Nathan Healy
Certified by Nathan Healy
Updated: July 2025
Quality Solar Solutions Since 2011
Palmetto has served 20,000+ customers across 31 states with an approval rating over 85%.
01

Solar in Tempe

Tempe residents are embracing solar energy as Arizona ranks 3rd for residential solar installations nationwide. With electricity prices rising 22% from 2020 to 2024, many homeowners are turning to solar for long-term savings.

Understanding solar panels for your home is your first step toward energy independence. This guide covers everything about solar installation in Tempe.

ARIZONA by the Numbers

6th Most residential solar in the United States
159k Households have installed solar panels
~$8k Arizona average solar rebate savings
~$65k Tempe average savings over 25 years
02

Key Takeaways

  • Tempe receives excellent solar irradiance year-round with 300+ sunny days annually, making it ideal for solar energy production.
  • Arizona offers generous solar incentives including 30% federal tax credit plus state rebates averaging $8,252 in total savings.
  • Solar systems in Tempe typically pay for themselves in 8 years while providing 25-year savings of $65,000.
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Palmetto Reviews

04

Solar Cost Calculator

Our solar cost calculator uses real installation data from Tempe neighborhoods like Ahwatukee, Kyrene, and South Tempe. Get accurate pricing estimates based on actual local projects, not generic industry averages.

Small Home Up to 2,000 sq ft
Medium Home 2,000-3,000 sq ft
Large Home Over 3,000 sq ft
System Size
This system size is designed to offset approximately 100% of the average electricity usage for a home of this size in Arizona.
Recommended
System
8.50 kW
Cost Breakdown
Your estimated investment
System Cost
$24173
Federal Tax Credit (30%)
$-7252
State Incentives
$-1000
Final
Cost
$15921
Savings
Your total financial benefit
Monthly Savings
Average utility bill reduction
$148
Payback Period
Break-even point
8.0 years
25-Year
Savings
$64692
05

Tempe Electricity Prices

Understanding electricity costs in Tempe, AZ helps homeowners make informed energy decisions for their families and budgets.

Arizona electricity rates have steadily increased from 12.5 cents per kWh in 2021 to 14.9 cents per kWh in 2024.

Solar panels allow Tempe homeowners to generate their own electricity, reducing dependence on utility companies and rising energy costs.

Over 25 years, solar systems can provide predictable energy costs while traditional electricity rates continue their upward trend.

Price of Energy: Arizona vs National Average

10¢
20¢
30¢
13.7¢
12.5¢
15.0¢
13.0¢
16.0¢
14.0¢
16.5¢
14.9¢
2021
2022
2023
2024
US Average
Arizona

Tempe Area Utility Providers

Tempe residents receive electricity from two main utilities: Arizona Public Service (APS) and Salt River Project (SRP). Based on 2023 data, their rates vary significantly.

APS charges 15.3¢ per kWh while SRP offers lower rates at 12.5¢ per kWh. Both fall within Arizona’s 14.0¢ state average and below the 16.0¢ national average.

These competitive rates reflect Arizona’s energy infrastructure, though rising costs make solar increasingly attractive. Solar panels can provide predictable energy costs regardless of utility rate changes.

Tempe Utilities Electricity Rates

APS
15.30¢
-4%
SRP
12.50¢
-22%
AZ Average
14.00¢
-12%
US Average
16.0¢
06

Arizona Solar Incentives

Tempe solar installation costs are reduced through federal and state solar incentives in Arizona designed to make clean energy affordable.

Arizona offers multiple incentive types including tax credits, property tax exemptions, and sales tax savings that significantly lower your upfront solar investment costs.

These programs help Tempe homeowners offset installation expenses while supporting Arizona’s clean energy goals and reducing long-term electricity costs.

$8,252

Average savings in Arizona solar rebates

Incentive Type Description Source
Residential Clean Energy Credit Federal tax credit A federal tax credit worth 30% the cost of a solar panel system in the year it’s installed Learn More
Credit for Solar Energy Devices State tax credit Arizona Homeowners receive the lesser of $1,000 or 25% off their solar panel installation. Learn More
Property Tax Exemption State tax exemption No property tax increase from added solar value. Prevents higher assessment on solar equipment. Learn More
Sales Tax Exemption State tax exemption No state or local sales tax on solar equipment and installation. Reduces upfront cost immediately. Learn More

The Residential Clean Energy Credit lets people claim a tax credit worth 30% the cost of a solar panel system in the year it’s installed. The credit can only be used against taxes you owe or have already paid that year, but any excess credit can be rolled over to future years.

The credit is broadly available, though there are a few restrictions — you must own the panels and they must be on a house you live in — so be sure to consult a tax professional about your situation.

Arizona’s Credit for Solar Energy Devices is a state tax credit that helps homeowners save money when they install solar panels on their Arizona residence. This nonrefundable tax credit reduces the amount of state income tax you owe, dollar-for-dollar, making solar energy more affordable for Arizona families.

To qualify for this credit, you must be an individual taxpayer who installs a solar energy device at your primary or secondary residence located in Arizona. The credit is nonrefundable, which means it can reduce your state tax liability to zero, but any unused credit amount cannot be refunded to you as cash. You’ll need to file Form 310 with your Arizona state tax return to claim this benefit.

While the official source doesn’t specify the exact credit amount or percentage, this incentive has been available for many years and continues to be offered for recent tax years through 2024. The credit applies to solar energy devices installed at your Arizona home, helping offset the upfront costs of going solar while supporting the state’s clean energy goals.

Arizona’s Property Tax Exemption for renewable energy equipment allows homeowners to exclude the added value of their solar panel system from their property tax assessment. This means that while your solar installation may increase your home’s overall value, you won’t pay additional property taxes on that increased value. The exemption applies to the full value of qualifying renewable energy equipment, including solar panels, inverters, and related components.

To qualify for this exemption, homeowners must file the appropriate property tax form (Form 82054REE) with the Arizona Department of Revenue. The exemption is available for various types of renewable energy systems installed on residential properties. Property owners need to provide detailed information about their renewable energy equipment to help assessors determine the proper valuation. This ongoing exemption continues as long as the renewable energy equipment remains installed and operational, making solar installations more affordable by eliminating the property tax burden on the system’s added value.

Arizona’s Solar and Wind Sales Tax Exemption removes state sales tax from the purchase and installation of solar and wind energy systems for your home. This means you won’t pay the standard Arizona sales tax (which varies by location but is typically around 5-10%) on your solar panels, inverters, batteries, and other system components, as well as the contractor’s installation services.

This exemption applies automatically at the point of sale when you purchase qualifying solar or wind equipment and installation services from contractors in Arizona. There are no income limits, application deadlines, or special forms to fill out – the tax exemption is built into Arizona state law and applies to all residential solar and wind installations. The savings can add up to hundreds or even thousands of dollars depending on your system size and local tax rates, making this a valuable benefit that works alongside other solar incentives to reduce your overall investment costs.

Net Billing in Arizona is a compensation system where solar homeowners receive credits for excess electricity their panels send to the grid. Unlike traditional net metering where you get full retail credit, net billing pays you a lower wholesale rate for your excess solar energy. Each major utility company in Arizona has its own net billing program with different credit rates and rules.

The financial benefits vary significantly by utility company. Arizona Public Service (APS) pays $0.06857 per kWh for exports, Tucson Electric Power (TEP) pays $0.0633 per kWh, and UNS Electric pays $0.0755 per kWh – all with 10-year rate locks. Salt River Project offers seasonal rates between $0.02-$0.06 per kWh, while cooperatives like Mohave Electric pay $0.0353 per kWh and Trico Electric pays $0.0368 per kWh. Most utilities require solar customers to switch to time-of-use rate plans, and some charge additional monthly fees ranging from $2.23 to $6.45.

Important considerations include annual credit true-ups where excess credits above certain thresholds ($10-$25 depending on utility) are either paid out or reset to zero. APS also charges a Grid Access fee of $0.242 per kW of solar capacity monthly. The export credit rates for new customers can change annually with most utilities, though many offer 10-year rate protection once you interconnect. Solar customers should carefully compare utility territories and rate structures, as the financial benefits can vary substantially across Arizona’s different service areas.

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 Quote
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Tempe 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.

Tempe’s abundant sunshine and clear skies create excellent solar conditions year-round. Even with seasonal variations, proper system design maximizes energy production in Arizona’s desert climate.

Solar Production in Tempe by Month

Daylight Hours
Energy Production (kWh/day)

What Can Your Solar System Power?

Summer Production (July)

[SummerProduction] kWh/day

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)

[WinterProduction] kWh/day

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

[AnnualProduction] kWh/year

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 Estimate
08

Solar Installations in Tempe

We’ve mapped every solar installation across America to show you something exciting: your Tempe neighbors are embracing clean energy! Click any hexagon to discover how many homes in that area have made the switch to solar.

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Leasing Solar Panels

For Tempe homeowners, Palmetto offers solar leasing options that make clean energy accessible without large upfront costs. Based on your utility provider, leasing is available throughout the Tempe area, including customers served by Arizona Public Service (APS) and Salt River Project (SRP).

With a solar lease, you pay a fixed monthly amount while we handle all maintenance, monitoring, and repairs. This predictable payment structure helps you budget for energy costs while reducing your carbon footprint. Unlike purchasing a system outright, leasing eliminates concerns about equipment maintenance or performance issues.

Solar leasing provides immediate savings on your electricity bills without the responsibility of system ownership. Learn more about leasing versus buying or explore our LightReach program for flexible solar solutions in Tempe.

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!

Learn More
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Frequently Asked Questions

Yes, solar makes excellent sense in Tempe due to Arizona’s abundant sunshine, generous incentives, and rising electricity costs. Tempe receives over 300 sunny days annually, creating ideal conditions for solar energy production.

With federal tax credits, state incentives, and average 25-year savings of $65,000, solar systems typically pay for themselves in 8 years. Arizona’s competitive electricity rates and net billing programs make solar a smart financial investment for Tempe homeowners.

No, Tempe does not have traditional net metering. Instead, Tempe residents served by Arizona Public Service (APS) and Salt River Project (SRP) participate in net billing programs that credit excess solar energy at wholesale rates rather than full retail rates.

APS pays $0.06857 per kWh for solar exports with a 10-year rate lock, while SRP offers seasonal rates between $0.02-$0.06 per kWh. Both utilities require solar customers to switch to time-of-use rate plans, and credits can roll over monthly with annual true-ups.

Yes, solar panels increase home value in Tempe, AZ. Research shows solar installations can boost property values, with Zillow’s study indicating solar panels increase home value by 4.1% on average nationwide.

In Tempe’s competitive real estate market, solar panels offer additional benefits beyond increased value. They provide predictable energy costs, reduce monthly utility bills, and appeal to environmentally conscious buyers who value energy-efficient homes with lower operating costs.

Solar costs in Tempe range from $12,121 to $20,759 after federal tax credits and state incentives, depending on your home size and energy needs. A typical medium-sized home requires an 8.5 kW system costing $15,921 after all incentives.

The 30% federal tax credit plus Arizona’s $1,000 state credit reduce upfront costs significantly. With average monthly savings of $148 and an 8-year payback period, most Tempe homeowners see positive returns quickly while enjoying 25-year savings of approximately $65,000.

Yes, solar is financially worth it in Tempe. With Arizona’s abundant sunshine and generous incentives, solar systems typically pay for themselves in 8 years while providing 25-year savings averaging $65,000.

The 30% federal tax credit plus Arizona’s $1,000 state incentive significantly reduce upfront costs. Rising electricity rates make solar’s predictable energy costs increasingly valuable for Tempe homeowners’ long-term financial planning.

We believe Palmetto Solar is the best choice for Tempe residents. Since 2020, we’ve completed 4,982 installations across Arizona, giving us deep local expertise in desert climate conditions and utility requirements.

We offer some of the industry’s best financing options and work with a proven installation network. Our national reach combined with local focus ensures Tempe homeowners receive quality solar solutions backed by comprehensive support and competitive pricing.