Arizona Solar Calculator — 2026 Costs & Payback
Arizona has the highest solar irradiance in the contiguous US (1,700 kWh/kW) but a complicated net metering history. Most major utilities use avoided-cost export rates, not retail net metering. Combined with relatively low electricity rates ($0.165/kWh), payback periods run 7–9 years — competitive but not exceptional given the production advantage.
US Solar Payback Calculator — 2026
Get an accurate solar payback estimate for your state using NREL solar irradiance, EIA electricity rates, and the 30% federal Investment Tax Credit.
The numbers above are based on state averages. Real quotes vary by roof orientation, shading, panel type, and installer. Compare quotes from 3+ pre-vetted installers in your area — free, no obligation.
Highest electricity rates in the lower 48. NEM 3.0 (since April 2023) cuts export rates ~75%. Battery storage now near-mandatory for payback.
Methodology & sources
Solar irradiance per state: National Renewable Energy Laboratory (NREL) PVWatts PSM3 typical-year data, weighted state average for residential rooftops.
Electricity rates: EIA Form 826 monthly residential rates (most recent September 2025 data).
Federal ITC: 30% through 2032 under the Inflation Reduction Act (Section 25D).
State incentives: DSIRE (Database of State Incentives for Renewables & Efficiency) as of April 2026.
Inflation assumptions: 2.5% annual electricity price increase (EIA AEO 2024 reference case), 0.5% annual panel degradation (NREL standard).
Self-consumption assumption: 45% direct self-consumption without battery — typical for residential without storage.
Deep dive — solar in Arizona
Arizona state solar tax credit: 25% of system cost up to $1,000. Modest but stacks with the federal 30% ITC.
TEP (Tucson) and APS (Phoenix area) charge demand fees on solar customers — a fixed monthly fee based on peak 15-minute usage. This significantly impacts payback for households with heavy AC loads.
SRP (Salt River Project, parts of Phoenix): Has the most installer-unfriendly rate plan, including a $50–100/month grid-access fee for solar customers. SRP customers should run the numbers carefully.
Battery storage in AZ: Increasingly recommended due to demand fees and avoided-cost rates. A 10 kWh battery enables peak-shaving (avoiding demand charges) and shifts solar production into evening AC use.
Best system size for AZ in 2026: 8–11 kW given larger AC loads. Battery: 10–13 kWh strongly recommended for new installs.
Arizona solar FAQ
Does Arizona have net metering?
Not at retail rate. APS, SRP, TEP all use avoided-cost compensation (~$0.05/kWh) for exports. This is far below the $0.165/kWh import price.
Are there demand charges for solar in Arizona?
Yes for SRP and TEP customers. Solar customers face additional demand fees based on peak 15-minute usage. APS customers can avoid this with the right rate plan.
What is the Arizona state solar tax credit?
25% of system cost capped at $1,000. Stacks with 30% federal ITC.
Why is Arizona payback longer than Florida if irradiance is higher?
Lower electricity rates ($0.165/kWh vs $0.16 FL is similar) and avoided-cost net metering instead of retail-rate. Higher production, but each kWh you export is worth less.