Residents in Phoenix, AZ who request quotes on the EnergySage Marketplace spend an average of $280 monthly on electricity. That adds up to $3,360 per year. A different way to look at it is that a typical Phoenix, AZ resident uses 1,849 kWh of electricity per month and 22,188 kWh over the year.
(For what it’s worth: Phoenix, AZ residents shopping for solar on EnergySage may use more electricity than a typical household.)
The easiest way to compare electricity costs across regions is to look at the electricity rate. In the U.S., residential rates generally range from 11 ¢/kWh all the way up to 34 ¢/kWh.
As of February 2026, the cost of electricity in Phoenix, AZ is 15 ¢/kilowatt-hour (kWh)—roughly 24% lower than the national average cost. That number is based on real-world electric bills shared with EnergySage over the past 12 months. You can compare that number to the most recent average state electric price reported by the U.S. Energy Information Administration (EIA).
Arizona’s electricity market is regulated, which means you can’t choose which company supplies your electricity. Instead, the state determines your electric utility company based on where you live. There are three main utility companies in Phoenix, AZ:
Arizona Public Service
Tucson Electric Power
Salt River Project (SRP)
Arizona Public Service and Tucson Electric Power are both Investor Owned Utilities (IOUs), meaning they're privately-owned, for-profit companies. The Salt River Project, on the other hand, is a community-owned, nonprofit utility that may offer lower rates.
- 100% free to use, 100% online
- Access the lowest prices from installers near you
- Unbiased Energy Advisors ready to help
When you pay your electric bill, you’re not only covering the costs to produce that electricity, but also the costs of running and maintaining the electrical grid, as well as public benefit funds that promote things like renewable energy and energy efficiency.
Electric bill costs are rolled into fixed (monthly customer charges) and variable charges (¢/kWh that you use).
Fixed charges, like the flat fee for having a meter, generally remain the same monthly unless your utility makes a policy update.
Your variable charges will change every month and depend on your electricity rate and how much electricity you use.
Your electric bill's variable charges will include a supply (or generation) charge and a transmission and distribution (or delivery) charge. The supply charge covers the cost of electricity generation, while the transmission and distribution charges cover the cost of delivering it to your home.
In Phoenix, fixed-rate energy plans are common across most utility companies. With a fixed-rate plan, your electricity rate stays the same all year long, no matter the time, day, or season.
If you participate in net billing, you usually have the option to sign up for a time-of-use (TOU) electricity plan. This means your rate can change depending on the time, day, or season. Even if you don't have solar panels, most utility companies in Phoenix still let you sign up for TOU rates or demand charge plans if that works better for you.
How clean is the electricity in Arizona?
While it's hard to pin down a precise estimate, according to the U.S. Energy Information Administration, about 60% of the electricity on Arizona’s utility grid comes from fossil fuels—primarily natural gas—as of August 2025.
Only about 19% comes from renewable sources. Given that more than half of the grid’s energy comes from fossil fuels, installing a home solar panel system in Arizona will almost always shrink your carbon footprint.
Some utility companies provide the option to pay a little more to offset your electricity use through renewable sources. If you're unable or unwilling to install solar but still want to reduce your carbon footprint, this is a great alternative. It just won't save you any money in most cases. (Though occasionally it could if it’s through a municipal group-buy program.)
As long as you have a suitable roof, one of the surest ways to save on energy is to go solar—ideally with a vetted contractor offering a competitive price.
Solar panels will reduce or even eliminate your electric bills in the short term and protect you against rising electricity costs in the long run, too. The amount you save depends on how much you spend on electricity now and how much of your electric bill you can offset with solar energy.
Solar panels are a big investment, but Phoenix, AZ homeowners who install them—and pay upfront—break even after an average of just 7.42 years. Then, the solar panels will continue to produce free electricity for years to come.
Does Phoenix offer net metering?
No, Phoenix no longer offers net metering programs. Instead, you can participate in a similar program called net billing. While you still earn credits for sending excess energy from your solar panels to the grid, you are compensated at a lower rate compared to net metering.
The value is based on the utility’s avoided cost, which varies by company. The Arizona Corporation Commission (ACC) ensures a standard method is used to calculate the avoided cost rate and prevents utilities from reducing rates by more than 10% each year. Your actual retail rate depends on your energy plan—but some utility companies assign specific plans to all solar owners.
The good news is your credits don’t expire. You can use them anytime, which is helpful during times when the sun isn’t shining, like at night. If you have credits over a specific balance at the end of the annual period, you’ll receive a check from your utility company.
How much can you save with solar?
Electricity rates in the Grand Canyon State are on the rise. With the help of state incentives and year-round sunshine, going solar in Phoenix, AZ can help you save big on energy bills.
Just take a look at how much you'll spend on electricity over time based on your current bill. It’s easy to see how going solar can pay off quickly.
Electricity cost over time in Arizona
Current monthly electric bill | 10-year electricity cost | 20-year electricity cost | 30-year electricity cost |
|---|---|---|---|
$50 | $6,700 | $15,000 | $26,000 |
$100 | $13,000 | $30,000 | $51,000 |
$150 | $20,000 | $45,000 | $77,000 |
$200 | $27,000 | $60,000 | $100,000 |
$250 | $33,000 | $75,000 | $130,000 |
Assuming a 2% annual increase based on inflation and average annual electric rate increases in Arizona.
Let's assume you pay $280 for electricity monthly (the Phoenix, AZ average) and that electricity prices increase by 2% annually. Let's also assume you buy your solar panel system upfront and that it costs you $25,000 before any available incentives.
In the first year with solar, you'll avoid spending $3,400 on electric bills. Over five years, you'll avoid $17,600; by 10 years, you'll have avoided $37,200. Solar panels are usually covered under warranty for 25 years—by then, you'll have avoided spending $111,700 on electric bills in Phoenix, AZ.
The average payback period in Phoenix, AZ is 7.42 years, so by this point, you've already broken even on your investment. When you subtract your upfront installation cost, you'll pocket $86,500 over 25 years with solar.
Your solar savings depend on you
How much your utility company charges for electricity is a big indicator of how much you'll save with solar. But your exact solar savings depend on your unique situation—including your energy usage, roof layout, system size, and how you pay for your system.
Here are some reasons your savings could be below average:
You don’t use much electricity, or your roof is small or has a less-than-ideal layout. You might have a relatively long payback period, so you'll save a little less over time.
You don't install enough solar panels to 100% offset your energy use. You’ll pay less up front but save less in the long run.
You finance your solar panel system with a loan or sign a lease or power purchase agreement (PPA) instead of paying up front. These types of arrangements can make a lot of sense for keeping your capital flexible and will allow you to start saving sooner. But they will cut into your long-term savings.
Choosing a high-quality solar installer is the key to getting a top-notch solar panel system that will help you save on electric bills.
We pre-screen all solar companies on EnergySage to ensure they get the job done right. Here are the highest-rated EnergySage installers in Phoenix, AZ:
Elite+ InstallerScreened & Verified4.8 /5.0850 Reviews
Elite+ InstallerScreened & Verified4.8 /5.071 Reviews
Elite InstallerScreened & Verified5.0 /5.041 Reviews
Elite InstallerScreened & Verified4.8 /5.029 Reviews
Elite InstallerScreened & Verified4.5 /5.0525 Reviews
Helping customers make informed decisions since 2009.
