Is Solar Worth It in Arizona?

7 factors to consider before going solar in Arizona

We’ve talked to hundreds of Arizonans who have already gone through the solar panel installation process. It’s generally worth it if you like the idea of lowering your monthly utility bills, helping the environment and gaining more energy independence. But it doesn’t work out for everyone. Here’s what to consider before making the switch.

1. Solar panel installation costs
2. Your energy consumption
3. Arizona solar incentives
4. Local net billing rates
5. How long you live in your house
6. The solar company you hire
7. How you pay

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

Average solar panel costs in Arizona are relatively low compared with other states. Before the federal solar investment tax credit (ITC), a typical residential system ranges from $10,686 to $21,372. That price drops to $7,253 to $14,506 after the full 30% tax credit.

On the higher end, Patrick in Tucson said his system cost $36,000, and Simin in Scottsdale paid over $40,000 for a large solar panel system

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 Arizona, the average cost per watt is only $2.14.

Average solar panel installation cost by system size in Arizona

2. Your energy consumption

A typical Arizona household needs a system with a capacity of 7 kW to offset its electricity needs with solar energy. You might need a larger or smaller system, depending on your current energy consumption.

This information can be found on your utility bill. It will tell you what size and capacity your solar system needs. Once you know this, you can calculate your potential savings and the time it should take for your solar installation to pay for itself. In Arizona, solar panels usually pay for themselves within 11.66 years.

Given rising energy costs in Arizona 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. Solar panels essentially generate free electricity once the initial installation costs are paid for.

3. Arizona solar incentives: tax credits and rebates

The federal solar investment tax credit (ITC) is a major incentive that reduces the upfront cost of going solar in Arizona. 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.

Don’t get confused: The ITC is not a rebate or a refund. It is a credit that goes toward what you owe on federal income taxes. It can only offset the taxes you owe. No one is going to automatically mail you a check for 30% of what your system costs immediately after you purchase it. There are a few additional solar incentives in Arizona, including:

• State income tax credit: Homeowners may claim 25% of the cost of solar devices on their personal state income taxes, up to $1,000.
• Sales tax exemption: Solar energy equipment is exempt from sales tax (up to $5,000 per device).
• Property tax exemption: For the purpose of property tax assessment, solar equipment adds no taxable value to homes in Arizona. In other words, your property taxes won’t go up just because you have solar panels.

Federal solar tax credit expires at the end of 2025

The ITC is now set to expire at the end of the year, much earlier than previously scheduled. The credit was expected to drop gradually, then fully expire in 2035 — but those future step-downs have been eliminated under the “One Big Beautiful Bill,” signed in July of 2025. This means you have until Dec. 31, 2025, to install and pay for a system to qualify for the 30% credit.

4. Local net metering (net billing) rates

Net metering is the process of sending excess energy your system produces back to the grid for compensation. Arizona technically uses a net billing system, but the two policies are very similar. However, the net billing rates are somewhat lower than net metering rates in other states.

The three largest utilities — Arizona Public Service (APS), Tucson Electric Power (TEP) and Salt River Project (SRP) — all have different net billing compensation rates approved by the Arizona Corporation Commission. For example, SRP solar price plans are different from Tucson Electric Power RCP export rates.

Solar panels last 25 to 30 years.

You can still get close to retail rates on grid exports — for now, anyway. In October 2023, the state’s utility regulator, the Arizona Corporation Commission, reconsidered compensation rules for how much residents can earn for the excess electricity their solar panels generate and feed into the grid. That’s despite the fact that citizens, local solar companies and two of the state’s biggest electric utilities supported keeping the existing rules in place.

5. How long you plan to stay in your house

Buying solar equipment is expensive, and it takes five to 10 years to recover the initial investment through savings on electric bills. If you sell your house and move before then, you might not fully realize the financial benefits of your solar panels.

In Arizona, solar panels typically pay for themselves within seven years.

One 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 the Zillow study. Over 25 years, Arizona homeowners with solar panels avoid an average of $42,844 in utility costs.

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

6. The solar company you hire

People have had mixed experiences with Arizona solar companies. In the best-case scenario, it’s easy to make the switch, and you’re happy with the system’s performance. In the worst-case scenario, you end up paying thousands for midtier solar equipment from a company with poor customer service and no follow-up or support.

For instance, Michael in Clarkdale thought going solar would save on electric bills, but it hasn’t so far. During the setup, a power surge caused by improperly installed wiring led to the system being blown, which further delayed the operation of the solar system. He was understandably disappointed by a salesperson’s unfulfilled promises.

“I haven't heard from them in two weeks and my system still isn't running. And it's pretty expensive,” Michael told us.

That’s why it’s so important to thoroughly research and verify claims made by sales teams before making a decision. Use NREL’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.

7. How you pay

If you can, it’s often financially strategic to pay for the whole thing upfront. You own the system from day one and receive the benefits of available tax credits; plus, you don’t have to pay interest on a loan.

Of course, paying cash is not always an option. That’s when loans, leases and other agreements come into play.

• Solar loan: Solar loans work like any other type of loan. They have relatively low interest rates. Once you pay yours off, you own your system outright.
• Solar lease: If you have limited savings, a solar lease is one way to get the benefits of installing panels without the high upfront cost. It works like a car lease — you get to use the panels but don’t own them. Agreements typically last 20 to 25 years.
• Power purchase agreement: Similar to leasing, a power purchase agreement (PPA) lets homeowners install solar panels without the upfront costs. You sign a long-term contract with a solar services provider to purchase the electricity generated by the panels at a predetermined rate. The provider owns and maintains the panels throughout the agreement, which usually lasts 10 to 25 years.
• Home equity loans or lines of credit (HELOC): These let eligible homeowners borrow against equity in their house to finance a solar panel system.

Monthly costs: Solar payments vs. savings

Think of going solar in terms of your monthly costs. For example, a solar customer in Prescott Valley told us they are saving $40 on their electricity bill, but considering their loan payment is about $120, their total monthly payments actually went up by about $80.

Is my home a good candidate for solar panels?

In Arizona and elsewhere, going solar ends up being worth it for many homeowners as long as their home is a good candidate to support a solar panel installation. Here’s what to think about before you commit:

• How old are your appliances? The first step is to ensure that your electrical loads are as small as possible. For instance, if you have an older refrigerator or air conditioning unit, it’s smart to upgrade those before investing in solar panels.
• How much sunlight do you get? Solar panels need regular exposure to sunlight to produce the most energy possible. Arizona gets a ton of peak sun hours, but lots of shading — like trees or tall buildings above your roof — could make your solar system less efficient.
• What is the size and angle of your roof? Arizona (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 your 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 Arizona

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

Benefits of solar panels in Arizona

Solar power is a renewable energy source that does not produce greenhouse gas emissions or other pollutants. Panels require little maintenance and can increase the property value of homes.

• 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.
• Cheaper energy bills: The average homeowner in Arizona uses a lot of power, which adds up to a lot of savings when you switch to solar. With electric rates throughout Arizona increasing, especially in the Phoenix-Mesa-Scottsdale areas, 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. “Originally our electric was the same as going with solar. Not anymore,” Leon in Sun City West told us. “Good decision on our part as we no longer will receive price increases which we know would happen with electric bill.”

Drawbacks of solar panels in Arizona

The main obstacle of going solar is the high upfront cost of purchasing and installing solar panels, inverters and other equipment. Then, since solar panels do not generate electricity at night, you need to enroll in net metering or get a storage battery to keep your lights on.

• 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 Arizona. That way, you can store energy at home instead of tapping into the local grid when you need to.
• Seasonal production variations: Arizona averages seven to eight peak sunlight hours each day, which maximizes the amount of power produced by solar panels. But you can expect some seasonal fluctuation in how much energy your panels produce. For example, Mark in Phoenix told us his system doesn’t put out as much power in the winter. “But my last bill was $48 which was like, only $7 was for the electricity and the other stuff was the [Arizona Public Service] fees,” he told us.
• Net billing compensation rules might change: Arizona residents get compensated for any electricity that their panels produce and send to the grid. The downside is that Arizona's net billing credits aren't for the full retail rate. In other words, the utility company pays you less for electricity than it charges when selling energy to customers. No one knows for sure how rates might change in the future.

Anecdotally, some APS customers who switched to solar have told us about high fees that add up quickly and connectivity delays. Unfortunately, depending on where you live, you might not have another option.

» MORE: Solar energy pros and cons

Compare solar companies in Arizona

Read our guide to the best solar companies in Arizona for more information on comparing all your options and getting the best deal.

Arizona solar FAQs

Bottom Line: Is going solar in Arizona worth it for you?

For a lot of homeowners, solar panels are worth it as long as their cost savings over time outweigh the initial investment. Others are happy to go solar for the environmental benefits alone. For many, like Maria in Surprise, it’s really both. “I decided to go solar not only to help the environment but also to stop (worrying) about how much electricity I am using, especially in the summer months,” she told us.

Depending on the size of your system and what financial incentives you qualify for, a typical residential solar panel installation costs $7,253 to $21,372 in Arizona. Over 25 years, Arizona homeowners with solar panels can save about $42,844 in total utility power costs.

If you can afford it, buying your solar energy system outright typically provides the highest return on investment. “I paid my solar system cash,” Mark in Phoenix told us, “which is the best way to go if you have the money so you can save the interest rate and still get the tax credit.”

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