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How Utility Rate Plans Impact Solar Savings in Arizona: APS, SRP, and TEP Explained

  • Writer: zjalomari
    zjalomari
  • 6 days ago
  • 4 min read

Are you considering solar energy for your home in Phoenix? Now is the perfect time to harness the power of the sun and take advantage of significant savings through federal and state tax credits. Our team at Phoenix Valley Solar can help you navigate these incentives and maximize your savings. You can also use our Arizona Solar Calculator to get an estimate of your potential benefits.


When it comes to saving money with solar in Arizona, your utility rate plan plays a critical role. Most homeowners understand how solar panels lower their energy bills, but fewer realize that how and when you use electricity — and what rate plan you're on — can make a big difference in your savings.

In this blog, we break down the most common rate structures used by Arizona’s three largest utilities — APS, SRP, and TEP — and explain how solar interacts with each.


1. Why Rate Plans Matter for Solar Owners

Most Arizona utility companies no longer offer traditional flat-rate electricity pricing. Instead, they use:

  • Time-of-Use (TOU) plans

  • Demand-based plans

  • Tiered pricing structures

These rate plans charge you different amounts depending on:

  • When you use electricity (day vs. night)

  • How much electricity you use during peak hours

  • Whether you generate and export solar energy

Choosing the wrong rate plan — or failing to manage your energy habits — can reduce your solar panel ROI in Arizona.


2. APS (Arizona Public Service): Time-of-Use + Demand Charges

APS offers a mix of Time-of-Use (TOU) plans with optional demand charges. For solar customers, TOU plans are the most common.

Key features:

  • Higher rates between 4 p.m. and 7 p.m. (peak hours)

  • Lower rates during midday (off-peak)

  • Net billing pays for exported solar energy at a fixed rate, updated annually

How it affects solar:

  • You’ll save the most by using your solar energy during the day and minimizing grid use during peak hours.

  • Battery storage can help shift excess solar power into the evening, increasing savings.

Tip: Set appliances (dishwashers, laundry, EV charging) to run midday, when your panels are producing and rates are lower.


3. SRP (Salt River Project): Demand-Based Plans

SRP offers rate plans with demand charges — meaning your bill is based not just on how much energy you use, but how much you use at once.

Key features:

  • Monthly bills include a “demand charge” based on your highest one-hour usage

  • Solar energy reduces your usage, but not always your demand peak

  • Net metering is no longer available; SRP uses net billing with a fixed export rate

How it affects solar:

  • Reducing simultaneous appliance use is key. Running your A/C, oven, and dryer at the same time may spike your demand.

  • Solar helps, but battery storage is even more valuable under SRP to flatten peak usage.

Tip: Use load-management tools or stagger appliance use to lower your demand charge and increase your solar savings.


4. TEP (Tucson Electric Power): Tiered and TOU Plans

TEP offers both flat and TOU rate plans. Solar customers are generally placed on TOU with net billing.

Key features:

  • Peak rates apply from 3 p.m. to 7 p.m.

  • Exported solar energy is credited at the Value of Solar Export rate, adjusted annually

  • No demand charges like SRP

How it affects solar:

  • Solar production aligns well with daytime usage patterns

  • You benefit most by using your solar power during production hours, not exporting it

Tip: Like APS customers, you can maximize savings by programming your usage for daylight hours.


5. How Net Billing Works Across Utilities

Under Arizona’s net metering policy (now net billing):

  • You’re credited for any excess solar electricity sent to the grid

  • The rate is lower than the retail rate you pay for power

  • The best way to maximize savings is to use your solar energy directly

This makes smart scheduling and energy storage more important than ever in maximizing your solar panel ROI.


6. Maximizing Solar ROI with the Right Plan

To optimize your savings:

  • Understand your utility’s plan options before installing solar

  • Analyze your daily usage patterns

  • Consider installing a home solar battery to shift power usage to high-cost hours

  • Work with a solar installer who understands how rate structures affect system design

At Phoenix Valley Solar, we evaluate your home’s usage and match your system to the rate plan that delivers the highest return on investment.


Final Thoughts: Know Your Utility Plan, Boost Your Savings

In Arizona, it’s not enough to just install solar panels. You need to understand how your utility charges for electricity — and design your system around those rules.

Whether you’re served by APS, SRP, or TEP, the right solar setup and usage habits can lead to significant long-term savings — even under net billing.


Get a Custom Solar Analysis Based on Your Rate Plan

At Phoenix Valley Solar, we don’t just install solar — we design it with your utility’s rate structure in mind. We’ll help you maximize every kilowatt-hour and every dollar saved.

Contact us today for a personalized consultation and solar savings estimate.


Are you considering solar energy for your home in Phoenix? Now is the perfect time to harness the power of the sun and take advantage of significant savings through federal and state tax credits. Our team at Phoenix Valley Solar can help you navigate these incentives and maximize your savings. You can also use our Arizona Solar Calculator to get an estimate of your potential benefits.




 
 
 

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