Arizona State Solar Power Rebates, Tax Credits, and Incentives

Solar Legislative Score:

Updated 10/2009

Arizona, with Lake Powell, the red rocks of Sedona, Flagstaff’s impressive mountains, and one of the seven natural wonders of the world, has a lot to protect by building up its renewable energy resources. Another thing it’s got is a lot of sun, and thankfully, the Arizona legislator has come through with new solar incentives and (mostly) solar friendly policies.

NET-METERING

After a long struggle, Arizona finally has a net-metering standard policy, and that’s great. What’s net metering? Why, it’s the policy that lets you store your extra solar energy with the utility, and they then credit your bill at night when the sun ain’t shining any more.  So, no batteries needed.

Even better, unlike a certain neighboring State (Cough! California. Cough!) Arizona is offering net metering with no limit on the number of customers who can get it. All they ask is that you don’t get more solar than 125% of your current electric needs.

Even better, for that extra 25% of power that your panels can generate, the utility is going to pay you extra cash at the end of the year. The rate is going to vary and has to be approved by the Public Utility Commission, but hey, it’s going to be something. That means that if you go all the way and buy a system that takes care of 125% of your current electric needs, you’ll not only get free electricity, but some spending money on top. Very nice, AZ politicians!  You Rock, mostly.  See more details about the program here.

STATE REBATES AND INCENTIVE PROGRAMS

You can tell Arizona is really trying to encourage its residents and businesses with a very generous rebate program. We’re talking a Cadillac solar rebate program that gives many residents $3/watt cash towards their purchase price up to a maximum of 50% of your up front cost.

You’ll notice I said “Many.” That’s because each utility has their own program and most give around $3/watt, although people in the Sulphur Springs Valley EC Utility can get a whopping $4/watt with the SunWatts Rebate Program, but they’re all pretty generous, and people living in SRP utility territory get $2.70/watt, which is still very good.

Check your utility’s generosity below. These are summaries by the good folks at the Database of State Incentives for Renewable and Efficiency, a.k.a. “DSIRE.org”

• APS – Renewable Incentive Program
• SRP – EarthWise Solar Energy Incentive Program
• Sulphur Springs Valley EC – SunWatts Rebate Program
• TEP – Renewable Energy Credit Purchase Program
• Trico Electric Cooperative – SunWatts Incentive Program
• UES – Renewable Energy Credit Purchase Program

In addition, every resident usually gets a $1000 State Tax Credit that you can use towards State income taxes. And of course, you Arizonans also benefit from the Federal 30% Investment Tax Credit, as well.

How much does that all add up to?  A bunch. Bags ‘o money, honey. Honest. Let’s take an average 5kW example in the beautiful solar friendly Phoenix area. Hello, Sun City, Sun City West, and all you other people! This example is for you:

EXAMPLE 5kW (5000 Watt DC STC) SYSTEM – HOME INSTALLATION COST

So again, this solar quote is for the Phoenix area in the APS utility for someone paying $100 average electric bill. We’re going to assume an average installed cost before rebates and incentives of $7/watt, due to the recent drop in solar panel prices. Could be more or less depending on competition in your area. So how does that pencil out? Let me get me my pencil. Wait, what’s a pencil? This is 2009. Let’s just type this sucker out:

• Cost Before Incentives: $35,000 (5000watts x $7/watt) (Don’t panic!)
• State Rebate: subtract $15,00 ($3/watt x 5000 watts)
• 30% Federal tax credit: subtract $6,000 (calculated after State rebate)
• Arizona State tax credit: subtract $1000
• Years to Payback: 10 years (Using Net Metering and “Time of Use” TOU rate (Schedule ET-1). That means you get about 80% of your electric costs free after 10 years. Not bad.

Estimated NET cost: $13,000

Oh, yeah. This helps too:

• Greenhouse Gas (CO2) Saved: 9618lbs/year, or like not driving 11,500 miles a year.
• New monthly electric bill with solar (first year): About $15/month average (less or 0 in summer months, higher during the winter months when there isn’t as much sun.)

Solar Fred Notes:

• You may save even more, depending on your utility and their net metering program, as mentioned above. As of this writing, the rate isn’t set.
• As always, this quote is general and could be less…or more. Solar is not a one size fits all sort of deal.
• Your cost will depend on a lot of factors, including your utility, roof type, energy usage, and lots of other things. In fact, check out these 9 ways it could be more expensive.

CONSENSUS

Arizona has come into its own in the solar world and truly encouraging its residents to use its abundant solar energy. We rated her pretty bad in the past, but this year, she’s getting a full 4 suns rating. The reason she’s not getting the full 5 is for businesses. At this time, a supermarket, for example, can’t finance their solar with a  Power Purchase Agreement, commonly known as PPAs. In fact, residents can’t either.  (Correcition: PPAs are allowed, but the PPA company has to be regulated like a utility.)  PPA financing structures are generally win-win for the solar customer and the finance companies. PPAs give you the panels for free (or very little down) and make their money back over a long (20 year) contract. They profit by charging you for the energy your panels generate–typically at lower rate than the regular utility rate. Utilities don’t want a lot of large installs with PPAs who charge lower electric rates than they do, duh, so they’re saying to the legislators that PPAs should be regulated just like another utility.  No little PPA company wants that hassle, so PPAs are scarce and reserved for huge solar farms run by….wait for it… the utility.

So when Arizona makes it easier for PPAs to finance small solar in the state, we’ll bump their rating up to 5 suns.  Otherwise, you Arizona solar powered residents have many sunny solar days ahead of you.

If you have more questions, you can ask them here, but honest, every home is different. The best thing for you to do is to get one of our free customized quotes, and one of our partner installers on the ground can explain all of this and more.  Heck, get 3 quotes and compare. It’s not like it costs you anything but a little time. Free. We like free. You should too.

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