter your actual monthly bill, any Arizona rebate amounts, and your offset target in our interactive calculator for a personalized estimate.
Frequently Asked Questions — Solar in Arizona
Compare Other States
Estimates are based on NREL PVWatts v8 production data, EIA 2025 electricity rates, and LBNL 2024 installed cost benchmarks. Actual savings vary by roof pitch, shading, utility rate structure, and local permit costs. This is not financial advice. Consult a licensed solar installer before making any purchasing decision.