Is Solar Worth It in Arizona in 2026?
Complete analysis of solar costs, incentives, net metering, and payback for Arizona homeowners — without the federal ITC.
Cost Per Watt
$2.70
installed
Electricity Rate
$0.129
per kWh
Payback (No ITC)
14.3 yr
current reality
Payback (With 30% ITC)
10 yr
hypothetical
25-Year ROI
75%
return on investment
Incentive Breakdown — Arizona
Available incentives for a typical 7kW residential solar system in Arizona
Federal ITC (25D)
ExpiredThe federal solar Investment Tax Credit expired on January 1, 2026. No federal credit available for new installations.
State Tax Credit
$1,000Arizona offers a personal income tax credit of 25% of system cost, up to $1,000.
SREC Market
Not AvailableArizona does not have a traditional SREC market.
Property Tax Exemption
Solar system value excluded from property tax assessment
Sales Tax Exemption
No statewide sales tax exemption for solar
Key Incentives: State tax credit worth $1,000; Property tax exemption for solar.
Solar Math — With vs Without Federal ITC
Cost breakdown for a typical 7kW residential system in Arizona
2026 Reality (No Federal ITC)
- System Size
- 7 kW
- Cost per Watt
- $2.70/W
- Gross Cost
- $18,900
- Federal ITC
- $0
- Net Cost
- $18,900
- Annual Savings
- $1,320/yr
- Payback Period
- 14.3 years
Hypothetical (With 30% ITC)
- System Size
- 7 kW
- Cost per Watt
- $2.70/W
- Gross Cost
- $18,900
- Federal ITC (30%)
- -$5,670
- Net Cost
- $13,230
- Annual Savings
- $1,320/yr
- Payback Period
- 10 years
Impact: Without the federal ITC, Arizona homeowners face a 4.3-year longer payback period — paying $5,670 more out of pocket.
Net Metering Policy — Arizona
How Arizona compensates your excess solar production
Significantly reduced export credits — substantially longer payback. Battery storage highly recommended.
Arizona moved to net billing in 2017. APS and other IOUs credit exports at a reduced rate (~$0.03-0.06/kWh).
Cost Per Watt Benchmark — Arizona
Arizona Average
$2.70/W
National Average
$3.05/W
Typical 7kW System
$18,900
Arizona's average installed cost is below the national average of $3.05/W
Breakeven Timeline
Without the federal ITC, a typical 7kW system in Arizona breaks even in 14.3 years. With the former 30% ITC, payback would drop to 10.0 years.
Without Federal ITC
14.3
years to break even
With Former 30% ITC
10
years to break even
Production Details
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