Solar panel payback in Arizona

10.8 years for a typical home solar system in Arizona to pay for itself, with no federal tax credit.

A 7.5 kW system sized for the average home here, which uses 1,019 kWh a month, costs about $21,000 at $2.80 per watt. It saves about $1,706 in its first year, and after 25 years it is $35,445 ahead. That leaves a comfortable margin inside the 25 to 30 years panels usually last.

Prices updated October 2026 from EIA, AAA and BLS data.

Your state

Electricity price

¢/kWh

Monthly electricity use

kWh

System size

Installed cost

$/W

2026 quotes average $2.60 to $3.00.

State and local incentives

Rebates or state tax credits.

Export credit

% of retail

Output, rate increases and upkeep

Yearly output per kW

kWh/kW

Output used as it is made

The rest goes to the grid. Higher if you are home by day.

Yearly electricity price rise

U.S. prices rose 5% in the past year.

Panel output loss per year

Inverter replacement in year 12

Set to 0 if your inverter warranty runs 25 years.

How Arizona compares

Arizona ranks 17th of 51 for solar payback, fastest first. The fastest is Hawaii at 5.9 years. At U.S. average figures, payback is 12.3 years.

Two things set payback: what each kWh is worth and how many the panels make. Arizona ranks 33rd for electricity price, most expensive first, at 15.38¢/kWh, and 2nd for sunshine, at an estimated 1,700 kWh a year per kW of panels. Strong sun helps, but with power below the U.S. average price, each kWh the panels make saves less.

The calculator assumes power sent to the grid earns 75% of the retail price, typical of net metering. Your utility's tariff sets the real rate, and a lower credit slows payback.

Three of its five neighbors pay back faster: California, Colorado and New Mexico, led by California at 7.7 years.

State	Electricity	Sun, kWh/kW	Payback
California	33.61¢	1,600	7.7 yrs
New Mexico	16.09¢	1,750	10.1 yrs
Colorado	17.00¢	1,550	10.8 yrs
Arizona	15.38¢	1,700	10.8 yrs
Nevada	12.77¢	1,700	14.0 yrs
Utah	13.12¢	1,600	14.4 yrs

More for Arizona

EV charging cost in Arizona vs gas: an EV saves $1,184 a year on fuel.
Heat pump vs gas in Arizona: a heat pump saves $63 a year.

What these numbers assume

A 7.5 kW system, sized to cover about 100% of a typical home's yearly use.
$2.80 per watt installed, paid in cash, with no state or local incentives entered.
No federal tax credit: Section 25D ended for systems placed in service after December 31, 2025.
Half the output used in the home as it is made; the rest credited at 75% of the retail price.
Electricity prices rising 3% a year, panels losing 0.5% of output a year, and a $2,000 inverter replacement in year 12.

Change any of them in the calculator above to match your own bills. The formulas are on the main solar payback calculator.

Sources

Electricity price: EIA Electric Power Monthly, Table 5.6.A (July 2026 data).
Household use: EIA 2025 retail sales divided by customers.
Installed cost: 2026 residential marketplace averages.
Output per kW: MeterMath estimate for a south-facing fixed roof system, rounded.
Export credit: MeterMath assumption for typical net metering.
Tax credit status: Public Law 119-21.