Arizona has more solar irradiance than almost any other US state — Phoenix receives 6.0–6.5 peak sun hours daily, among the highest in the country. The compliance landscape is dominated by two major utilities with below-retail export compensation rates, an active Arizona Corporation Commission that sets the rules, and a notable exception: SRP (Salt River Project), which operates under its own rules outside the ACC’s jurisdiction.
Arizona Solar Market
Arizona has over 5 GW of installed solar capacity (residential + commercial + utility). The Phoenix metro area is one of the top US residential solar markets by installations per capita. Strong irradiance, high summer electricity bills, and state tax incentives drive demand despite below-retail export rates.
APS Net Metering: The Resource Comparison Proxy
Arizona Public Service (APS) serves the Phoenix metro area and most of northern and central Arizona. Its solar compensation program:
- Export rate: Resource Comparison Proxy (RCP) — approximately $0.076–0.10/kWh
- Retail rate: $0.12–0.17/kWh depending on rate plan
- Billing: Monthly net of production vs. consumption; export credits applied at RCP rate
- Annual settlement: Year-end true-up; excess credits paid at RCP rate (not forfeited)
The gap between retail ($0.14/kWh average) and RCP ($0.08/kWh) means Arizona solar economics depend heavily on self-consumption. A customer who uses 80% of their solar production saves at retail rates; only the 20% exported earns the lower RCP rate.
APS Rate Plans for Solar Customers
APS offers several rate plans for solar customers. The Saver Choice Plus TOU rate plan is designed for solar customers:
| Time Period | Retail Rate |
|---|---|
| Summer on-peak (3–8 PM weekdays) | $0.20–0.26/kWh |
| Summer off-peak | $0.09–0.12/kWh |
| Winter on-peak (5–9 PM weekdays) | $0.12–0.16/kWh |
| Winter off-peak | $0.08–0.10/kWh |
Solar generation peaks midday, not during the 3–8 PM summer peak. Battery storage can shift solar production to discharge during the peak, capturing the higher retail savings. APS’s TOU rates make storage economics favorable.
SRP (Salt River Project): A Different Set of Rules
SRP is not regulated by the ACC — it’s a political subdivision that operates under its own board. SRP serves Scottsdale, Mesa, Tempe, Chandler, Gilbert, and parts of East Phoenix.
SRP switched from retail-rate net metering to a below-retail export structure in 2015 (earlier than most utilities). The current SRP solar program:
- Residential Export Price (REP): Below retail, approximately $0.06–0.08/kWh
- Required rate plan: SRP’s time-of-use rate for solar customers
- Demand charges: SRP’s solar rate plan includes a demand charge component
SRP’s demand charges (charged based on peak 15-minute demand) added significant complexity to solar economics. Battery storage specifically sized to reduce SRP demand charges can substantially improve ROI for SRP customers.
SRP Demand Charges
SRP’s solar rate plan includes a demand charge that can reduce or eliminate the bill savings from a solar installation without storage. A 5 kW system on a SRP demand-charge plan without storage may see only $20–40/month in savings instead of the $60–90/month that retail-rate net metering would provide. Always model SRP’s demand charges accurately in proposals for Scottsdale, Mesa, Tempe, and East Phoenix customers.
TEP (Tucson Electric Power)
TEP serves the Tucson metro area. Export compensation:
- Export rate: Below retail, approximately $0.07–0.09/kWh
- TOU options: Available for solar customers; on-peak is 3–8 PM on weekdays
- Interconnection: Online portal at tep.com
TEP solar customers benefit from Tucson’s strong irradiance (similar to Phoenix) while facing similar below-retail export compensation. The economics are favorable for self-consumption-optimized systems.
Arizona Incentives
| Incentive | Amount | Notes |
|---|---|---|
| Federal ITC (30%) | 30% of system cost | All Arizona solar customers |
| Arizona State Income Tax Credit | 25%, up to $1,000 | Form 310; 5-year carryforward |
| Property Tax Exemption (residential) | Full exemption | Solar adds no assessed value |
| Sales Tax Exemption | State TPT exempt | Some cities have their own solar exemptions |
Arizona State Income Tax Credit
Form AZ-310 (Renewable Energy Tax Credit): 25% of system cost up to $1,000 per year. The credit has been available since 1995, making it one of the oldest state solar credits in the US.
Example: A $18,000 solar system:
- Federal ITC (30%): $5,400 credit
- Arizona state credit: $1,000 (capped)
- Total incentive: $6,400 (35.5% of cost)
AHJ Permitting in Arizona
Phoenix
- City of Phoenix permits through the Phoenix Permits portal
- Solar permit application: online submission accepted
- Typical turnaround: 10–20 business days
- SolarAPP+ participation: Some Phoenix addresses are eligible
Tucson
- City of Tucson Permits through Tucson Online Permit Center
- TEP coordination for interconnection
- Typical turnaround: 2–3 weeks
Scottsdale / Maricopa County
- City of Scottsdale has a streamlined solar permit process
- Maricopa County permits for unincorporated areas
All Arizona cities have generally adopted NEC 2020.
Arizona Contractor Licensing
Arizona requires solar installers to hold a Registrar of Contractors (ROC) license:
| License Class | Scope | Notes |
|---|---|---|
| A-17 (Solar) | Solar PV installation | Solar-specific; most residential solar |
| CR-11 (Electrical) | Electrical work including solar | Full electrical scope |
| KA (Electrical) | Residential electrical | Limited to residential scope |
License verification: roc.az.gov
Design Arizona Solar Projects with Accurate RCP Economics
SurgePV models APS, TEP, and SRP export rates — including SRP demand charges — to produce accurate Arizona solar proposals.
Book a DemoNo commitment required · 20 minutes · Live project walkthrough
Frequently Asked Questions
Does Arizona have net metering?
Arizona has a below-retail export compensation program (not true retail-rate net metering). APS pays the Resource Comparison Proxy rate (~$0.08/kWh) for exported solar. Retail rates average $0.14/kWh. This makes self-consumption optimization critical for Arizona solar economics.
What is the SRP solar situation?
SRP operates outside ACC jurisdiction with its own solar rules. SRP’s below-retail export rates and demand charges require careful proposal modeling. Battery storage specifically addressing SRP demand charges significantly improves ROI for SRP-territory customers.
What state incentives does Arizona offer for solar?
The Arizona State Income Tax Credit (25%, up to $1,000) on Form AZ-310, plus full property tax exemption and state sales tax exemption for solar equipment, in addition to the federal 30% ITC.
