Updated 1 day ago
Residential Solar Panels Cost and Savings in Arizona in 2025
Written by
Zeeshan Hyder
Find out what solar panels cost in your area
Arizona has the fifth-most installed solar PV capacity in the country, generating enough solar energy to power nearly 1 million homes.
The economics of residential solar panels here is hard to beat, which should come as no surprise given the immense amount of sunshine in the state.
How much does a solar system cost in Arizona?
The cost of an installed residential solar system in Arizona is about $2.64 per watt before incentives. After claiming the 30% federal solar tax credit, the price is only $1.85 per watt.
This puts the average cost of a 6-kilowatt (6 kW) system at $15,840 before incentives and $11,100 after claiming incentives.
There is little variance in cost between Phoenix, Flagstaff, and Tucson, as most of the best solar companies have offices in each city.
What tax credits are available in Arizona?
If you pay federal income taxes, 30% of your solar system costs can be claimed as a deduction from your federal tax liability.
Unfortunately, the Arizona state tax credit expired on Jan 1, 2021. Prior to that, you could claim 25% of the cost of your solar system to be claimed as a deduction from your state taxes of up to $1,000.
What is Arizona net billing?
Arizona follows a system called net billing to determine how solar homeowners are compensated for their excess solar power production. It was adopted in December 2016 after the Arizona Corporation Commission (ACC) replaced the previously-existing system, net metering.
Under net billing, APS, SRP, and TEP currently value your exported solar generation at an average of about 8-9 cents per kWh.
While less generous than the net metering offered in many other states, it still gives homeowners something close to retail rates for their grid exports, and allows for big energy cost savings.
A Prescott, AZ home installing solar panels can reduce their monthly bill from $130 to $29.50 using the program, according to our estimates. That’s a savings of $101 per month, just $9 less than what they would have saved ($110) had there been full-retail net metering.
Learn more: An in-depth look at net billing in Arizona.
Where can I find the best solar installers in Arizona?
SolarReviews has thousands of reviews for Arizona solar installers, and we also publish a list of the best-rated solar companies in each city in Arizona.
You can use our solar calculator below to see solar panel offers from top-rated solar companies in Arizona. Our calculator will also estimate the cost of solar panels, solar savings, and payback period for any location in Arizona; to use it, start by entering your zip code below.
How much electricity do solar panels produce in Arizona?
For every 1 kW of solar panels installed on a south-facing roof in Arizona, you can expect to generate 1,752 kilowatt-hours (kWh) per year.
System size | Annual energy production |
|---|---|
4 kW | 7,008 kWh |
10,512 kWh | |
8 kW | 14,016 kWh |
17,520 kWh |
Learn more: How much power do solar panels produce?
How many solar panels will I need?
The average 2,500-square-foot home in Arizona uses approximately 12,815 kWh of power per year. This means it would require a 7.31 kW solar system to cover its power needs.
If we assume the use of 400-watt (400 W) solar panels, then you will need approximately 19 panels to power your home.
To find out what kind of solar panel system would be right for your home, you can enter your average monthly power bill into the solar calculator below.
Why is Arizona a market leader in solar?
A significant reason for the growth of solar power in recent years is Arizona’s RPS law. RPS stands for Renewable Portfolio Standard and requires the state’s Investor Owned Utilities (IOUs) to source 15% of their power from renewable sources in 2025. If they don’t do this they will receive large fines.
Arizona also receives more sunshine than any other state. Solar panels in Arizona produce about 70% more power than in states such as New York. An excellent solar output means that it takes fewer solar panels to reach the desired output.
Zeeshan is a solar journalist who has long been passionate about climate issues and developed a deep interest in solar power after witnessing its successful adoption in Australia. He has previously worked as a journalist for a major news organization, covering energy, climate, and environmental stories, among other topics. He also served as an organizer for the Pakistan Youth Climate Network, an advocacy group aimed at raising climate awareness...
Learn more about Zeeshan Hyder