Does Solar Still Make Sense with Lower Buyback Rates in Arizona?
Thinking about installing solar but worried about buyback rates?
It’s a valid concern. APS and SRP have continuously reduced their solar buyback rates since net billing replaced net metering in 2017, which affects how much you can save with solar.
But even without a strong buyback rate, solar panels still have significant financial benefits for Arizona homeowners, especially if you install them with a battery.
What’s Going on with Arizona Net Metering in 2025?
For context: Arizona used to offer one of the best net metering (aka solar buyback) programs in the country.
Under the old net metering structure, you could export the excess solar power your panels generated to the electric grid, and your utility would be required to credit you at the full retail price of power.
Things changed in 2017 when the Arizona Corporation Commission (ACC) voted to replace net metering with net billing. Utilities are still required to credit solar customers for the power they send to the grid with net billing, but the rates are much lower.
This change opened the doors for APS and SRP to continue reducing buyback rates—APS has dropped rates by 10% every year since 2017.
Why Solar Still Makes Sense
Even though buyback rates are not the same as they once were, solar panels are still worth it for most homes and businesses in Arizona.
Strong Solar Tax Incentives in Arizona
The tax incentives for solar panel installation in Arizona are among the best in the country. Right now, you can claim:
- 30% federal tax credit for solar panel and/or battery installation
- $1,000 state tax credit for residential solar installation
- Sales tax exemption for solar installation
- Property tax exemption for solar installation
Save Thousands on Electric Bills
Solar panels will save you money on your electric bills, with or without a good buyback rate. The average monthly electric bill in Arizona is about $150 (although most of us are paying way more than that, especially in the summer). If you offset just 80% of that with solar power, you’ll save $1,440 a year, which adds up to $36,000 in your system’s 25-year lifespan, even before considering rate increases.
Batteries Increase Savings!
Solar battery storage is the key to ramping up savings with a low solar buyback rate. With a battery, you can store the excess power you generate during peak daylight hours. In the evenings, when expensive time-of-use utility rates kick in, you can use your stored power instead of buying from the grid.
Hedge Against Rising Electricity Prices
Utilities might be cutting solar buyback rates, but they’re certainly not cutting electricity rates. The average residential electric rate in Arizona rose 4.5% between January 2024 and January 2025, according to the US Energy Information Administration, and more price hikes are coming.
With solar, you don’t have to worry about these increases since you don’t rely on grid power. The more your utility raises rates, the more you end up saving.
Energy Security & Backup Power
We have a reliable electric grid in Arizona. But age, increased demand, and extreme heat threaten it. With solar plus battery backup, you don’t have to worry about what happens to the grid. Your solar panels will stay on and provide backup power during a grid outage so your lights stay on, your fridge stays cold, and your family stays safe.
Is Solar Worth it for Your Home?
Generally speaking, yes — solar panels are worth it in Arizona. But every home is different. Your savings will depend on your electricity rate, how much power you use, and your home’s solar viability. Almost all homeowners will see a return (usually in less than 10 years), but it’s up to you to decide whether that return is worth it.
SouthFace Solar & Electric can give you all the information you need to make an informed decision. We offer free, no-pressure consultations so you can get personalized estimates and advice from a local solar expert.
