Solar Financing in Arizona
Lease vs. Buy vs. PPA — Complete financing guide for AZ homeowners
Urgent tax credit deadlines
- Section 30D EV credit (up to $7,500) — expires June 30, 2026 (12 days left).
- Section 48E solar ITC safe harbor — construction must start by July 4, 2026 (16 days left).
Going solar in Arizona? With electricity rates averaging 13.9¢/kWh and excellent solar resources, choosing the right financing option can save you $22,125 or more over 25 years. This guide breaks down every option available to Arizona homeowners.
Avg Rate
13.9¢
per kWh
Solar Resource
Excellent
AZ
Typical System
8kW
residential
Payback
~10.8 yrs
estimated
Solar Incentives & Tax Credits in Arizona
Arizona homeowners can take advantage of the following solar incentive programs:
Federal Solar Investment Tax Credit
30% federal tax credit via Section 48E for qualifying projects (leases, PPAs, commercial) that begin construction before July 4, 2026. The residential ownership credit (25D) expired December 31, 2025.
30% of system cost
Arizona Solar Energy Credit
Arizona offers a personal income tax credit of 25% of system cost, capped at $1,000 per residence.
Up to $1,000
Solar Energy Device Property Tax Exemption
Active solar energy devices are exempt from property tax on the added value (ARS 42-11054).
100% property tax exemption
Net Metering in Arizona
Arizona moved to a net billing model in 2017. APS and other investor-owned utilities credit solar exports at a reduced avoided-cost rate, typically 3-6 cents per kWh.
✓ Arizona offers a property tax exemption for solar installations, meaning your property taxes won't increase despite the added home value.
Compare Financing Options in Arizona
See how cash purchase, solar loan, lease, and PPA compare based on Arizona's average rates:
Solar Financing Comparison for Arizona
Based on 13.9¢/kWh electricity rate and a 8kW system
Cash Purchase
Pay upfront — maximum long-term savings
- Upfront Cost
- $16,800
- Monthly Savings
- $130/mo
- Tax Credit Eligible
- Yes
Solar Loan
$0 down — own the system over time
- Down Payment
- $0
- Monthly Payment
- $164/mo
- Net Monthly
- $-34/mo
- Tax Credit Eligible
- Yes
Solar Lease
$0 down — provider owns the system
- Down Payment
- $0
- Monthly Payment
- $104/mo
- Net Monthly
- $26/mo
- Tax Credit Eligible
- No
Power Purchase Agreement
$0 down — pay per kWh produced
- Down Payment
- $0
- Annual Savings
- $941/yr
- Tax Credit Eligible
- No
Estimates based on average Arizona (AZ) rates and system costs. For a personalized comparison, use our full financing calculator.
Lease vs. Buy vs. PPA in Arizona
Buying (Cash or Loan)
Best for: Maximizing long-term savings and home value.
- You own the system and all electricity it generates
- Eligible for the 30% Federal Tax Credit (~$7,200 on a 8kW system)
- Property tax exempt in Arizona
- Increases home value by an average of 4.1%
- Highest 25-year savings: ~$22,125
- You handle maintenance (panels need little)
Solar Lease
Best for: Zero upfront cost with predictable payments.
- $0 or low upfront cost
- Fixed monthly payment (no surprise bills)
- Maintenance and repairs typically covered
- Not eligible for tax credits or incentives
- Lower 25-year savings (~$7,725)
- May complicate home sale (lease transfer)
Power Purchase Agreement (PPA)
Best for: Paying only for what you produce, $0 down.
- $0 upfront cost
- Pay a per-kWh rate (typically lower than utility)
- Provider owns and maintains the system
- Not eligible for tax credits
- Rate escalates 2-3% annually (read the contract)
- Lowest 25-year savings of the three options
Solar Financing FAQ — Arizona
Is solar worth it in Arizona?
Yes, solar is a worthwhile investment in Arizona. With moderate electricity rates averaging 13.9¢/kWh and excellent solar resources, a typical 8kW system can offset most of your household electricity usage. The estimated payback period is 10-12 years, after which you enjoy more than a decade of largely free electricity. arizona moved to a net billing model in 2017 is the main policy factor to verify with your utility.
What solar incentives are available in Arizona?
Arizona residents can claim the 30% Federal Solar Investment Tax Credit (worth $7,200 on a typical 8kW system). The state also offers Arizona Solar Energy Credit, Solar Energy Device Property Tax Exemption. Arizona offers a property tax exemption, so your property taxes won't rise despite the added home value.
Should I lease, buy, or get a PPA in Arizona?
Buying your solar system (cash or loan) maximizes long-term savings and qualifies you for the 30% Federal Tax Credit. On a typical 8kW system in Arizona, that's about $7,200 back. Buying yields roughly $22,120 in net savings over 25 years. Leasing or a PPA requires $0 down and includes maintenance, but you won't get tax credits and your 25-year savings will be much lower (around $7,720). If you can afford the upfront cost or qualify for a low-rate loan, buying is the clear winner in Arizona.
How much does a solar system cost in Arizona?
A typical 8kW residential solar system in Arizona costs approximately $24,000 before incentives. After the 30% Federal Tax Credit (~$7,200), the net cost drops to about $16,800. Actual costs vary based on equipment quality, installer, roof complexity, and whether you add battery storage. Arizona offers a property tax exemption, so your property taxes won't rise despite the added home value.
Does Arizona have net metering?
Arizona moved to a net billing model in 2017. APS and other investor-owned utilities credit solar exports at a reduced avoided-cost rate, typically 3-6 cents per kWh.
What is the solar payback period in Arizona?
The typical solar payback period in Arizona is approximately 10-12 years. With a net system cost of about $16,800 after the federal tax credit and annual electricity savings of roughly $1,401-$1,712 (based on 13.9¢/kWh), most Arizona homeowners see full payback within 12 years and enjoy 13+ years of largely free electricity thereafter.
Related Solar Tools
Estimates are based on Arizona average rates, system costs, and the 30% Federal Solar Investment Tax Credit. Actual savings vary by installer, equipment, roof, and utility policy.