Are Solar Panels Worth It in Arizona? 2026 Cost & Payback
A typical Arizona household uses about 1,050 kWh a month and pays 15.55¢ per kWh — roughly $163 a month. Covering that takes a 6.9 kW system costing about $19,005, which pays for itself in about 12 yr 4 mo.
Solar payback calculator — Arizona
Adjust any input to see how the payback period moves.
Pays for itself in
12 yr 4 mo
from switch-on
25-year net gain
$24,809
after paying it off
System size
6.9 kW
Up-front cost
$18,977
Year 1 savings
$1,369
Year 1 output
12,579 kWh
No federal tax credit applied. The 30% residential credit (IRC §25D) ended for purchases made after 31 December 2025. Leases and PPAs fall under a different provision claimed by the installer.
The numbers behind it
| Average electricity rate | 15.55¢ / kWh |
|---|---|
| Peak sun hours per day | 6.75 hours |
| Annual yield per kW installed | 1,831 kWh |
| Typical monthly usage | 1,050 kWh |
| System size needed | 6.9 kW |
| Installed cost per watt | $2.76 |
| Gross system cost | $19,005 |
| Federal tax credit | Not available (expired for 2026 purchases) |
| Net up-front cost | $19,005 |
| First-year output | 12,600 kWh |
| First-year savings | $1,372 |
| Net metering | Partial / net billing |
| Payback period | 12 yr 4 mo |
| 25-year net gain | $24,855 |
Net metering in Arizona
Arizona credits exported power below the retail rate. Electricity you use as it is generated is still worth full price, which makes daytime usage — and increasingly a battery — far more valuable.
Common questions
How much do solar panels cost in Arizona?
At around $2.76 per watt installed, the 6.9 kW system a typical Arizona home needs works out to roughly $19,005 before any incentives. The 30% federal residential credit no longer applies to systems purchased after 31 December 2025, so that is also the net price.
How long do solar panels take to pay for themselves in Arizona?
About 12 yr 4 mo. That accounts for panel output falling roughly 0.5% a year and utility rates rising around 2.5% a year, which pull the answer in opposite directions.
Does Arizona have net metering?
Arizona credits exported power below the retail rate. Electricity you use as it is generated is still worth full price, which makes daytime usage — and increasingly a battery — far more valuable.
How much will I save over 25 years in Arizona?
Roughly $24,855 after the system has paid for itself — about 131% return on the up-front cost. Savings are larger if electricity prices rise faster than 2.5% a year.
Is Arizona sunny enough for solar?
Arizona averages about 6.75 peak sun hours a day, and a well-oriented array there yields roughly 1,831 kWh per kW installed each year. Sunlight matters less than most people assume — electricity price is the bigger driver, which is why cloudy, expensive states often beat sunny, cheap ones.
How we calculate this
We model 25 years one year at a time rather than dividing cost by first-year savings. Panel output falls 0.5% each year and electricity prices rise 2.5% each year, so the payback figure reflects both.
Production uses the modelled AC yield for Arizona rather than a flat efficiency factor. A peak-sun-hours approximation runs about 9% high, which is enough to make payback look a year faster than it is.
We assume 40% of generation is used in the home as it is produced, with the rest exported and credited according to the state's net metering rules.
Data vintage: Electricity: EIA Electric Power Monthly Table 5.6.B (residential, May 2026 YTD). Solar resource: PVGIS v5.3 (EU JRC), ERA5 2005-2023. Gasoline: AAA state averages. Natural gas: EIA residential by state. Heating degree days: NOAA CPC population-weighted normals. Retrieved 2026-08-03/04. Install costs, household usage, net-metering status, annual mileage, time-of-use spreads and outage hours remain estimates.