Groceries cost more. Insurance costs more. Cars cost more. It can feel like everything has gotten more expensive over the last decade and a half, because for the most part, it has. Consumer prices overall have risen roughly 44% since 2010, according to Bureau of Labor Statistics data.
Solar is one of the rare exceptions. The hardware that goes into a home solar system has gotten dramatically cheaper over the same stretch, even as the cost of nearly everything else went up.
Key Takeaways
- Residential solar hardware and installation costs fell 65% from 2010 to 2024, according to the U.S. Department of Energy’s own cost benchmark research, even as general consumer prices rose about 44% over the same period.
- Utility electricity rates have moved the opposite direction from solar, rising roughly 30% in recent years according to federal energy data, which is part of what makes self-generated power more valuable over time.
- The 30% federal residential solar tax credit ended for any system placed in service after December 31, 2025. This matters, and this article won’t pretend otherwise.
- Arizona’s own state solar credit remains active and unaffected by the federal change.
The Cost Paradox: Hardware Down, Everything Else Up
According to the U.S. Department of Energy and the National Renewable Energy Laboratory’s own annual cost benchmark research, the installed cost of a residential solar system fell 65% between 2010 and 2024, from $9.23 per watt down to $3.25 per watt. That decline was driven mostly by the collapsing cost of panels and inverters in the earlier years, with continued smaller improvements since.
Over that same 2010 to 2024 window, the Consumer Price Index, the government’s primary measure of what things cost, rose from an index value of 218.056 to somewhere around 313 to 315, a cumulative increase in the neighborhood of 44%.
Put plainly: while the price of a typical basket of goods and services was climbing by nearly half, the price of solar hardware was falling by nearly two-thirds. That’s an unusual combination, and it’s worth understanding why it happened. Manufacturing scale, automation, and steady gains in panel efficiency have driven the industry down a cost curve that most consumer goods simply don’t follow.
Why Utility Rates Keep Climbing Regardless
The other half of this story is what’s happening to the price of electricity itself. Federal energy data shows the national average residential electricity price has risen roughly 30% in recent years, driven by grid modernization spending, rising demand, and fuel cost volatility. Arizona hasn’t been exempt from that trend.
This is the part of the equation that makes falling solar costs matter even more. A solar system doesn’t just get cheaper to build. It also increasingly protects a homeowner from a bill that keeps climbing regardless of what the broader economy is doing.
What Actually Still Helps With Cost in 2026 (Being Straight About the Incentive Picture)
Here’s where this article needs to correct something that’s easy to get wrong, and that a fair amount of solar marketing still gets wrong: the 30% federal residential solar tax credit is gone for typical homeowner-purchased systems. Under the One Big Beautiful Bill Act, signed into law in July 2025, the federal credit for homeowner-owned solar (Section 25D) ended for any system placed in service after December 31, 2025, with no phase-down period.
That’s a real change, and it’s worth being upfront about it rather than quietly hoping homeowners don’t notice.
What’s still true and still helps:
- Arizona’s state solar credit remains active. Homeowners can claim 25% of their system’s cost, up to $1,000, on their state income taxes, and this credit was not affected by the federal change.
- Arizona’s sales and property tax exemptions on solar equipment are still in place. Solar equipment is exempt from state sales tax, and the added value a solar system brings to a home is exempt from property tax assessment.
- Financing structures that use third-party ownership, such as leases or power purchase agreements, may still access a comparable credit through a different part of the tax code that applies to the system’s owner rather than the homeowner directly, which can show up as a lower price or payment rather than a credit you claim yourself.
None of this replaces what the federal credit used to offer. It’s a smaller stack of benefits than homeowners had access to as recently as 2025. But it’s also not nothing, and combined with the underlying hardware cost decline, the math still has real weight behind it.
Locking In Tomorrow’s Power at Today’s Price
Buying a solar system is, in a real sense, prepaying for a large share of your future electricity at today’s cost. Once it’s installed, the fuel is free. That doesn’t change whether utility rates go up 2% next year or 8%.
This is the part of the “inflation hedge” idea that holds up the best under scrutiny: it’s not that solar is immune to cost pressures during installation, it’s that once installed, a big share of a homeowner’s future energy cost is fixed, while the alternative (buying all your power from the utility) isn’t.
The Honest Caveats
A few things worth saying plainly, because an accurate picture is more useful than an overly rosy one:
- Not all of a solar system’s cost has fallen at the same rate. Hardware costs (panels, inverters) have dropped the most. “Soft costs” like labor, permitting, and customer acquisition have not fallen nearly as fast, and are more tied to local wages and overhead.
- Losing the federal credit does lengthen the math for some homeowners. It’s a real reduction in available savings compared to a 2025 installation, and anyone comparing quotes to what a neighbor paid last year should expect a different bottom line.
- Results vary by home, usage pattern, and financing choice. The comparison in this article is a national and state-level picture, not a quote.
Questions Arizona Homeowners Should Ask Before Going Solar
Didn’t there used to be a 30% federal tax credit? What happened to it? Yes. The federal residential credit (Section 25D) ended for systems placed in service after December 31, 2025, under the One Big Beautiful Bill Act. It’s no longer available to homeowners purchasing a system with cash or a loan in 2026.
Is there still any way to get a credit similar to that 30%? Not for a direct purchase. Homeowners using a lease or power purchase agreement may still see value from a similar credit, since it applies to the system’s third-party owner rather than the homeowner directly, and can be reflected in pricing.
What incentives are actually still available in Arizona? Arizona’s own 25% state credit (capped at $1,000), plus sales and property tax exemptions on solar equipment, are all still active and unaffected by the federal change.
If hardware is so much cheaper, why doesn’t solar feel cheap right now? Hardware is only part of total system cost. Labor, permitting, and other “soft costs” haven’t fallen nearly as much, and the loss of the federal credit also affects the bottom-line price a homeowner sees today compared to a year or two ago.
Does losing the federal credit mean solar isn’t worth it anymore? Not necessarily, but it does change the math compared to previous years. The combination of falling hardware costs and rising utility rates still supports a strong case for many homeowners, but it’s worth running the numbers for your specific situation rather than assuming the old math still applies.
Sources
DOE/NREL, Documenting 15 Years of Reductions in U.S. Solar Photovoltaic System Costs https://docs.nrel.gov/docs/fy25osti/92536.pdf
U.S. Department of Energy, Solar Photovoltaic System Cost Benchmarks https://www.energy.gov/cmei/systems/solar-photovoltaic-system-cost-benchmarks
U.S. Bureau of Labor Statistics, Consumer Price Index https://www.bls.gov/cpi/
U.S. Energy Information Administration, Short-Term Energy Outlook https://www.eia.gov/outlooks/steo/
Congressional Research Service, summary of Residential Clean Energy Credit expiration https://www.congress.gov/crs-product/IN12611
Arizona Department of Revenue, Credit for Solar Energy Devices https://azdor.gov/forms/tax-credits-forms/credit-solar-energy-devices
Arizona Governor’s Office of Resiliency, Residential Solar and Wind Energy Systems Tax Credit https://resilient.az.gov/clean-energy-hub/households/residential-solar-and-wind-energy-systems-tax-credit
