Tempe, AZ Solar Panels
In This Guide
Solar Power in Tempe
With Arizona electricity prices up 22% since 2020, more Tempe homeowners are turning to solar panel installation as a smart, long-term solution — and it’s no surprise that Arizona ranks 3rd in the nation for residential solar installations. If you’re researching solar panels for your home in Tempe, AZ, you’re in the right place.
In this guide, we’ll walk you through everything you need to know about solar installation in Tempe — from how the process works to what you can realistically expect to save on your energy bills.
How Much Do Solar Panels Cost in Tempe, AZ?
See what Tempe homeowners are actually paying for solar. Our calculator uses real installation data from Tempe and nearby areas like Chandler, Mesa, and Scottsdale to give you a local, accurate estimate for your home.
System
- No upfront investment
- Palmetto handles all maintenance
- 90% Production Guarantee
- Comprehensive protection program included
Key Takeaways
- Tempe gets 6.4 peak sun hours daily and over 300 sunny days a year, making it one of the best cities in the U.S. for solar energy production.
- Arizona homeowners can save an average of ~$65,000 over 25 years with solar, while state incentives help reduce the upfront cost of installation.
- Leasing solar starts at just $109/month with no upfront cost — Palmetto owns and maintains the system, so you can start saving right away.
Tempe Electricity Prices
Electricity costs in Tempe have been climbing. Here’s what the data shows — and why many homeowners are paying closer attention.
Arizona electricity rates rose from 12.5 cents per kWh in 2021 to 14.9 cents per kWh in 2024 — a nearly 20% increase. Tempe residents served by APS or SRP have felt this steady climb in their monthly bills.
Solar panel installation gives homeowners a way to generate their own electricity, reducing how much they rely on the grid. As utility rates rise, producing your own power becomes an increasingly practical option for managing energy costs.
A home solar system typically operates for 25 years or more. Over that time, locking in a more predictable energy cost — rather than absorbing ongoing utility rate increases — can represent meaningful long-term savings for Tempe homeowners.
Price of Energy: Arizona vs National Average
Tempe Area Utility Providers
Salt River Project (SRP) is the primary utility serving Tempe, AZ. Based on 2023 data — the most recent available — SRP’s residential electricity rate averaged 12.5¢ per kWh.
SRP’s 2023 rate sits below both the 2023 Arizona state average of 14.0¢/kWh and the 2023 national average of 16.0¢/kWh, largely due to SRP’s diversified energy mix and regional infrastructure advantages.
Even at lower-than-average rates, electricity costs add up over time. For Tempe homeowners, solar installation can be a practical way to reduce dependence on utility pricing and better manage long-term energy expenses.
Tempe Utilities Electricity Rates
Arizona Solar Incentives
Tempe homeowners have access to several solar incentives in Arizona that can meaningfully reduce the upfront and long-term cost of going solar.
Arizona offers a state income tax credit, a sales tax exemption on solar equipment, and a property tax exemption — so your home’s value can increase without raising your tax bill. Battery storage and net billing credits add further savings.
Homeowners who lease solar through Palmetto’s LightReach program have a simpler experience — Palmetto claims the commercial tax credit directly and passes those savings through as lower monthly lease 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 Tempe 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 Tempe (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 in Tempe 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. For Tempe residents served by APS, the export rate is approximately $0.0617/kWh (locked in for 10 years at the time of interconnection).
A key benefit for APS customers 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 Tempe 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 QuoteTempe 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 enjoys over 300 sunny days annually, with intense summer heat and mild winters creating strong year-round solar potential — making it one of the most naturally productive cities for solar energy.
Solar Production in Tempe 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 Tempe
We’ve mapped solar installations across Tempe so you can see just how many of your neighbors have already made the switch. Explore the heatmap below to discover which neighborhoods and communities are leading the way in clean energy adoption right here in Tempe, AZ.
Leasing Solar Panels
If you’re not ready to pay for solar upfront, Palmetto offers a solar lease through its LightReach program — available to Tempe homeowners served by APS, SRP, and other Arizona utilities. With a lease, you pay a fixed monthly amount (for example, $109/month for a medium-sized home) based on your system’s estimated production. Palmetto owns the system, handles all maintenance, and backs it with a 90% production guarantee.
Leasing is a straightforward alternative to a cash purchase. When you buy outright, you’re responsible for the full upfront cost — typically $23,000 or more — plus any future maintenance or repairs. With a lease, there’s no large investment to recoup, no loan to manage, and no maintenance to worry about. You simply pay a predictable monthly amount and let your panels do the work. To understand the full tradeoffs, this guide on buying vs. leasing solar is a helpful resource.
In Arizona, only a lease (not a PPA) is currently available through Palmetto. That means your monthly payment stays fixed year-round — unlike a PPA, where payments fluctuate with seasonal production. For Tempe homeowners who want a simple, low-risk way to start saving on electricity, a solar lease is worth considering.
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 Tempe. With 6.4 peak sun hours daily and over 300 sunny days per year, Tempe is one of the best cities in the U.S. for solar production. Arizona electricity rates have risen nearly 20% since 2021, and a typical Tempe homeowner can save an estimated ~$65,000 over 25 years.
If upfront cost is a concern, Palmetto’s LightReach solar lease removes that barrier entirely — you can go solar with no money down and start saving from day one, with payments starting as low as $109/month.
Tempe is primarily served by Salt River Project (SRP), which uses a net billing program rather than traditional net metering. When your solar panels produce more electricity than your home uses, the excess is exported to the grid and credited at a rate between $0.02–$0.06/kWh depending on the season and your chosen TOU rate plan — which is below the retail electricity rate.
The good news for SRP customers is that unused credits roll over indefinitely with no annual true-up, so your credits never expire. Because export rates are lower than retail rates, most Tempe solar owners focus on self-consumption — using solar energy directly in the home — to maximize their savings.
Yes, solar panels can increase your home’s value in Tempe. Arizona’s Solar Energy Property Tax Exemption means any added home value from solar won’t raise your property tax bill — a meaningful benefit for Tempe homeowners.
According to a Zillow study, homes with solar panels sell for approximately 4.1% more than comparable homes without them. In a market like Tempe, where home values are strong and energy costs are rising, solar can be a smart long-term investment for both your energy bills and your property.
The most affordable way to go solar in Tempe is through Palmetto’s LightReach lease — with no upfront cost and a fixed monthly payment starting at $109/month for a medium-sized home. Palmetto owns and maintains the system, so there’s nothing out of pocket to get started.
For homeowners who prefer to purchase outright, a typical 8.5 kW system in Tempe costs around $23,173 after Arizona’s state incentives. Note that the federal 30% residential solar tax credit is no longer available for cash purchases following the Big Beautiful Bill. Use the calculator above for a personalized estimate.
For many Tempe homeowners, solar is worth it financially — and with a lease, the math is straightforward from day one. Through Palmetto’s LightReach program, your monthly lease payment is typically less than your current electricity bill, so you start saving immediately with no upfront investment.
With Arizona electricity rates up nearly 20% since 2021, locking in a predictable monthly payment helps protect against future rate increases. A typical Tempe homeowner can save an estimated ~$65,000 over 25 years — making solar a sound long-term financial decision.
We believe Palmetto Solar is the best choice for Tempe homeowners. As a national company with a strong local presence, we’ve completed 4,982 installations across Arizona since 2020 — giving us deep experience with local utilities like SRP and the permitting process in Tempe.
We offer some of the best financing options in the industry, including our LightReach lease starting at just $109/month with no upfront cost. Our trusted install network, 90% production guarantee, and hands-on maintenance make going solar simple and worry-free for Tempe residents.
With Palmetto’s LightReach lease, Tempe homeowners can go solar with 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 Tempe, the estimated monthly lease payment is approximately $109/month — often less than your current electricity bill, so savings begin 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 the Big Beautiful Bill.