Solar in Arizona: Costs, Incentives, and How APS, SRP, and TEP Net Billing Works

Arizona has some of the best sun and the cheapest solar installs in the country, which is what keeps rooftop solar worthwhile here even though the state’s electricity is cheaper than the national average. The numbers that decide whether solar pays in Arizona are different from a high-rate state like California or Massachusetts: the win comes from producing a lot of power cheaply, claiming the state’s own incentives, and understanding that Arizona no longer has full-retail net metering. Instead, your utility, whether that is APS, SRP, or TEP, credits the power you export to the grid at its own below-retail rate, and those three utilities handle it very differently. This guide is the statewide overview: what solar costs in Arizona in 2026, the incentives that still apply, how net billing works at each major utility, and where your city fits, so you can check your address in about a minute.

Updated June 2026 with Arizona’s current state credit, the 2026 net-billing export rates at APS, SRP, and TEP, and the federal tax-credit change.

Why solar still pays in Arizona

The reason solar pays in Arizona is not a high power bill, it is cheap, abundant production. Arizona homes pay about 15.48 cents per kWh (EIA, as of April 2026), lower than the high-rate Northeast and below the national average, so the savings do not come from replacing expensive power the way they do in California. What tips the math in Arizona’s favor is the other side of the ledger. Roughly 6.5 peak sun hours a day means a kilowatt of panels produces about 1,755 kWh a year here, well above the national norm, and Arizona is one of the cheapest states in the country to install solar, averaging about $2.15 per watt (EnergySage Arizona, as of June 2026). High output plus low install cost is what keeps the payback reasonable even after the federal credit ended after December 31, 2025.

Your own production is what turns that into savings, so estimate your roof rather than a generic number. Output depends on your roof’s pitch, shading, and orientation, so run NREL’s free PVWatts calculator for your address, then weigh the long-run numbers with our guide on whether solar panels are worth it. Because Arizona credits exported power below retail, using more of your own solar on site, by running the air conditioner and pool pump in daylight or adding a battery, matters more here than in a full-retail net-metering state.

How much solar produces across Arizona’s metros

Production barely changes across the major metros, which is why Arizona is such a strong solar state. We ran NREL’s PVWatts model for a standard 6 kW system in each of the four largest metros this guide covers. The spread from top to bottom is tiny, because the whole state sits in the same high-sun band, so a well-placed roof produces roughly the same wherever you are.

Metro	Serving utility (electric)	Est. annual production, 6 kW	Peak sun hours
Phoenix	APS or SRP (by address)	~10,531 kWh	6.54
Tucson	TEP	~10,680 kWh	6.55
Mesa	SRP or APS (by address)	~10,472 kWh	6.50
Scottsdale	APS or SRP (by address)	~10,472 kWh	6.49

Source: NREL PVWatts v8, 6 kW system, as of June 2026. Your own output depends on roof pitch, shading, and orientation; run PVWatts for your address.

City-level guides are now live for Phoenix, Tucson, Mesa, and Scottsdale, each with its serving utility, local permitting, and net-billing details. The statewide rules on this page apply everywhere in Arizona; your city guide adds the local specifics, with the main variable being which utility serves your exact address. For how we run the production and rate numbers behind these guides, see our data and methodology.

The Arizona difference: APS, SRP, and TEP all credit exports differently

This is the single most important thing to understand about solar in Arizona: there is no statewide retail net metering, and your utility decides what your exported power is worth. Arizona’s regulator, the Arizona Corporation Commission (ACC), ended traditional full-retail net metering for the investor-owned utilities in its Value-of-Solar case, voted in December 2016 and issued as Decision No. 75859 in January 2017, replacing it with net billing, where the energy you use from your own panels in real time avoids the retail rate, but any surplus you export is credited at a lower, utility-set export rate called the Resource Comparison Proxy (RCP) (APS Rate Rider RCP tariff, A.C.C. No. 6241, as of June 2026). Homeowners who already had net metering were grandfathered onto the old terms; new systems go on net billing. See how Arizona net billing credits your exports at APS, SRP, and TEP for the utility-by-utility detail. For how the underlying mechanism works, see how net metering and net billing credit your solar exports.

The export rate is well below the retail rate, and it differs a lot by utility, which is why your address matters. The table compares the current residential export credit at the three major utilities against Arizona’s roughly 15.48 cent retail rate. Treat these as dated snapshots, because the rates are set by each utility on its own schedule.

Utility	Who it serves	Current export credit	Key terms
APS	Phoenix metro (by address) and much of Arizona	~6.17 cents per kWh (APS RCP tariff)	Locked 10 years from interconnection; rate cannot fall more than 10% a year; next reset September 1, 2026
TEP	Tucson and most of southern Arizona	~5.13 cents per kWh (TEP RCP)	Locked up to 10 years; cannot fall more than 10% a year; next reset October 1, 2026
SRP	Phoenix metro (by address)	Export Price Plan, about 3.45 cents per kWh fixed (SRP Customer Generation)	SRP is self-governed, not ACC-regulated; sets its own solar price plans; confirm your plan directly with SRP

Rates as of June 2026 from each utility’s own tariff or price-plan page. The APS and TEP rates step down on the ACC’s annual schedule (capped at 10% a year); SRP sets its own. Confirm the current figure with your utility before you sign.

Note: SRP is a public power district governed by its own elected board, not the Arizona Corporation Commission, so its solar price plans and export credit work differently from APS and TEP, and SRP did not follow the ACC’s net-billing case. Phoenix-metro addresses can be served by either APS or SRP, so confirm which utility, and which solar price plan, applies at your exact address before you budget.

Arizona’s solar incentives that still apply in 2026

Beyond the production and the low install price, Arizona homeowners stack a state tax credit and two tax exemptions. These go to the system owner, so on a lease or PPA the company that owns the panels keeps them. The table sorts what applies from what does not, so you can plan on facts, and the deep walkthrough of each lives on our Arizona solar incentives guide.

Program	Applies in Arizona?	What it does
Arizona Residential Solar Energy Credit	Yes	25% of system cost, capped at $1,000 per residence, nonrefundable with a 5-year carryforward, on Form 310 (ARS 43-1083; AZDOR)
Solar equipment sales-tax exemption	Yes	The sale of qualifying solar energy devices is deducted from Arizona’s transaction privilege (sales) tax base, with no cap (ARS 42-5061)
Energy-equipment property-tax exemption	Yes	An on-site solar system “add[s] no value” for property-tax assessment, so it does not raise your tax bill (ARS 42-11054)
Net billing / export credit	Yes (replaces net metering)	Credits the power you export, below retail and set by your utility (see the utility table above)
Statewide retail net metering	No, ended	Arizona replaced full-retail net metering with net billing for new systems; earlier solar customers were grandfathered (APS RCP tariff, citing ACC Decision 75859)
Federal residential credit (Section 25D)	No, it ended	The 30% homeowner credit ended for systems placed in service after Dec 31, 2025 (IRS)

The state credit is small but nearly automatic for a full system, and it is not the federal one. The Arizona Residential Solar Energy Credit equals 25% of your solar device cost, capped at $1,000 cumulative for the same residence, and because almost any full rooftop system runs well over $4,000, most installs hit the $1,000 maximum (ARS 43-1083; Arizona Department of Revenue, as of June 2026). It is nonrefundable, so it offsets Arizona income tax you owe rather than paying out as a refund, and any unused amount carries forward for up to five years. People most often confuse this with the expired federal credit, so to be clear: the two are different, the federal one ended after December 31, 2025, and Arizona’s state credit applies for the 2026 tax year. For the full incentive walkthrough, including the paperwork your installer handles, see our Arizona solar incentives guide and the broader solar incentives explainer.

What the end of the federal tax credit means in Arizona

The federal homeowner credit is gone, but Arizona’s programs are not. The 30% federal Residential Clean Energy Credit (Section 25D) ended for systems placed in service after December 31, 2025, under the One Big Beautiful Bill Act, so an Arizona homeowner who buys solar with cash or a loan in 2026 cannot claim it (IRS Residential Clean Energy Credit, as of January 2026). This matters in Arizona specifically, because several state incentive pages and installer sites still show a 30% federal credit running through 2032; for a homeowner buying in 2026, that figure is out of date. Arizona’s state credit, the sales- and property-tax exemptions, and your utility’s net billing were not affected. For the full national timeline, see what the federal solar tax credit change means in 2026.

One federal exception exists, and it is not the homeowner’s to claim. A separate commercial credit, Section 48E, is claimed by the business that owns a leased or PPA system, not by the resident (IRS Clean Electricity Investment Credit, as of 2026). So on a lease or PPA you do not file for a federal credit yourself; the system owner does. The 25D homeowner credit, by contrast, ended after December 31, 2025.

What an Arizona system actually saves: our estimate

Here is the original math for a Phoenix-area home, built from the rate, the production, and the APS export credit on this page. Because Arizona credits exported power below retail, the value of each kilowatt-hour depends on how much you use yourself versus export. The table assumes about 65% of production offsets your own usage at the 15.48 cent retail rate and 35% is exported at the APS net-billing rate of about 6.17 cents, which works out to a blended value near 12.2 cents per kWh. It uses the Arizona average install price of $2.15 per watt and subtracts the $1,000 state credit. These are estimates to show the shape of the numbers, not a quote for your roof.

System size	Est. annual production (Phoenix)	Installed cost at $2.15/W	After the $1,000 state credit	Est. annual savings	Simple payback
5 kW	~8,775 kWh	~$10,750	~$9,750	~$1,070	~9.1 years
6 kW	~10,531 kWh	~$12,900	~$11,900	~$1,285	~9.3 years
8 kW	~14,040 kWh	~$17,200	~$16,200	~$1,715	~9.4 years
10 kW	~17,550 kWh	~$21,500	~$20,500	~$2,140	~9.6 years

Two honest takeaways from those numbers. First, the way to shorten your own payback is to use more of your solar directly, by shifting big loads like the air conditioner and pool pump into daylight hours or adding a battery, so fewer kilowatt-hours are sold back at the low export rate. Second, the flat $1,000 state credit is a bigger share of a small system’s cost than a large one, so right-sizing your system to your actual usage, rather than overbuilding to export, is the move in a net-billing state. Production figures come from NREL’s PVWatts calculator, which you can run for your own address, and you can pressure-test the decision with our guide on whether solar is worth it in 2026.

Paying for solar in Arizona: cash, loan, lease, or PPA

How you pay decides who keeps the state credit and the tax exemptions. If you want the Arizona Residential Solar Energy Credit and the exemptions to be yours, you own the system through a cash purchase or a solar loan. A lease or PPA can mean no up-front cost for eligible homeowners, but it is a long-term agreement with monthly payments, not free solar, and the company that owns the panels keeps the tax benefits while you get a lower or more predictable power price.

Path	Up-front cost	Who keeps the state credit and exemptions	Best when
Cash purchase	Full system cost	You, the owner	You want the fastest payback and the most lifetime value
Solar loan	Little to none, financed	You, the owner	You want ownership without paying cash up front
Lease or PPA	$0-up-front where eligible	The third-party owner	You prefer no up-front cost and a simpler, fixed monthly bill

How to choose a solar installer in Arizona

Arizona has a deep, competitive installer market, which is good for you because it means real competition on price and service. Rather than chasing a “best installer” list, screen any company against objective criteria:

• A valid Arizona ROC contractor license (the Registrar of Contractors license) and proper electrical licensing.
• NABCEP certification, the industry’s professional standard for PV installers.
• A clear workmanship and equipment warranty in writing.
• Real experience with your specific utility’s net-billing enrollment and interconnection, since APS, SRP, and TEP each handle solar differently, plus the Form 310 state credit and the county property-tax exemption paperwork.
• A written production estimate and a transparent quote that does not count the federal credit that ended after December 31, 2025. For a checklist, see the right questions to ask a solar installer.

MySolarFY matches you with licensed installers that serve your area so you can compare real local quotes side by side, with no obligation. To see how we research and match, read how MySolarFY works.

Check which Arizona solar programs are available at your address →

Frequently asked questions

Is solar worth it in Arizona in 2026?

For most Arizona homes with decent sun, yes, though the case is built differently than in a high-rate state. Arizona power is cheaper than average at about 15.48 cents per kWh (EIA, as of April 2026), so the savings come from very high production, about 1,755 kWh per kW a year, and from some of the cheapest install prices in the country, near $2.15 per watt (EnergySage Arizona, as of June 2026). Because Arizona uses net billing rather than full-retail net metering, sizing your system to your own usage matters, and savings depend on your roof, your utility, and how you pay.

Does Arizona have net metering?

No, not the full-retail kind anymore. Arizona’s regulated utilities replaced retail net metering with net billing after the Arizona Corporation Commission’s Value-of-Solar case (voted December 2016, issued as Decision No. 75859 in January 2017), so the power you use from your panels avoids the retail rate but any surplus you export is credited at a lower, utility-set rate (APS RCP tariff, as of June 2026). Earlier solar customers were grandfathered onto the old terms; SRP, which is self-governed, sets its own solar price plans separately. The practical takeaway is to size your system close to your own usage so most of your power is used on site rather than exported at the low rate.

Does Arizona have its own solar tax credit?

Yes, and it is separate from the federal credit, which ended after December 31, 2025 (IRS, as of 2026). Arizona’s state incentive is the Arizona Residential Solar Energy Credit, claimed on Form 310, worth 25% of your system cost up to a cap of $1,000 per residence (ARS 43-1083; Arizona Department of Revenue, as of June 2026). Because the cap is low, most full rooftop systems hit the $1,000 maximum, so for the typical homeowner it is a flat $1,000 off Arizona income tax, with any unused portion carrying forward for up to five years.

What is my Arizona electric utility for solar, APS, SRP, or TEP?

It depends on your exact address. Tucson and most of southern Arizona are served by Tucson Electric Power (TEP). The Phoenix metro is split between Arizona Public Service (APS) and Salt River Project (SRP), and which one serves you is set by your address, not your city, so neighbors on different blocks can have different utilities. This matters for solar because each utility credits exported power at its own below-retail rate and runs its own interconnection and net-billing enrollment. Confirm your utility on your electric bill before you compare quotes, since it changes the export math.

Is the 30% solar tax credit going away in 2026?

It is already gone. The 30% federal Residential Clean Energy Credit (Section 25D) ended for systems placed in service after December 31, 2025, under the One Big Beautiful Bill Act, so a homeowner who goes solar in Arizona in 2026 cannot claim it (IRS, as of January 2026). Several Arizona pages still show the credit running through 2032; that is out of date. The credit was not reduced for 2026, it ended, so plan your Arizona project around the state’s own programs instead, which the change did not touch.

Can I get solar with no up-front cost in Arizona?

Some homeowners can, through a lease or power purchase agreement (PPA) where eligible, which can mean no out-of-pocket cost at installation in exchange for monthly payments. This is not free solar; it is a long-term agreement, typically 20 to 25 years, and total payments may exceed the cost of a cash purchase. On a lease or PPA the third-party owner, not you, collects the Arizona state credit and the tax exemptions, while your benefit is a lower or more predictable power price. If you want to own the system and capture those incentives yourself, a cash purchase or solar loan is the path that keeps them. Check what you qualify for before deciding.