Cost of Solar Panels in Arizona 2024 – Tips to Saving Money

Arizona’s climate is one of the most conducive for solar power generation, with half arid, half semi-arid, and some parts humid. The highest average temperature in Arizona can sometimes hit over 40° in the summer.

In April 2021, each solar panel goes for $2.70/W in Arizona. The cost of a 5KW solar power installation in Arizona is $15000. In the 25 or 30-year solar system’s lifespan, you’ll save between $26,000 and $30,000. You’ll get your payback in seven to nine years.

Average Cost of Solar Panels in Arizona

$11,800 to $16,200

Average savings in 25-30 years of solar power

 $26,000 to $30,000

Average Payback Period

 7 to 9 years

As one of the hottest regions in the entire country, Arizona has the potential to surpass other solar giants in the northern hemisphere. The subtropical region enjoys a ranging desert landscape and plenty of sunlight that could yield 180% more than New York’s potential. AZ has 70% more power than NY and requires fewer solar panels than other states.


Again, Arizona is America’s third highest solar power producer, only behind California and northern Carolina. Arizona red-hot’s solar potential is so profound that the former governor Janet Napolitano called the state “The Persian Gulf of Solar Energy”.

Yet, Arizona’s electricity bills are higher than the national average. The average monthly bill for an Arizonian home is about $128.40. That’s higher than the national average of $111.67.

The Renewable Portfolio Standards legislation insists that all investors must agree to source at least 15% of their power from clean energy before 2025.

With the massive growth in solar energy production, Arizona is finally reclaiming lost glory after years of being referred to as the Phoenix of Air Pollution.

Our post comprehensively looks at the cost of solar panels, equipment and power production in Arizona. Also, see the rebates, credits and tax cut policies in AZ as well as a case study of the Solana Power Generation project. Let’s go right in, shall we?

Financing your Arizona Solar Installation Project


Even though it might sound expensive to install solar panels and systems in Arizona, it will eventually pay off.  If you are having financial constraints you can 100% funding, so it shouldn’t be a problem.

You can get state tax credit federal tax credit and other incentives to finance your solar power project.

The Federal Solar Tax Credits

The federal government is using tax credits to encourage citizens to go green. If you install solar panels that meet the national standards, you’ll qualify for a tax credit of up to $1000, or 30% of your costs. The credits will be canceled with other registered taxes.

solar Tax Credits

As of 2024, the credit is now 30% and could keep sinking low. So, you may have to rush.

Solar Energy Tax Credit AZ

On top of the federal tax credits, people in Arizona also get to enjoy state tax credits for installing the solar system. The state credits 25% of the total cost, as long as that doesn’t exceed $1000. Of course, that’s a huge saving, especially on your income taxes.

Net Billing AZ

Since 2016, net metering is no longer in operation, and the net billing is now in its place. The net billing isn’t credited at the retail rate. Now, in case you are producing more than you are using, you’ll receive compensation for that.

Solar Sales Tax Exemption

The Equipment Sales Tax Exemption law shields equipment used in the installation of solar power systems from the 5.6% rate. In addition, the legislation prevents the application of sales taxes on any Renewable Energy Credits (RECs).

Average Cost of Installing Solar Panels in Arizona Cities









Paradise Valley


Fountain Hills




Sun City














Litchfield Park


Maricopa County














Sun City West






Lake Havasu City








Tips to Save Solar Power Costs in Arizona


The initial power installation costs can be a challenge for many homeowners. Saving a few dollars is certainly a welcome idea. The best way to save cash with solar power is to speed up the time in which the system pays off.

Here are tips to lower the costs of solar power in Arizona.

Get incentives: Reduce your installation costs by claiming rebates, state and federal tax cuts and other incentives. The 22% federal tax and at least 25% in Arizona will slash your costs by a great deal.

Cost versus Savings: Don’t rush into taking loans and grants before calculating what you stand to gain. Most “free solar” programs will not have any sensible return.

Recommended to read: Leasing vs. Buying Solar Panels: Weigh All Your Options

Install Quality Equipment: High-quality solar panel systems are efficient and will pay off sooner than the cheap varieties. The top-tier equipment will also outlast its competition.

Set the right angle: Tilt the panels at the 34 ° optimum angle. Panels set at the right angle receive more sunshine and produce more electricity.

Arizona’s Solana Generation Station


One of America’s finest solar power success stories is the Solana Generating Station in Arizona. Completed in 2013, Solana enjoys fame as the biggest parabolic trough solar station in the world. Also, it prides being the first molten salt storage power plant in America.

Popularly known for its molten salt storage technology, the Gila Bend power plant produces 670,000MWh. That’s enough to power approximately 70,000 homes.

Solana owes its success mainly to the technology used in harvesting plenty of Arizonian sunshine. The Concentrated Solar Power (CSP) sets glasses to focus a large amount of sunlight on the panels.

The parabolic trough system focuses the solar energy onto a tube within which molten salt heats water and produces steam. Then steam rotates dynamo turbines that generate electricity.


How many solar panels would power your Arizona home?

The average home has a power consumption rate of about 13000 kWh per year in Arizonian and a 2500 square foot roof. If you install the standard 7.31 kW system, you’ll need 25 300-watt panels.

How much power will I get from my panels in AZ?

The average solar panel would produce 250 watts, and 370kWh a year in Arizona. But, the total power you get depends on your system’s efficiency. Also, you have to make sure the panels are tilted south to get optimum sunshine all year round.


 Annual Production in kWh

Avg System Cost
(After tax credit)

4 kW



5 kW



6 kW



10 kW

17,500 kWh


Which is the best tilt angle for solar panels in AZ?

The best angle to tilt your panels in Arizona is 33° towards the south. See more info on our post on calculating the optimum tilt angle for solar panels in your city here.

How much solar credit do I get from Arizona state taxes?

Before January 2021, the Arizonian state government would offer you a 25% tax credit. A quarter of the cost of installing your solar system would be on the government and you’d claim a deduction from your other state taxes up to $1000.

What is the total cost of setting up a solar system in Arizona?

Residential solar systems cost about $2790 per kilowatt before incentives are deducted. However, this may vary depending on the cities. When you claim the 26% tax credits by the Federal Government, the price will be cut to about $1970 per kilowatt.

Therefore, a 5kW system would cost you about $13,950 before deductions and $9,850 after the 26% federal credit is applied.


Can I get a free solar panel installation in Arizona?

Yes, the APS and SRP programs will install solar panels on your roof for free. However, the APS communities are mainly for low-income homeowners who want an extra $30 at the end of the month. All they do is consent to solar panel installation on their rooftops.

So, APS savings won’t make a good investment for a lot of people because it earns you just about $7,200 in a lifetime.

Purchasing your system is the best way to get returns. First, you pay off the installation costs for the first seven years or so. Then, the next 18 years of the solar system’s lifespan will be yours to have free electricity. That saves you over $25,000!

If you are a nonprofit, you can check whether you qualify for the SRP. This program seeks to provide installations for nonprofit organizations.

Is it worth it to install solar panels in Arizona?

The best answer is that you should look at the monthly electricity bills you have to pay with and without solar panels.

Your solar system will save you thousands of dollars in monthly electricity bills. EnergySage reports that the average home in Arizona can save up to $30,000 in a lifetime.

Saving money starts the same day your solar system becomes operational, but it’ll take you a while to start reaping the profits.

Solar systems pay off in about 7 years, but you’ll have them for 25 years. Within this period, your kWh will cost far less than it does with the grid.

Then, panels are 80% cheaper than they were a decade ago. The cost is further subsidized by state incentives and the federal 26% tax credit.

So, your solar system in Arizona is worth it in the long term.

Leave a Comment