The 30% federal solar tax credit is gone. Both APS and SRP have completed their shift from net metering to net billing. If you’ve been researching solar in Phoenix and the numbers you’ve found online don’t quite add up, that’s why: the policy landscape that shaped most of the advice out there changed at the end of 2025, and the 2026 calculations are different in ways that matter.
Phoenix still averages 5.8 to 6.5 peak sun hours per day, which means panels here produce roughly 40 to 60 percent more electricity annually than the same panels in New York or Seattle. The resource advantage hasn’t changed. What has changed is how your utility credits the energy you don’t use, how system sizing affects your returns, and which incentives are still on the table. At Argent Solar Electric, we’ve been designing solar systems for Phoenix-area homes since 2007, and our NABCEP-certified team works through exactly these kinds of policy shifts with homeowners every day. Here’s what you need to know heading into 2026.
What Net Billing Means for Your Solar Credits in 2026
Under traditional net metering, every kilowatt-hour your panels sent to the grid earned you a credit at the full retail rate. If you paid $0.25 per kWh to buy power, you got $0.25 per kWh back when you exported. Net billing works differently: your utility credits exported energy at a much lower “avoided cost” rate, and the gap between what you pay to buy power and what you earn by exporting becomes the central design challenge for any new solar system.
APS credits exports under the Resource Comparison Proxy (RCP) rate, set by the Arizona Corporation Commission (ACC). The current RCP rate is approximately $0.0617 per kWh through August 31, 2026. Most APS customers on a time-of-use (TOU) rate plan pay between $0.16 and $0.33 per kWh to buy grid power. That gap (buying at up to $0.33 and selling at $0.0617) is exactly why exporting excess production is far less valuable than using your solar energy directly.
SRP retired all traditional net metering plans in November 2025. Every new SRP solar customer is now on a net billing structure under time-of-use plans, with the Customer Generation Price Plan (E-27) as the standard option. The E-27 export credit is approximately $0.035 per kWh, about half the APS RCP rate, making the self-consumption argument even stronger for east Valley and south Scottsdale homeowners than it is for those on APS.
APS vs. SRP: Your Address Determines the Math
One of the most common misconceptions Phoenix homeowners bring to a solar consultation is that their city determines their utility. It doesn’t. APS and SRP service territories divide the Phoenix metro at the street level, and your address determines which utility’s billing structure, export rate, and fixed charges apply to your system. A home in north Scottsdale may be on APS while a home a few miles south is on SRP. The only way to confirm your utility is to check your bill or look up your address on each utility’s service territory map.
This distinction matters because the two utilities impose very different cost structures on solar customers. APS residential solar customers pay approximately $12 per month in fixed charges before any electricity usage and face no demand charges. Billing is based on energy consumption and time of use, which makes system performance predictable from month to month.
SRP solar customers face two additional cost pressures. The fixed charge is approximately $32 per month, nearly three times the APS fixed charge. The E-27 plan also includes a demand charge: a fee based on the single highest 30-minute interval of grid power draw during on-peak hours in a billing cycle. One August afternoon when your air conditioning surges while your panels are producing less than expected can set your charge for the entire billing period. Even a well-performing solar system doesn’t eliminate a demand charge on its own.
How System Design Has to Change Under Net Billing
The financial logic under net metering rewarded maximizing production. Bigger systems exported more, earned more credits, and recovered costs faster. Under net billing, that logic is inverted. A system sized to match your household’s actual daytime consumption, rather than one sized to push as much power onto the grid as possible, delivers better financial returns because every kilowatt-hour used directly avoids paying retail rates instead of earning a small export credit. This is what’s often called self-consumption optimization, and it changes how we evaluate roof orientation, system capacity, and load scheduling in ways that weren’t as important under net metering.
Battery Storage & SRP Demand Charges
For SRP customers, battery storage isn’t just a nice-to-have; it’s often what makes a solar installation financially rational. Midday solar production peaks when household demand is lowest. Without battery storage, that surplus exports at $0.035 per kWh. With battery storage, it charges the battery instead. When on-peak evening hours arrive, the battery discharges rather than drawing from the grid, reducing both the energy charge and the demand charge by absorbing high-draw intervals that would otherwise set the monthly peak. Avoiding a single large demand spike each billing period can offset a significant portion of the battery’s added cost over the system’s life, particularly as SRP raised its fixed charges by 50 percent in November 2025 and its on-peak rates continue to climb.
The APS Rate Lock Opportunity
APS customers have a meaningful timing incentive. When you submit an APS interconnection application, the RCP export rate in effect at that time locks in for 10 years. The ACC caps annual RCP reductions at 10 percent, so the rate will decline, but the pace is regulated. An APS customer who interconnects today locks in the current $0.0617 rate through the cap-controlled reduction schedule rather than facing whatever lower rate applies to new customers in future years. Waiting means starting at a lower rate. Acting now means 10 years at the higher starting value.
Which Incentives Are Still Available for Phoenix Homeowners in 2026
The federal residential solar investment tax credit under Section 25D expired December 31, 2025. Systems installed in 2026 under a direct purchase or loan structure don’t qualify. Any payback estimate that still includes a 30% federal credit is out of date, and any company presenting those numbers without disclosing the expiration deserves a follow-up question.
Three Arizona-level incentives remain in place and are worth building into your evaluation.
- Arizona Residential Solar Energy Credit (A.R.S. §43-1083): A state income tax credit equal to 25% of the installed system cost, capped at $1,000. Unused credit carries forward for up to five additional tax years. This credit is unaffected by the federal ITC expiration and applies to systems purchased or financed in 2026.
- Property tax exemption (A.R.S. §42-11054): The full added value a solar system contributes to your home’s assessed value is permanently excluded from property tax assessment. In Maricopa County, where the effective property tax rate is approximately 0.67%, a $20,000 value increase would otherwise add roughly $134 per year in taxes. The exemption eliminates that cost for the life of the system.
- Sales tax exemption: Solar panel equipment, inverters, batteries, and installation labor are exempt from Arizona’s 5.6% state sales tax. On a typical residential system, this reduces upfront costs by approximately $1,200.
Third-party ownership structures, meaning solar leases and power purchase agreements (PPAs), operate under different tax rules. When a solar company owns the system on your roof, it can claim the commercial investment tax credit under Section 48E, which remains available through 2027. Some providers pass through a portion of that credit as a lower monthly rate. For homeowners who missed the 2025 purchase-ITC window and prefer to avoid a large upfront cost or loan, a well-structured lease or PPA is worth understanding on its own terms, not as a fallback but as a legitimate financing path with its own trade-offs.
What the 2026 Numbers Actually Mean If You’re Evaluating Solar Now
Without the federal ITC, payback periods on purchased systems in Phoenix have extended from roughly 5 to 7 years to roughly 9 to 12 years, depending on system size, utility, rate plan, and usage profile. That’s a longer horizon, and it requires more precise system sizing than buyers needed to think about in 2025. But the underlying economics in Arizona remain strong. Phoenix’s sun resource is exceptional, utility rates are rising on both the APS and SRP sides, and the state-level incentive stack still lowers upfront costs in ways most markets don’t offer. APS has also filed for a pending rate increase of approximately 14%, with new rates possible as early as July 2026, pending ACC approval, meaning every billing cycle at a higher rate increases the value of every kilowatt-hour your panels produce and consume directly.
The 2026 picture is different from 2025, but it’s navigable with the right system design and an honest look at current rates and incentives. Argent Solar Electric has been sizing solar systems for Phoenix-area homes under Arizona utility structures since 2007, and our NABCEP-certified team offers free consultations that walk through your specific utility, rate plan, and usage profile with the current numbers. Reach us at (623) 500-6880 to schedule yours.