Homeowner Rebates, Tax Benefits, Net Metering & SRECs for Arizona Homeowners
Arizona homeowners are increasingly turning to solar as year-round air conditioning use drives higher electricity bills and prolonged heat waves place constant strain on the grid. In much of Arizona, cooling is not seasonal — it’s a daily necessity for most of the year — making electricity consumption both high and unavoidable. Solar allows homeowners to offset the largest driver of their energy bills: daytime AC usage during peak heat.
The average residential electricity rate in Arizona is approximately 14–15¢ per kWh, placing the state near the national average, but that figure understates real household costs due to extremely high usage. Arizona homeowners often consume significantly more electricity than the national average because air conditioning runs from spring through fall — and often year-round in southern parts of the state. Solar is uniquely well-matched to this demand profile because systems produce the most energy during hot, sunny afternoons when AC load is highest.
Although federal solar incentives are not available to homeowners in 2026, Arizona continues to offer utility-administered net billing programs, favorable property tax treatment, and solar-friendly permitting, making residential solar financially viable when systems are designed correctly.
Here's what homeowners need to know about Arizona solar incentives in 2026.
Types of Arizona Solar Incentives for Homeowners
Property tax exemption: Solar systems are excluded from property tax assessments
Sales tax treatment: Solar equipment generally exempt from transaction privilege tax
State energy policy: Distributed generation supported through utility regulation
Arizona exempts the added value of residential solar systems from property tax calculations, allowing homeowners to install solar without increasing annual property taxes. In many jurisdictions, solar equipment is also exempt from state transaction privilege tax, reducing upfront costs. These protections help preserve long-term savings even as home values increase.
Utility-Specific Solar Incentives in Arizona
Investor-owned utilities: APS, SRP, and TEP administer solar programs
Municipal utilities: Offer local net billing structures
Battery compatibility: Storage systems allowed and increasingly common
Arizona Public Service (APS)
Arizona Public Service serves much of central Arizona, including Phoenix. APS offers residential solar under a net billing framework rather than traditional net metering. Homeowners with Arizona solar receive bill credits for exported electricity at a set export rate, while solar is most valuable when used directly in the home. APS time-of-use rate plans strongly incentivize pairing solar with battery storage to manage evening peak pricing.
Salt River Project (SRP)
Salt River Project serves the Phoenix metro area and surrounding regions. SRP uses a net billing model and emphasizes demand-based rate plans, where peak electricity usage significantly affects bills. For SRP customers, solar systems are typically designed to reduce daytime demand from air conditioning, and batteries are often used to shave late-afternoon and evening peaks.
Tucson Electric Power (TEP)
Tucson Electric Power serves southern Arizona and offers residential solar under net billing tariffs. Export credits are applied to customer bills, but system value is maximized through on-site consumption and storage. TEP customers often see strong alignment between solar production and AC-driven summer loads.
Net Billing (Net Metering Replacement) for Residential Solar in Arizona
Supported by: APS, SRP, TEP, and most municipal utilities
Credit method: Export credits at utility-set rates (not full retail)
Rollover: Credits typically roll forward monthly
Design priority: Maximize on-site usage rather than exports
Arizona utilities no longer offer traditional full retail net metering for new residential systems. Instead, homeowners participate in net billing, where excess solar energy exported to the grid earns a credit at a fixed export rate set by each utility. APS, SRP, and TEP all operate under this structure.
Because export credits are lower than retail electricity prices, solar systems in Arizona are most effective when designed to directly power household loads — especially air conditioning — rather than exporting large surpluses to the grid.
Why Use Energy Storage in Arizona
AC load management: Batteries reduce grid use during peak cooling hours
Time-of-use optimization: Storage shifts solar energy into expensive evening periods
Outage resilience: Batteries provide backup during heat-related grid stress
Net billing value: Storage increases self-consumption of solar production
Energy storage plays a critical role in Arizona due to continuous air conditioning demand and time-of-use pricing. Batteries allow homeowners to store excess midday solar production and use it during late-afternoon and evening hours when temperatures remain high but solar output drops.
This reduces reliance on expensive grid power and helps manage demand charges or peak pricing under APS and SRP rate plans. Storage also provides short-duration backup power during outages, which can be especially important during extreme heat events.
Solar Design Considerations for Year-Round AC Use
Load-matched system sizing: Systems are designed around cooling demand, not just annual kWh
West-facing panels: Capture late-day sun to align with AC usage
Battery integration: Supports evening cooling without grid reliance
Efficient inverter selection: Handles sustained high output in extreme heat
In Arizona, solar system design is often driven by air conditioning load, not just total annual energy usage. Many homeowners benefit from west- or southwest-facing panels that extend production into late afternoon when cooling demand peaks.
Pairing solar with residential energy storage allows continued AC operation into the evening without pulling from the grid at high rates. Equipment selection also matters — inverters and batteries must be rated for sustained operation in high ambient temperatures.
SREC and Production-Based Incentives in Arizona
Statewide SREC market: Not available
Primary value drivers: Bill reduction through self-consumption
Utility programs: Net billing and time-of-use optimization
Arizona does not operate a statewide Solar Renewable Energy Credit (SREC) market. Residential solar value is realized primarily through reducing grid electricity purchases, especially during peak cooling hours, rather than selling production credits. For most homeowners, system design and storage integration matter more than production-based incentives.
Need Help Navigating Incentives? Reach Out to US Solar Supplier
Arizona homeowners face year-round cooling costs, high electricity usage, and complex utility rate structures that make solar most effective when systems are carefully designed. Maximizing value depends on matching solar production to AC demand, choosing the right rate plan, and integrating storage where appropriate.
US Solar Supplier helps Arizona homeowners with materials selection, residential system design, battery sizing, and utility compliance for APS, SRP, and TEP. Whether you’re trying to offset summer cooling bills, manage demand charges, or add backup power for extreme heat events, our team can help you design an incentive-ready system tailored to Arizona’s climate.
Contact US Solar Supplier for personalized guidance on solar equipment, design services, and homeowner-focused solar planning in Arizona.
