Guide to solar panels in Phoenix, AZ (2021)
Updated August 18, 2020
Phoenix is a great place to go solar. Depending on where you live in Phoenix, you could either be using Salt River Project (SRP) or Arizona Public Service (APS) as your utility. Both utilities offers net billing to their customers, so they pay for any excess solar energy their solar customers send to the grid.
The most significant incentive to install solar panels in Phoenix is the 26% federal tax credit. However, the tax credit is set to step down to 22% at the end of 2020. So in order to get the most savings potential, the best time to go solar in Phoenix is now.
Another key incentive for going solar in Phoenix is the Arizona solar tax credit, which is equal to 25% of the costs of a solar system, up to $1,000. By entering your address into our solar panel calculator below, you can see what other local incentives are available in your area.
On this page:
Current cost of solar panels in Phoenix
Solar prices near you
Net profit (savings less system cost)
$25,814-$31,550
Payback period
7.1-8.7 years
Recommended size for the selected utility bill
5.8kW
Solar panel cost calculator
Phoenix solar panel cost & savings calculator
Current solar incentives and tax credits available in Phoenix, AZ
Net metering
Arizona does not offer full retail net metering. Instead, Arizona utilties are required to compensate their solar customers who export energy to the grid with an on-bill 'export credit'. This export credit is worth less than the full retail rate of electricity.
For instance, Phoenix resdients who use APS will recieve $0.1045 per kilowatt hour (kWh) of excess solar energy they send to the grid. This is slightly lower than APS's retail rate of electricity of around $0.12 per kWh.
Arizona solar energy tax credit
Not only do Arizona residents get to take advantage of the federal tax credit, but they can also receive the state’s solar energy credit. Arizona’s solar energy credit is equal to 25% of the costs of a solar system, up to $1,000. That is a significant amount of savings on your income taxes.
The 26% federal solar tax credit explained
The federal solar tax credit is equal to 26% of the total cost of installing solar panels on your home. The amount of the tax credit is then deducted from your federal taxes. You can claim the credit over several years if the amount you owe in taxes is less than the amount of your tax credit. You can only take advantage of the federal tax credit if you pay federal income taxes.
Keep in mind that the federal solar tax credit is set to step down at the end of 2022, falling from 26% of costs to just 22%. So, the best time to go solar is now, so you can maximize your solar savings.
How much will solar panels on my home save me?
The answer to this question depends on your electricity usage. Generally speaking, the higher your power usage, the greater your potential savings are from installing solar.
The average monthly electricity usage in Arizona is about 1,030 kWh per month. However, you are most likely using a lot more than this since this average includes small apartments and condos.
The Phoenix solar panel savings calculator uses our database of electric rates from local utilities to convert your monthly power bill into how much electricity your home uses. From there, the calculator can work out how many solar panels you need to offset your power usage, how much a solar system will cost based on prices of local solar companies, and the amount of money you will save on your electric bill.
Cost and savings for a 9.22 kW average-sized solar system in Phoenix
Cost per watt range
$2.06 - $2.52
Average payback
7.3 - 8.9 years
Annual power production
14,328 kWh
Levelized cost of solar energy
4¢ /kWh
If you don't get solar
18¢ /kWh
(forecast avg Arizona electric rates over the next 25 years)
Average solar savings on this system over the next 25 years
$44,521
(Savings shown after repayments of capital)
Related topics:
Are solar panels worth it in Phoenix
Solar panels have fallen in price by more than 80% in the last ten years. In 2021 they also remain subsidized by the 26% federal tax credit and the net metering law making them an excellent investment. They offer a return well above the long term average return from both the share market and also property investment.
Another way to look at this question is the levelized amount you will pay for each kWh of power you will use over the next 25 years with and without solar panels. As you can see below the savings are significant.
Going solar in AZ
Check out all of the ways energy providers of can help you be more energy efficient and save money.
Table 2: Available incentive programs
| Incentive name | Eligibility | Type |
|---|---|---|
| Residential Renewable Energy Tax Credit | Federal | Personal Tax Credit |
| Net BIlling | State | Net Metering |
| Solar and Wind Equipment Sales Tax Exemption | State | Sales Tax Incentive |
| Energy Equipment Property Tax Exemption | State | Property Tax Incentive |
| Residential Solar and Wind Energy Systems State Tax Credit | State | Personal Tax Credit |
| Salt River Project Battery Storage Incentive Program | Utility | Battery Rebate |
Table 2: Available incentive programs
|
Eligibility: Federal incentive
Type: Personal Tax Credit
|
|
Eligibility: State incentive
Type: Net Metering
|
Note: Please keep in mind that the best source of up-to-date information on incentives are the solar installers who specialize in your area.
Related solar news
Ben Zientara
January 26, 2021
The state of net metering in the United States in 2021
This annual report ranks the states for friendliness to home solar based on their net metering programs.
Catherine Lane
August 21, 2019
Is renting Tesla solar panels better than buying them?
Tesla’s rent solar program promises easy installation & minimal upfront costs. You’ll just have to forfeit your tax credits and rebates. We discuss whether or not it's worth it.
Zeeshan Hyder
April 2, 2019
Solar loans: Everything you need to know
Solar panels are a great way to cut down on your power bills but the initial cost can be off putting. Explore the pros and cons of financing your solar system.
Ben Zientara
January 21, 2019
What is a solar carve-out?
A solar-carve out sets a specific goal for electricity generation from solar panels in a state’s energy mix. It often includes incentives for installing solar.
Zeeshan Hyder
August 13, 2018
Residential solar panels cost and savings in Arizona in 2021
An accurate breakdown of solar panel savings in Phoenix, Tucson and Flagstaff based on APS electric rates and the cost of solar panels being charged by the best local solar companies in Arizona.