Arizona Solar Calculator

Enter your utility and monthly bill — get system size, annual production (AZ averages 6.5 PSH — best in the US), ITC credit, AZ state credit, and tax exemptions.

Your Arizona home

Average monthly electric bill?

Your utility company?

System size?

Add battery storage??

Roof orientation?

Arizona solar analysis — 8 kW system

$14,960 after incentives (was $22,800)

Recommended system size11.1 kW

Annual production14,121 kWh/yr

Annual kWh usage19,599 kWh/yr

Bill offset72%

Annual savings$1,902.11/yr

Gross system cost$22,800

Federal ITC (30%)-$6,840.00

AZ state credit (25%, max $1,000)-$1,000.00

Net cost after all credits$14,960

Payback period7.9 yrs

25-year net savings$32,593

⚠️ Temperature derating applied: Arizona's hot summers reduce panel output 5-10%. Production estimates include a 7% thermal derating adjustment.

⚠️ AZ incentives: property tax exempt + sales tax exempt on solar equipment. Note: SRP uses demand charges — consult an installer for SRP-specific analysis.

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How to Use This Calculator

Enter your utility bill and provider

Start with your average monthly electric bill. Use an annual average if possible — Arizona summer bills can be $300-500+ due to air conditioning, while winter bills are much lower. Select your utility company: APS (Arizona Public Service) serves most of metro Phoenix; SRP (Salt River Project) covers Phoenix east suburbs and Scottsdale; TEP (Tucson Electric Power) serves Tucson; UNS Electric covers Flagstaff and Prescott.

Set system size and options

The calculator shows your recommended system size based on your bill, but you can adjust the kW slider to see how different system sizes affect economics. Add battery storage if you want backup power during Arizona's monsoon season outages or to use solar energy at night. Select roof orientation — south-facing is ideal but east/west splits are common and effective in Arizona's exceptional sunshine.

Read the incentives breakdown

Arizona has three layers of incentives beyond the federal ITC: the 25% state tax credit (up to $1,000), 100% property tax exemption (solar doesn't increase your home's taxable value), and 100% sales tax exemption on solar equipment. The calculator shows the net cost after federal and state tax credits.

The Formula

Annual kWh = Monthly Bill × 12 ÷ Electricity Rate Recommended kW = Annual kWh ÷ (6.5 PSH × 365 days × 0.80 efficiency × 0.93 temp factor) Annual Production = System kW × 1000 × 6.5 PSH × 365 × 0.80 × 0.93 × Roof Factor ÷ 1000 Gross Cost = System kW × 1000 × $2.85/W Federal ITC = Gross Cost × 30% AZ State Credit = min(Gross Cost × 25%, $1,000) Net Cost = Gross Cost - Federal ITC - AZ State Credit Payback = Net Cost ÷ Annual Savings 25-year Savings = (Annual Savings × 25) - Net Cost

Arizona uses 6.5 PSH — the highest average in the continental US. The 0.93 temperature derating factor accounts for reduced efficiency when panels exceed 25°C — common in Phoenix summers where ambient temperatures regularly exceed 110°F. This 7% production reduction is already factored into the annual production estimate.

Example

The Hendersons — Phoenix home, APS customer

The Hendersons have an average monthly APS bill of $220 ($0.1347/kWh). They want an 8 kW south-facing system without battery storage. They owe federal income tax to use the credits.

Monthly bill$220/mo (APS)

System size8 kW

LocationPhoenix (6.5 PSH)

RoofSouth-facing

Result

Annual production~13,700 kWh/yr

Bill offset~69%

Annual savings~$1,826/yr

Gross system cost$22,800

Federal ITC (30%)-$6,840

AZ state credit (25%)-$1,000 (capped)

Net cost$14,960

Payback~8.2 years

25-year savings~$30,700

Arizona's combination of 6.5 PSH, 30% federal ITC, 25% state credit (capped at $1,000), plus property and sales tax exemptions makes solar economics among the best in the US. An 8.2-year payback on a 25-year system leaves 17 years of pure savings.

FAQ

Why is Arizona the best state for solar in the US? ▼

Arizona averages 6.5 peak sun hours per day — the highest in the continental US. Phoenix gets over 300 sunny days per year. This means a 6 kW system in Phoenix produces roughly the same electricity as a 9 kW system in Seattle. Arizona also offers a 25% state tax credit (up to $1,000), 100% property tax exemption, and 100% sales tax exemption on solar equipment — stacking on top of the federal 30% ITC.

What is Arizona's 25% solar tax credit? ▼

Arizona offers a personal income tax credit equal to 25% of solar system costs, capped at $1,000. To claim the full $1,000, your system must cost at least $4,000. The credit is claimed on Form 310 with your Arizona state tax return. Unlike the federal ITC, the Arizona credit is non-refundable and can carry forward up to 5 years if you don't owe enough state tax in the first year.

Does hot weather reduce solar panel output in Arizona? ▼

Yes — solar panels lose about 0.4% efficiency per degree Celsius above 25°C (77°F). In Phoenix summers where ambient temperatures reach 115°F (46°C) and panels can reach 155°F (68°C), this reduces output by 5-10% compared to standard test conditions. This calculator applies a 7% temperature derating. The good news: Arizona's longer days and more direct sun angles more than compensate — annual production still exceeds most US states.

What is the difference between APS and SRP solar policies? ▼

APS offers net metering at retail rate (currently around $0.1347/kWh) with a reasonable export credit for excess solar. SRP uses a demand charge structure — you pay a fee based on your peak 30-minute power demand, which can make standard grid-tied solar less effective for SRP customers. SRP's Customer Generation Plan is available but has lower export rates. SRP customers often benefit more from battery storage to shift loads and reduce demand charges.

Is Arizona property and sales tax exempt for solar? ▼

Yes on both counts. Property tax exemption: Solar adds significant value to Arizona homes — an 8 kW system typically adds $10,000-20,000 in appraised value — but Arizona law exempts this added value from property taxes under ARS § 42-11054. Sales tax exemption: Arizona exempts solar equipment from the state's 5.6% transaction privilege tax (sales tax) under ARS § 42-5061, saving roughly $1,280 on a $22,800 system.

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