Are Solar Panels Worth It in Arizona?
Last updated July 1, 2026 · based on Arizona energy prices
In Arizona, where residential electricity averages about 14¢/kWh and rooftop solar yields roughly 1,750 kWh per kW per year, solar is a reasonable long-term investment, paying back in about 14.9 years.
Arizona solar cost & savings (typical 7 kW system)
| Metric | Estimate |
|---|---|
| Annual production | 12,250 kWh |
| Installed cost (before incentives) | $21,000 |
| Estimated annual savings | $1,409 |
| Payback period | 14.9 years |
| 25-year net savings | +$12,184 |
Figures use Arizona average prices, a 7 kW system at $3.00/watt, 50% self-consumption at retail plus a conservative 9¢/kWh net-metering credit, and ~0.5%/yr panel degradation. Sources: EIA electricity prices and NREL PVWatts production modeling.
What this means for Arizona homeowners in 2026
The 30% federal residential solar tax credit (Section 25D) expired December 31, 2025, so a 2026 installation in Arizona carries the full upfront cost unless a state or utility incentive applies. Because Arizona electricity costs around the national average, the payback case is more marginal — strongest for high electricity users, south-facing roofs, and homeowners who plan to stay long term.
Frequently asked questions
Are solar panels worth it in Arizona in 2026?
At Arizona's electricity price of 14¢/kWh, a typical 7 kW system saves about $1,409 per year and pays for itself in roughly 14.9 years. There is no federal solar tax credit in 2026 (Section 25D expired December 31, 2025), so these figures reflect bill savings and net metering only.
How much do solar panels cost in Arizona?
A 7 kW system costs roughly $21,000 installed at about $3.00/watt before any state or utility incentive. Costs vary by installer, equipment, and roof complexity.
How much electricity will solar produce in Arizona?
About 1,750 kWh per year per kW installed in Arizona, so a 7 kW system produces roughly 12,250 kWh/year. Your exact output depends on roof orientation, tilt, and shading.
Estimates based on Arizona average energy prices and a simplified model; your results will vary. Energy prices and incentives change frequently. Not financial advice.