Phoenix, AZ Solar Panels
Solar Power in Phoenix
Phoenix is one of the sunniest cities in the country — and that makes it one of the best places to go solar. It is no surprise that Arizona ranks 3rd in the nation for residential solar installations.
Sunshine is just part of the story. Arizona electricity prices have risen 22% from 2020 to 2024, and many homeowners want to better understand and manage their energy costs. This guide covers what you need to know about solar panels for your home in Phoenix.
How Much Do Solar Panels Cost in Phoenix, AZ?
Using real installation data from Phoenix and surrounding areas — including Scottsdale, Mesa, Tempe, and Chandler — this calculator gives you an honest, localized estimate of what solar installation actually costs for your home.
System
- No upfront investment
- Palmetto handles all maintenance
- 90% Production Guarantee
- Comprehensive protection program included
Key Takeaways
- Phoenix gets 6.5 peak sun hours per day, making it one of the best cities in the country for solar — and Arizona ranks 3rd in the nation for residential solar installations.
- Phoenix homeowners can save an average of $65,000 over 25 years with solar, while Arizona’s state incentives — including a $1,000 tax credit and sales tax exemption — help lower your upfront costs.
- You don’t need to buy solar panels to benefit from them — Palmetto’s LightReach lease lets Phoenix homeowners go solar for as little as $109/month with no upfront investment.
Phoenix Electricity Prices
Electricity costs in Phoenix have been climbing steadily — and understanding that trend is key for homeowners exploring their energy options.
Arizona’s residential electricity rate rose from 12.5 cents per kWh in 2021 to 14.9 cents per kWh in 2024 — nearly a 20% increase in just three years. While still below the national average, the gap is narrowing.
Solar panel installation gives Phoenix homeowners a way to offset rising utility costs by generating their own electricity. Rather than absorbing each rate increase, homeowners with solar can rely more on energy they produce themselves.
Over time, that energy independence becomes increasingly valuable. As grid electricity rates continue to rise, a solar system installed today helps stabilize what a homeowner pays for power over the long term.
Price of Energy: Arizona vs National Average
Phoenix Area Utility Providers
Phoenix homeowners are primarily served by two utilities: APS and SRP. Based on 2023 data — the most recent available — APS charges 15.3¢/kWh and SRP charges 12.5¢/kWh, compared to the 2023 national average of 16.0¢/kWh.
SRP is a not-for-profit public power district, which helps keep its rates below Arizona’s 2023 state average of 14.0¢/kWh. APS, an investor-owned utility, carries a different cost structure, placing its rates closer to the national average.
With Phoenix electricity costs rising and the city averaging over 300 sunny days per year, solar panels can help homeowners better predict and stabilize their energy costs over the long term.
Phoenix Utilities Electricity Rates
Arizona Solar Incentives
Phoenix homeowners considering solar installation in Phoenix have access to several solar incentives in Arizona that can help reduce the upfront and ongoing costs of going solar.
Arizona offers a state income tax credit of up to $1,000, a sales tax exemption saving roughly 5.6% on equipment, a property tax exemption on added home value, a 30% federal battery storage tax credit, APS storage rewards, and net billing credits for excess energy exported to the grid.
Recent federal legislation eliminated the residential solar tax credit, but Arizona’s state and local incentives remain in place. Homeowners who lease solar through LightReach — Palmetto’s solar lease program — have a simpler experience, as Palmetto applies the commercial tax credit and passes savings through via lower monthly payments.
| Incentive | Type | Description | Source |
|---|---|---|---|
| Arizona Residential Solar Energy Tax Credit | Tax Credit | Arizona homeowners can claim a state income tax credit equal to 25% of the cost of a solar or wind energy device installed at their residence, up to a maximum of $1,000. | Learn More |
| Arizona Solar Equipment Sales Tax Exemption | Sales Tax Exemption | Arizona exempts qualifying solar energy equipment from state sales tax, saving homeowners approximately 5.6% on the purchase price of eligible solar components. | Learn More |
| Arizona Solar Energy Property Tax Exemption | Property Tax Exemption | Arizona law exempts the added home value attributable to a solar energy system from property tax assessments, so installing solar will not increase your annual property tax bill. | Learn More |
| Federal Battery Storage Investment Tax Credit (ITC) — 30% | Tax Credit | Homeowners who install a qualifying battery storage system with at least 3 kWh of capacity can claim a 30% federal tax credit on the total installed cost of the battery through 2032. | Learn More |
| APS Storage Rewards Pilot Program | Rebate | APS battery owners can earn approximately $110 per average kilowatt of battery output per season by enrolling in APS’s Storage Rewards Pilot, which pays homeowners for discharging stored energy during peak demand events. | Learn More |
| Arizona Net Billing (Excess Solar Export Credits) | Net Metering | Arizona’s major utilities compensate solar customers for excess electricity exported to the grid through net billing programs, crediting homeowners at a utility-specific rate that is lower than the retail electricity rate. | Learn More |
Arizona’s Residential Solar Energy Tax Credit allows homeowners to claim 25% of the total cost of a qualifying solar or wind energy device installed at their primary or secondary residence, up to a maximum credit of $1,000. Qualifying systems include photovoltaic (solar panel) systems, solar domestic water heating systems, solar pool and spa heating systems, passive solar building systems, solar daylighting systems, and wind turbines. This credit is applied directly against your Arizona state income tax liability.
If the credit exceeds your tax liability in the year it is claimed, the unused portion can be carried forward for up to five consecutive tax years — so you won’t lose the benefit if you don’t owe enough taxes in a single year. There is no expiration date on this program, and it is currently active for 2026 installations.
To claim the credit, complete Arizona Form 310 and attach it to your state income tax return for the year the system was installed. The official form and instructions are available through the Arizona Department of Revenue at azdor.gov. Note that the $1,000 cap applies regardless of how many solar devices are installed, so the maximum benefit per household is $1,000 total.
Arizona provides a full sales tax exemption on the purchase of qualifying solar energy devices and equipment, including solar panels, inverters, mounting hardware, and installation labor. This exemption is applied automatically at the point of sale by the seller — homeowners in Phoenix do not need to file any paperwork to receive this benefit. The state sales tax rate is approximately 5.6%, though local jurisdictions may add additional taxes, so actual savings will vary by location.
Eligible equipment includes photovoltaic systems, solar water heating systems, solar space heating systems, solar thermal electric systems, passive solar systems, wind energy devices, solar pool heating systems, and daylighting systems. The exemption applies to both residential and commercial installations with no maximum dollar cap, making it a valuable savings tool for larger systems.
It is important to note that the sales tax exemption does not automatically extend to standalone battery storage systems, controls, or accessories that are not considered an integral part of the solar energy system. If you are pairing a battery with a new solar installation, confirm with your installer which components qualify. This exemption is authorized under Arizona Revised Statutes and has been in effect since 1997.
Under Arizona Revised Statutes §42-11054, the increase in a residential property’s assessed value resulting from the installation of a solar energy system is fully excluded from property tax calculations. This means that even though solar panels can significantly increase your home’s market value, your annual property tax bill will not go up as a result of the installation. This exemption is permanent and applies statewide to residential, commercial, and industrial properties.
For most Phoenix-area (Maricopa County) homeowners, this translates to an estimated savings of $100–$300 per year in property taxes, depending on the size of the system and the local tax rate (millage rate). In counties with higher millage rates, the annual savings can be even greater. Over the life of a solar system (25+ years), this exemption can represent thousands of dollars in cumulative tax savings.
The exemption is generally applied automatically, but homeowners may be required to submit documentation of system costs and equipment to their county assessor. It is recommended to contact your local county assessor’s office to confirm the process in your jurisdiction and ensure the exemption is properly recorded. No annual renewal is required once the exemption is in place.
The federal Battery Storage Investment Tax Credit allows homeowners to claim 30% of the total installed cost of a qualifying battery storage system directly against their federal income tax liability. To qualify, the battery must have a minimum capacity of 3 kWh. Critically, the battery does not need to be paired with solar panels — standalone battery installations also qualify for the full 30% credit. The credit covers the cost of the battery unit, inverter, installation labor, and any necessary electrical panel upgrades.
As a practical example, a Tesla Powerwall 3 with a fully installed cost of approximately $16,000 would generate a federal tax credit of $4,800. For a typical home battery system costing between $12,000 and $16,000, homeowners can expect a credit of $3,600 to $4,800. This credit is currently set at 30% through 2032, making 2026 an excellent time to take advantage of it. If the credit exceeds your tax liability in the year of installation, the unused portion can be carried forward to future tax years.
To claim the credit, file IRS Form 5695 (Residential Energy Credits) with your federal tax return for the year the battery system is placed in service. Note that this credit applies to the battery storage component specifically — the federal residential solar panel tax credit (Section 25D) has expired as of December 31, 2025, and is no longer available for new solar panel installations. Always consult a qualified tax professional to confirm your eligibility and maximize your benefit.
Arizona Public Service (APS) offers the Storage Rewards Pilot program, which pays residential battery storage owners for contributing stored energy back to the grid during high-demand periods. Enrolled homeowners earn approximately $110 per average kilowatt of battery output released during the event season, which runs from May 1 through October 31. APS may call up to 60 discharge events per season, each lasting one to four hours. A typical 13.5 kWh battery with 6 kW of output capacity can earn approximately $660 per season.
This program replaces the original APS Residential Battery Pilot, which offered an upfront rebate of up to $3,750 and is now closed to new applicants. The Storage Rewards Pilot is an ongoing, performance-based program open for enrollment. The pilot is designed to run for five years with up to 5,000 participants, so enrollment capacity may be limited. Participants must have a qualifying battery storage system installed at their APS-served home.
To enroll, contact APS directly through their website or customer service line. This program is separate from the APS Cool Rewards smart thermostat program and is specifically designed for battery storage owners. Because APS operates under a net billing structure (not net metering), pairing a battery with solar and enrolling in Storage Rewards is one of the most effective ways to maximize the financial return on a solar-plus-storage investment in the APS service territory.
Arizona has transitioned from traditional net metering to net billing across its major utilities. Under net billing, when your solar panels produce more electricity than your home uses, the excess is exported to the grid and you receive a bill credit — but at a rate below the retail electricity rate. The specific export rate varies by utility: APS credits approximately $0.0617/kWh (locked in for 10 years at the time of interconnection); SRP credits approximately $0.028/kWh on time-of-use net billing plans (all legacy net metering plans were retired in November 2025).
A key benefit for APS customers in Phoenix is the 10-year rate lock: the export rate in effect when your system interconnects is guaranteed for 10 years, even if rates decrease for future customers. The Arizona Corporation Commission has established a schedule where export rates may decrease by up to 10% each year for new customers, meaning the sooner you go solar, the higher your locked-in export rate will be. APS also charges a Grid Access Fee of approximately $0.93 per kW of solar array capacity per month.
Because net billing export rates are significantly below retail electricity rates, the financial strategy for Phoenix solar owners has shifted toward self-consumption — using as much of your solar production directly in your home as possible — and pairing solar with battery storage to store excess energy for use during evening peak hours rather than exporting it at low rates. Always verify the current export rate with your specific utility before making installation decisions, as rates are updated periodically.
Ready to start saving with solar?
Speak with a Palmetto solar expert to find out exactly how much you can save with Arizona incentives.
Get a Free QuotePhoenix Solar Irradiance
Solar panel production varies throughout the year based on daylight hours, weather patterns, and sun intensity. Understanding how seasons affect your solar system helps set realistic expectations for your investment.
Phoenix’s 300+ sunny days and intense desert sun make it one of the top solar cities in the U.S. High heat can slightly reduce panel efficiency, but overall production remains exceptionally strong year-round.
Solar Production in Phoenix by Month
What Can Your Solar System Power?
Summer Production (July)
In July, your 10 kW system could power:
- 3.6 average homes (15 kWh/day per home)
- or Run central AC for 18 hours AND power all other appliances
- or Fully charge 5.4 Tesla Model 3 electric vehicles
Winter Production (December)
In December, your 10 kW system could power:
- 2 average homes (15 kWh/day per home)
- or Keep your home heating system running for 15 hours
- or Fully charge 3 Tesla Model 3 electric vehicles
Annual Production
Over a year, your 10 kW system could:
- Offset 10 tons of carbon dioxide emissions
- or Equal the environmental benefit of planting 175 trees
- or Save approximately $4,234 in electricity costs
Want to know exactly how much solar can power your home?
Get a personalized solar analysis based on your actual home, energy usage, and roof characteristics.
Get My Custom EstimateSolar Panel Systems in Phoenix
We’ve mapped thousands of solar installations across Phoenix so you can see just how many of your neighbors have already made the switch. Explore the map below to discover which communities and neighborhoods are leading the way in clean energy adoption across the Valley.
Leasing Solar Panels
Not everyone wants to pay tens of thousands of dollars upfront for a solar system. That’s why Palmetto offers a solar lease through LightReach — and the good news is that a lease is available to Phoenix homeowners across all major Arizona utilities, including APS and SRP.
With a solar lease, you pay a fixed monthly amount — for example, $109/month for a medium-sized home — and Palmetto owns and maintains the system. That means no repair bills, no performance worries, and no large upfront investment. Compare that to a cash purchase, where you’re responsible for maintenance, and you need years to recoup your costs before savings fully kick in.
Not sure whether leasing or buying is right for you? The answer depends on your financial goals and how long you plan to stay in your home. Learn more about the differences between buying and leasing solar to find the option that makes the most sense for your situation.
Go solar without the investment
With LightReach, there are no investment costs to recoup, loan payments to manage, or maintenance needs to take on. As soon as your panels are active, your solar savings are too!
Explore LightReach LeasingFrequently Asked Questions
Yes, solar makes strong sense in Phoenix. With 6.5 peak sun hours per day and over 300 sunny days annually, Phoenix homeowners can save an average of $65,000 over 25 years. Arizona also offers a $1,000 state tax credit, a sales tax exemption, and a property tax exemption on added home value.
Upfront cost is no longer a barrier. Palmetto’s LightReach solar lease lets Phoenix homeowners go solar with no money down, starting at $109/month — with savings from day one and no maintenance responsibilities.
Phoenix does not have traditional net metering. The two main utilities serving Phoenix — APS and SRP — both use a net billing program instead. When your solar panels produce more electricity than your home uses, the excess is exported to the grid and credited to your bill, but at a rate below the retail electricity rate.
For APS customers, excess solar is credited at approximately $0.0686/kWh, and that rate is locked in for 10 years from the date your system connects to the grid. SRP customers receive credits between $0.02–$0.06/kWh depending on the season and rate plan chosen. Because export rates are lower than retail rates, Phoenix solar owners benefit most by using their solar energy directly at home.
Yes, solar panels can increase your home value in Phoenix. According to a Zillow study, homes with solar panels sell for approximately 4.1% more than comparable homes without them. For the median Phoenix home, that can translate to a meaningful increase in resale value.
Arizona also helps protect that added value — the state’s Solar Energy Property Tax Exemption means the increased home value from solar is excluded from your property tax assessment, so your annual tax bill won’t go up as a result of the installation.
The most affordable way to go solar in Phoenix is through Palmetto’s LightReach lease — starting at $109/month for a medium-sized home with no upfront cost. Palmetto owns and maintains the system, so there are no surprise repair bills.
If you prefer to own your system outright, a cash purchase for a typical Phoenix home runs $23,000–$30,000 after Arizona’s $1,000 state tax credit. Note that the federal 30% residential solar tax credit is no longer available following the Big Beautiful Bill. Use the calculator above for a personalized estimate.
For Phoenix homeowners, solar can be worth it financially from day one — especially with a lease. With Palmetto’s LightReach, your monthly payment is typically less than your current electricity bill, so you start saving immediately with no upfront investment.
For those who purchase, Phoenix homeowners save an average of $65,000 over 25 years, with a payback period of roughly 11 years. With Arizona electricity rates rising nearly 20% since 2021, locking in a predictable energy cost makes strong financial sense.
We believe Palmetto Solar is the best choice for Phoenix homeowners. As a national company with a strong local presence, we’ve completed 4,982 installs in Arizona since 2020. Our trusted install network ensures quality workmanship across the Valley.
We offer some of the most flexible financing options available, including our LightReach lease — starting at just $109/month with no upfront cost. Whether you lease or purchase, Palmetto makes going solar in Phoenix straightforward and affordable.
With Palmetto’s LightReach solar lease, there is no upfront cost. One simple monthly payment covers the system, installation, monitoring, maintenance, and a 90% Production Guarantee. For a typical 8.50 kW system in Phoenix, the estimated lease payment is approximately $109/month — often less than your current electricity bill, so savings start on day one.
Because Palmetto owns the system, it claims the commercial Investment Tax Credit (ITC) and passes those savings to you through lower monthly payments — an advantage that cash purchases no longer offer following recent federal legislation.