25-year savings projection for Arizona
This projection starts from Arizona's assumed $0.16/kWh electricity rate and 1,720 kWh/kW of annual production, then grows savings by 3% a year as electricity prices rise and reduces output by 0.5% a year as panels degrade.
| Year | Annual savings | Cumulative savings | vs. $21,800 cost |
|---|---|---|---|
| Year 1 | $1,814 | $1,814 | −$19,986 |
| Year 5 | $2,001 | $9,533 | −$12,267 |
| Year 10 | $2,263 | $20,310 | −$1,490 |
| Year 15 | $2,558 | $32,495 | +$10,695 |
| Year 20 | $2,892 | $46,271 | +$24,471 |
| Year 25 | $3,270 | $61,846 | +$40,046 |
A simple, undiscounted projection — it does not apply a discount rate, financing interest, inverter replacement (commonly needed once in 25 years), maintenance, or any change in home value. Treat it as a shape, not a forecast. See methodology.
Why savings look like this in Arizona
Excellent production potential makes roof orientation, shade, and utility export rules key variables.
The single biggest variable is what your utility pays for exported power. Arizona replaced retail net metering with net billing. Utilities such as APS and SRP credit exported solar at an export rate below retail that can step down annually, so self-consumption drives most savings.
What would change this number
- Your actual rate. This uses a $0.16/kWh Arizona average. If you pay more, savings scale up roughly proportionally.
- Self-consumption. We assume 68% of output is used on site at retail value and the rest exported at 45% of retail. Households home during the day, or with a battery, do better.
- Electricity price growth. At 3% a year, savings nearly double by year 25. Slower growth meaningfully reduces lifetime return.
- Incentives. Arizona's main program — 25% state tax credit (capped at $1,000) — reduces net cost and shortens break-even. See Arizona incentives →
- Financing. A cash purchase earns the return above. A loan shifts it — interest can consume a large share of lifetime savings.
Frequently asked questions
How much can you save with solar panels in Arizona?
An 8 kW system in Arizona could save roughly $1,814 in the first year — about $151 a month — and around $61,846 across 25 years, assuming electricity prices rise 3% a year and panel output declines 0.5% a year. Against a midpoint installed cost of $21,800, that is a net gain of about $40,046.
What is the ROI on solar panels in Arizona?
On these assumptions, roughly 184% over a 25-year system life — $40,046 of net savings on a $21,800 system. That is a simple, undiscounted return: it ignores financing interest, the time value of money, and any effect on home resale value. A cash purchase and a loan produce very different numbers.
How long does it take for solar to pay for itself in Arizona?
Around year 11, when cumulative savings first exceed the $21,800 installed cost. A simple payback that ignores rising electricity prices gives a wider range of 10–14 years.
Do solar savings in Arizona include the federal tax credit?
No. The 30% federal residential clean energy credit (Section 25D) ended for systems installed after December 31, 2025, so none of these figures include it. Any savings projection you see elsewhere that still applies 30% to a 2026 purchase is overstating the return.
What most affects solar savings in Arizona?
Three things, in order: your utility's export compensation (Arizona replaced retail net metering with net billing.), how much of the output your household consumes on site rather than exporting, and your actual electricity rate versus the 0.16/kWh state assumption used here. 25% state tax credit (capped at $1,000) can improve the result further.
Where these numbers come from
State assumptions are informed by public data and reviewed periodically (September 2026):