An 8 kW solar array will meet most households’ electricity needs in the Phoenix metro, at a cost of around $26,000. Factor in the federal solar tax credit, a state tax credit, and other incentives, and the cost of solar in Phoenix could be as low as $17,400.
Phoenix is one of the best cities for solar energy, ranking seventh in the U.S. for overall solar capacity. The city known as the Valley of the Sun seems an obvious place to install a rooftop array, thanks to high electricity costs and consumption and lots of sunshine.
Data from real-life installations shows that the average home solar panel array installed in Phoenix, Arizona, in 2021 was 11.6 kW in size and cost $37,631. Many homeowners in Phoenix can likely meet household electricity needs with a smaller array, though, especially if their home is energy efficient. This might mean a gross cost closer to $25,000, or a net cost of just over $17,000.
Most online solar estimates for Phoenix are inaccurate
We dig into the data below to calculate the likely cost of home solar in Phoenix, Arizona. These figures, taken from actual installations, offer a more accurate guide to how much you’ll pay for solar in Phoenix than online quote generators. We’ve consistently found that popular online solar marketplace quotes are wildly inaccurate, underestimating the true cost of solar in Phoenix by an average 63 percent.
See also: The cost of home solar in Arizona
Our cost models are based on data from the Lawrence Berkeley National Laboratory’s Tracking the Sun report, and are informed by national average prices paid for home solar in 2022, as well as forecasts for the price of solar in 2023. We also account for that discrepancy between real-life costs and online quotes, to provide a better reflection of the likely cost of solar in Phoenix, Arizona, in 2023.
The cost of home solar in Phoenix, Arizona
There were nearly 4,000 residential solar installations completed in 2021 in Phoenix, Arizona. We looked at the cost of those installations after filtering for self-installed projects and those that were third-party owned. Our data set comes from the Lawrence Berkeley National Laboratory’s Tracking the Sun report and generates an average cost per Watt of $3.24 for home solar in Phoenix.
| Cost per Watt | Cost for 5 kW system | Cost for 7.84 kW system | Cost for 11.6 kW system | |
| Online quote marketplaces | $2.44 | $12,200 | $19,130 | $28,304 |
| Quotes factoring in average discrepancy | $3.88 | $19,408 | $30,432 | $45,027 |
| NREL | $2.95 | $14,750 | $23,128 | $34,220 |
| LBNL mean average | $3.24 | $16,220 | $25,434 | $37,631 |
Despite online quote marketplaces typically using a 5 kW model for estimates, we can see from the data that actual installations in 2021 averaged a whopping 11.6 kW. This means the average cost of home solar in Phoenix was $37,631, not the $12,000 often cited online.
A deeper dive into the data from LBNL shows us that the most common price paid for an installation in 2021 (the mode average) was actually $50,000, and that the most common system size was 11.88 kW. In the middle of the range (median), systems powered in at 9.52 kW capacity and cost $33,759.
| System size kW (DC) | Average cost | |
| Mean | 11.60 | 37615.49 |
| Median | 9.52 | 33759.29 |
| Mode | 11.88 | 50000 |
The economy of scale typically means that larger systems cost less per Watt. So, while the mean average cost per Watt was $3.24, the median was $3.55, given the smaller system size in the mid-range. The most common price paid, however, works out to $4.21 per Watt, which is significantly higher than the online quotes of $2.44 per Watt.
The NREL gives a figure of $2.95 per Watt (DC) as the modeled market price (MMP) for the U.S. as a whole in 2022. While it’s likely that the cost of solar will decrease in Phoenix over 2022 compared to 2021, it seems unlikely the true cost will drop as low as the NREL’s national estimate.
Looking at all of these sources, we feel comfortable using an estimated system cost of $3.24, per the LBNL data, for going solar at home in Phoenix, Arizona, in 2023.
That said, we also dug into the cost for solar installations provided by different installers in Phoenix and found some significant differences. One of our top picks for a solar installer in Phoenix, Harmon Electric, actually worked out to far less per Watt than average. And installations by Tesla Energy cost just $1.50 per Watt on average, likely because most of these installations used cheaper Hanwha Q Cells and were very large, meaning shared costs across the project.
Here’s a breakdown showing the range of costs depending on installer. Note that Arcadia Solar installed just eight residential arrays in 2021, whereas the other, larger, companies installed far more.
| Installer | Average array size | Average cost | Average cost per Watt |
| Harmon Electric | 11.80 | $34,026 | $2.88 |
| Elevation Solar | 11.59 | $37,619 | $3.24 |
| Tesla Energy | 23.70 | $35,590 | $1.50 |
| Sunpower Corporation | 9.00 | $33,188 | $3.69 |
| Sunrun Inc | 9.16 | $34,340 | $3.75 |
| Arcadia Solar | 8.98 | $35,894 | $4.00 |
The table above not only shows the diversity in cost per Watt for solar depending on installer, it also offers a sense of the size range for installations in the city. This brings us to the next step of working out the true cost of going solar in Phoenix: figuring out how big an array you actually need.
How big a solar array do you need in Phoenix?
Phoenix gets around 6.52 solar hours and has an efficient conversion of the sun’s energy to electricity. For every kilowatt of capacity installed, Phoenix residents can expect to generate 1,753 kilowatt hours on average, according to the SunWatts calculator.
Knowing how much electricity a solar array can produce is only half the battle, though. We also need to know how much electricity the average household in Phoenix uses each year. Again, most online solar quotes are based on a 5 kW system, which is seriously undersized for meeting 100 percent of Phoenix residents’ needs. The upshot of installing such a small system would be ongoing dependence on the electric grid and ever increasing utility bills.
Phoenix residents use more electricity per person than half of their fellow Americans. Average electricity consumption is, according to the Energy Information Administration (EIA), around 14,000 kW annually. This is likely because three in five Arizonans use electricity for heating and cooling their homes.
By our calculations, then, the average Phoenix homeowner will want to install a solar array with a 7.84 kW capacity to meet 100 percent of household electricity consumption.
Lowering the cost of solar in Phoenix – tax credits, incentives, and tax exemptions
Phoenix homeowners who install solar can take advantage of both the federal and state solar tax credits. The state credit applies first, after any utility rebates or manufacturer rebates. After that, the federal credit of 30% applies to the remaining cost.
Arizona also offers a sales tax exemption on solar, which helps to reduce the upfront cost of going solar in Phoenix. Arizona Public Service and Salt River Project are two utilities that offer net metering or net billing to help residents who install solar at home lower their utility bill each month.
APS also offers incentives up to $2,500 for homeowners who install solar storage batteries and share their data, plus a bonus $1,250 for customers who also agree to allow the grid to draw from stored battery energy at scheduled times.
SRP currently offers a $250 rebate for customers who install rooftop solar and a demand management system.
Find out more about Arizona state solar incentives here.
How much does electricity cost in Phoenix?
The EIA gives an average price of 10.73 cents per kilowatt hour for residential electricity in Arizona in 2021. Many Phoenix residents are serviced by the Salt River Project (SRP) utility, however, which charges more for electricity than average in the state.
As of January 2023, SRP lists prices of 8.76 cents to 13.46 cents per kWh, depending on the time of year and how much electricity a household uses in a month. The EIA estimates that Arizona households use 14,000 kWh annually on average, which means many homeowners pay the highest rate in the summer months. Based on an average of the SRP pricing schedule (11.11 cents/kWh), the likely average cost of electricity per household in Phoenix is $1,555.40.
To work out potential savings over the 25-year warranty period of newly installed solar panels, it’s tempting to just multiply the annual electricity bill by 25. However, a solar array may not fully meet the electric needs of a household all year round, especially if the system doesn’t include storage. In addition, utilities typically raise prices every year.
For greater accuracy in our savings predictions, we use a 2.4% rate of inflation. This is the average historic rate in the U.S. We also model different scenarios below, including some where an array only partially meets electricity needs.
Assuming 2.4% inflation over 25 years, and average electricity use of 14,000 kWh annually, here’s what a Phoenix homeowner might expect to save by installing a solar array that meets 100% of electricity needs:
- Over 5 years – $8,159
- Over 10 years – $17,346
- Over 15 years – $27,689
- Over 25 years – $56,219.
The rate of inflation in early January 2023 is much higher, though, at 7.1%. This is likely to fall in the next 25 years, but assuming it sticks around, Phoenix residents could see utility bill savings closer to the following:
- Over 5 years – $8,963
- Over 10 years – $21,592
- Over 15 years – $39,388
- Over 25 years – $98,563.
Actual savings will vary between households and are subject to utility prices, electricity use, the productivity of the installed solar array, maintenance costs, battery storage capacity, and net metering and net billing, among other things.
Putting it all together – Your solar payback period in Phoenix, Arizona
If you’ve only looked at online quotes based on a 5 kW system and low cost per Watt, you may be surprised by the actual cost of solar in Phoenix. With a typical system costing closer to $25,000 than $12,000, many homeowners might assume it’s not worth installing solar in Phoenix.
The reality, though, is that a larger system at a higher upfront cost pays for itself very quickly. How? Because a system sized to meet your family’s actual electricity use helps you save more on your utility bill each year than a smaller system that leaves you dependent on the grid.
Working out how quickly your solar array pays for itself in savings is a key part of the decision to go solar at home. Once you reach that magic point where savings have balanced out the upfront cost, your rooftop array will continue to generate truly free electricity for years to come.
Below, we offer a range of possible solar payback scenarios, assuming average electricity use but varying eligibility for rebates and tax credits, and at different rates of inflation.
- Assuming a 2.4% inflation rate and average energy use and costs
Gross cost of a 5 kW solar array = $3.24/Watt x 5,000 = $16,200
Minus potential state tax credit (25%, to a maximum of $1,000) = $1,000
Subtotal = $15,200
Federal tax credit of 30% = $4,560
Net cost of solar = $10,640
Cost of electricity = $0.1111 per kWh
Average electricity use in Phoenix = 14,000 kWh per year
Estimated cost of electricity for first 12 years = $21,337
Twelve-year savings (assuming array meets 50% of electricity needs) = $10,668
Solar payback period = Just under 12 years.
- Assuming a 7.1% increase in electricity costs each year and average electricity use
Gross cost of a 5 kW solar array = $3.24/Watt x 5,000 = $16,200
Minus potential state tax credit (25%, to a maximum of $1,000) = $1,000
Subtotal = $15,200
Federal tax credit of 30% = $4,560
Net cost of solar = $10,640
Cost of electricity = $0.1111 per kWh
Average electricity use in Phoenix = 14,000 kWh per year
Estimated cost of electricity for first 10 years = $21,592
Ten-year savings (assuming array meets 50% of electricity needs) = $10,796
Solar payback period = Just under 10 years.
- Assuming a 2.4% inflation rate and average energy use and costs but a larger array and higher rebates
Gross cost of a 7.84 kW solar array = $3.24/Watt x 7,840 kW = $25,402
Minus maximum utility rebates = $3,750
Subtotal = $21,652
Minus potential state tax credit (25%, to a maximum of $1000) = $1,000
Subtotal = $20,652
Federal tax credit of 30% = $6,196
Net cost of solar = $14,456
Cost of electricity = $0.1111 per kWh
Average electricity use in Phoenix = 14,000 kWh per year
Estimated cost of electricity for first 9 years = $15,420
Nine-year savings (assuming array meets 100% of electricity needs) = $15,420
Solar payback period = just under 9 years.
- Assuming a 7.1% inflation rate and average energy use and costs but a larger array and maximum rebates
Gross cost of a 7.84 kW solar array = $3.24/Watt x 7,840 kW = $25,402
Minus maximum utility rebates = $3,750
Subtotal = $21,652
Minus potential state tax credit (25%, to a maximum of $1000) = $1,000
Subtotal = $20,652
Federal tax credit of 30% = $6,196
Net cost of solar = $14,456
Cost of electricity = $0.1073 per kWh
Average electricity use in Arizona = 14,000 kWh per year
Estimated cost of electricity for first 7 years = $13,502
Eleven-year savings (assuming array meets 100% of electricity needs) = $13,502
Solar payback period = just over 7 years.
- Assuming a 7.1% inflation rate and average energy use and costs but a larger array with no rebates
Gross cost of a 7.84 kW solar array = $3.24/Watt x 7,840 kW = $25,402
Minus potential state tax credit (25%, to a maximum of $1000) = $1,000
Subtotal = $24,402
Federal tax credit of 30% = $7,320
Net cost of solar = $17,081
Cost of electricity = $0.1111 per kWh
Average electricity use in Phoenix = 14,000 kWh per year
Estimated cost of electricity for first 8 years = $16,016
Eleven-year savings (assuming array meets 100% of electricity needs) = $16,016
Solar payback period = just over 8 years.
On average, Phoenix homeowners who install solar are likely to have a solar payback period of 7-12 years. This means that even in a worst-case scenario, going solar in 2023 could give Phoenix residents nearly 15 years of free electricity during the warranty period, plus many more years of electricity production thereafter.
Final thoughts on the cost of going solar in Phoenix, Arizona
As one of the sunniest places in the U.S., it’s no surprise that Phoenix already boasts one of the highest solar capacities in the country. Much of this is made up of residential rooftop arrays, along with community solar, commercial solar installations, and utility scale projects.
Thanks to the relatively high cost of electricity here, and the potential for generous utility rebates and a state and federal tax credit, homeowners who go solar in Phoenix can quickly pay off the cost of their array. There are also plenty of experienced, qualified solar installers in Phoenix, meaning homeowners can shop around to find an installer they like and trust.
Finally, the cost of solar depends greatly on the company installing it. Some of our favorite installers in Phoenix include Harmon Electric and Elevation Solar, with a great track record and average or lower than average costs per Watt for rooftop solar.