Net Billing And The Case for Arizona’s Solar Market

Arizona may be one of the best states in the country for solar, but our solar policies can be a little complicated. When it comes to how homeowners are credited for excess solar energy, the rules vary widely depending on where you live and who your utility provider is. Most Arizona utilities offer some sort of buyback credit for excess solar energy sent back to the grid. These credits differ between utilities and rate plans. For the sake of this blog we’ll explore the difference between the net metering and net billing models. 

Net metering allows solar customers to receive full retail credit for excess electricity they send back to the grid, effectively spinning their meter backward. Net billing, on the other hand, compensates exported energy at a lower, predetermined rate—often based on wholesale or avoided cost—reducing overall savings.

To get the most from your solar investment, it’s important to understand the difference between these policies and know which apply to your home. In this guide, we’ll break down how net billing and net metering work with Arizona’s three largest utilities – APS, SRP, and TEP – and show you how solar batteries are helping Arizona homeowners take control of their energy savings. 

Net metering vs net billing

Net metering and net billing may sound similar, but the way they impact your energy bill is very different. Knowing which one your utility uses can make a big difference in your return on investment. 

Net metering 

Under traditional net metering, solar panel owners received a full retail credit for every kilowatt-hour (kWh) of excess solar electricity they sent back to the grid. For example, if your system produced 10 kWh but your home only used 7 kWh, the remaining 3 kWh would be credited to your bill at the same rate you pay for electricity – essentially giving you a one-to-one exchange.

This system provides great financial returns, but many Arizona utilities have moved away from it for new solar customers in recent years. That said, some homeowners are still grandfathered into these older net metering plans, and in many cases, those plans can transfer to new homeowners when a solar home is sold. 

Read more in our guide: Selling Your Home With Solar Panels: Expert Guide 2025. 

Net billing

Net billing is the new standard for most Arizona utilities. This system credits homeowners for excess solar energy, but at a much lower rate than what they pay for electricity. Instead of a dollar-for-dollar trade, you might receive just a few cents per kWh for the energy your system exports, which can be 30% to 70% less than the retail rate. This lower export rate is usually tied to the utility’s ‘avoided cost’ or a similar benchmark. 

Because of this, solar net billing rewards homeowners who use more of their solar energy onsite rather than exporting it to the grid. That’s where battery storage comes in – by storing your own energy, you can use it when it’s worth the most, rather than selling it back at a discount. But more on that later! 

How net billing works with APS

Arizona Public Service (APS) made the switch from net metering to net billing back in 2017. That means new solar customers no longer receive full retail credit for excess energy they send back to the grid. Instead, they’re paid a reduced ‘export rate’ for that electricity. 

APS’s Resource Comparison Proxy (RCP)

APS uses a system called the Resource Comparison Proxy (RCP) to determine how much you get credited for solar energy. As of 2024, that rate is $0.06857 per kWh, which is roughly half the average retail electricity rate of $0.12 per kWh. 

Here’s how it breaks down:

• Solar energy used in your home offsets electricity at the full retail rate
• Excess solar sent to the grid is credited at the lower RCP rate
• You’ll receive monthly bill credits for exported energy, and if those exceed $25 at year’s end you may be issued a refund. 

So, while you still save money by offsetting your energy use, you earn much less for the solar energy you don’t use immediately. This makes storing your energy in a battery a more valuable option under APS’s current structure.

APS evaluates its solar buyback rate each September, typically approving a 10% reduction. Since 2017, this decrease has occurred annually—except in 2020 due to the pandemic. By signing a solar interconnection agreement, your net billing rate is locked for 10 years. So, the sooner you go solar, the better your long-term payback.

Time-of-use rate plans 

APS requires solar customers to enroll in a time-of-use (TOU) rate plan, where electricity is more expensive during peak demand hours (typically between 4 PM and 7 PM). There are two TOU plans available: 

• TOU-E: Energy costs vary depending on the time of day
• TOU-Demand: Lower energy rates overall, but includes a demand charge based on your highest usage during on-peak hours.

Read: What is the Cheapest Time to Use Electricity in Arizona?

APS’s on-peak hours are typically from 4 PM to 7 PM, when solar panels aren’t producing as much energy. Without a battery, this is when you’re most likely to draw expensive power from the grid. With a battery, you can use your stored solar energy earlier in the day to offset 100% of the costly on-peak energy you would otherwise have to purchase. 

Read More: Solar Panels ROI: Calculating Your Average Returns

How net billing works with SRP

Unlike APS, Salt River Project (SRP) still offers net metering, but only on a limited basis and only through a couple rate plans. These plans are set to expire in November 2025.

Right now, SRP offers two demand-based solar panels that qualify as net metering (ending soon): 

• E-27
• Average Demand Price Plan. 

Under these plans, any excess energy your system produces is credited at the full retail rate, which means you get the most value out of every kilowatt-hour you send to the grid. 

That said, both these plans include demand charges based on the highest 30-minute spike in power usage during on-peak hours in a given billing cycle. This means that, even if your overall energy use is low, one brief surge – like starting the AC and oven at the same time – can trigger a big fee.

This is where solar batteries become useful. By storing excess solar and discharging it strategically (rather than sending it back to the grid for a credit), you can eliminate the need to purchase on-peak utility power and avoid costly demand spikes all together. In fact, a battery will typically save more than you would otherwise earn from net metering credits. 

New SRP plans in 2025

In November 2025, SRP will retire its current solar plans and transition all new solar customers to net-billing-based time-of-use (TOU) rate plans. These plans, like E-28 (Conserve 6-9 PM) and E-16 (Manage Demand 5-10 PM), encourage solar-plus-battery systems by rewarding homeowners who shift usage to off-peak hours. 

How net billing works with TEP

Tucson Electric Power (TEP) fully transitioned away from net metering in 2018, replacing it with a net billing structure for all new solar customers. That means any excess solar energy sent to the grid is credited at a reduced export rate, not the full retail rate.

As of 2025, TEP’s excess generation credit rate is $0.0570 per kWh, compared to a typical retail rate of around $0.15 per kWh. That’s a 62% difference in value, which can add up fast for homeowners who export a lot of their solar energy. 

The good news is that, like APS, many TEP customers are still grandfathered into older net metering plans established before 2018 (and now retired). These legacy plans provide full-retail credit for exported solar energy and offer much higher savings potential. 

What is instantaneous netting?

Both APS and TEP, and soon SRP, use a method called instantaneous netting to measure solar energy usage and export. 

Instead of calculating your solar usage and exports over the course of a day or month, instantaneous netting measures your system in short intervals – usually hourly. Any excess energy produced at that moment is immediately sent to the grid and credited at your utility’s export rate (which is far lower than the retail rate you pay to buy electricity). 

Let’s say your solar panels produce more electricity than your home is using at 2 PM. That extra power is exported and credited at a reduced rate, often 30% to 70% less than what you’d pay to use it later. You can’t ‘bank’ that energy to use it later in the evening when electricity is more expensive. 

That means every kWh you use in real time is worth significantly more than what you send back to the grid. And if your solar system produces more than you’re using during low-demand times, you’re essentially giving that power away. 

Home batteries make a huge difference in this regard. Instead of exporting excess solar during the day, you can store it and use it later during peak hours when grid electricity is most expensive. In this way, solar batteries help ‘time-shift’ your energy use and protect you from the lost value caused by instantaneous netting. 

Continue Reading: Home Battery Storage Without Solar in Arizona

Example of net billing in Arizona

If you’re still thinking, ‘OK, but what does net billing actually mean for my electric bill?’, you’re not alone. Net metering and net billing in Arizona can be confusing, especially with all the talk about export rates, time-of-use plans, and instantaneous netting. So let’s break it down with a simple example based on APS’s net billing structure. 

Imagine you install a solar system on your home in Phoenix, Arizona, designed to cover most of your typical monthly electric bill – let’s say around $130. On a sunny summer day, your system produces 28 kilowatt-hours (kWh) of electricity between 6 AM and 7 PM. 

Here’s what happens next: 

• Your home uses 18 kWh of that solar energy throughout the day, offsetting your electricity use at the full retail rate (around $0.12 per kWh)
• The remaining 10 kWh of excess solar gets exported back to the grid, and APS credits you at their current RCP export rate of $0.06857 per kWh. 

So, those 10 exported kWh earn you about $0.69 in bill credits, which is almost half the $1.20 you’d save by using that energy yourself.  

At the end of the month, your electric bill might drop from $130 to about $23 – which is great! But under full-retail net metering, your bill could have potentially been brought down to just a few dollars. 

Read More: How to Lower Your Electricity Bill in Arizona

Now let’s say you add a battery to the same system. Instead of exporting that 10 kWh, your battery stores it during the day. When peak pricing kicks in between 4 PM and 7 PM, your battery discharges the stored energy, offsetting usage that would’ve cost you up to $0.20 per kWh on a TOU rate plan. 

Instead of earning $0.69, you’re now saving $2.00 for using your own power. That’s nearly 3X the value, and these gains can really add up over the course of the year.

Solar batteries vs net billing

By now, you’ve learned that Arizona’s net billing structure offers far less value for exported energy than the old net metering model. That’s why more and more homeowners are turning to solar batteries, not just for backup power but for additional savings.  

But how do the savings actually compare in real life?

Let’s say your solar energy systems produce 50 extra kWh in a month. You have two choices for what to do with that excess energy: 

• Option 1: Export it to the grid under net billing: Exported at $0.12 per kWh retail value, credited at $0.06857 per kWh (APS’s current rate), your total monthly credit would be $3.43 
• Option 2: Store it in a battery to use during on-peak hours: If on-peak rates are $0.20 per kWh, using your stored energy instead of buying from the grid would save you $10.00 per month. 

In this case, a solar battery boosts your savings by 66% compared to exporting your energy. That’s a big deal, especially when you repeat those savings month after month. 

Why batteries make more sense under net billing

Arizona’s shift to net billing makes one thing clear: the less energy you send back to the grid, the better. Solar batteries allow homeowners to take more control for their energy instead of relying on utilities to buy their excess at a discount. 

Here’s what batteries offer that net billing can’t: 

• Better financial returns: As the example above demonstrated, instead of selling excess solar energy at a discount, you can store it and use it when electricity is most expensive – getting the full value out of your energy. 

• Protection from rate hikes: TOU rate plans and export credit rates can (and usually do) change over time. A solar battery allows you to rely less on the grid, helping shield your savings from future price hikes and seasonal rates. 

• Backup power during outages: Unlike net billing, a solar battery can keep your lights on and critical appliances running during grid outages.
• Support for a smarter grid: Batteries help smooth out energy demand by delivering power when it’s needed most, like peak evening hours. That’s why utilities are now designing rate plans to encourage solar battery adoption. 

See More: Should I Get Battery Storage for My Solar Energy System?

Summary: Net billing and home battery storage

Net metering may be on its way out in Arizona, but that doesn’t mean that solar isn’t worth it. With a solar + battery setup, homeowners can take full control of their energy, lower their bills, and stay protected from rate changes and outages. 

Although APS and TEP have already moved to net billing, many homeowners are still on grandfathered net metering plans that offer higher savings. In some cases, these plans can be passed on to new homeowners. SRP customers still have access to net metering through demand-based plans, but those will be retired in November 2025, making batteries more important than ever for maximizing your solar ROI.

At Sun Valley Solar Solutions, we’ve helped thousands of Arizona homeowners design custom solar + battery solutions tailored to their utility, rate plan, and energy goals. Our team stays on top of every policy change so you don’t have to, and we’re here to help you build a system that maximizes savings under today’s rates and into the future. 

If you’d like to explore your options with solar power, contact us today to schedule a free consultation. To learn more about the costs and benefits of solar and batteries, you can also download our free guide ‘Are Solar and Batteries Right For You?’