With summer air conditioning driving electricity bills sky-high in Central City, Phoenix, many homeowners are looking for relief. But in 2026, does solar still make financial sense without the 30% federal tax credit? The answer is yes, but the strategy has changed. Success now depends on smart system design that works with the rules set by Arizona Public Service (APS), where using your own solar power is far more valuable than sending it back to the grid.
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Open calculatorBenchmark Cost Analysis
What Do Solar Panels Cost in Central City?
The following are modeled net costs for an 8.5 kW system after applying Arizona's $1,000 state tax credit. This system size is typical for a home with an average monthly bill of around $179.
- Solar-Only System (8.5 kW): The estimated net cost is $18,125, with a projected payback of 11.5 years. This option offers a faster return on investment.
- Solar + Battery System (8.5 kW panels & 10 kWh battery): The estimated net cost is $33,125. This system provides greater annual savings and energy security, with a projected payback of 13.5 years.
These figures are estimates. Your actual costs will depend on your home's specific characteristics and energy needs.
Incentives & Tax Credits
State & Local Solar Benefits for 2026
While the federal tax credit for homeowners has expired, Arizona continues to offer strong incentives that make solar a viable investment.
- $1,000 State Tax Credit: Arizona offers a one-time state income tax credit for 25% of the cost of a solar system, up to a maximum of $1,000.
- Property Tax Exemption: Your home's assessed value will not increase for tax purposes after installing a solar system. This means you can add a valuable asset to your property without a corresponding rise in property taxes. An owned solar system can be a strong selling point for future buyers.
- Sales Tax Exemption: The state's sales tax does not apply to the purchase of major solar energy equipment, reducing your upfront cost.
Net Metering: Arizona Public Service Co
APS Reduced Compensation
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How APS Export Rates Impact Your Solar Bill
Arizona Public Service (APS) uses a system where exported solar energy is credited at a rate much lower than the retail price of electricity. For 2026, the modeled export credit is around $0.06 per kWh. When you buy power from APS, you're paying a retail rate of about $0.16 per kWh.
Because of this difference, every kilowatt-hour of solar energy you use at home is worth nearly three times as much as one you export. A solar battery allows you to store this valuable energy instead of giving it away for a low credit, ensuring you get the maximum financial benefit from your investment.
Projected Savings
Projected Solar Savings with APS in 2026
The key to saving money with solar in the APS territory is maximizing self-consumption. This means using the solar energy you generate directly in your home. A battery is the best tool for this, allowing you to store daytime energy for use during peak evening hours.
- A solar-only 8.5 kW system is modeled to save an average of $1,443 per year.
- By adding a 10 kWh battery to that same system, the estimated annual savings jump to $1,910.
That extra $467 in annual savings comes from avoiding the purchase of expensive grid power at night. Furthermore, as utility rates continue to climb over the years, the value of the electricity your system produces will also increase, providing a powerful hedge against energy inflation.