Arizona and Colorado Solar Power Leading the West
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If you win a trip to Colorado, the first thing you may think of packing is a pair of skis to take advantage of the amazing snow and mountains. Win a trip to Arizona and you’ll probably grab a tube of sunscreen so you can work on your tan. Yet, as different as these two spectacular states are, they have at least one thing in common: they are both leaders in solar energy!
Arizona: Sunshine, Sunshine and more Sunshine!
Arizona’s solar leadership may not come as a surprise to anyone who has visited the state. It boasts some of the sunniest weather in the U.S., with has 3 of the top 5 sunniest cities in the country according to the National Climatic Data Center. These favorable conditions have helped Arizona to jump to an early lead in the solar industry, with the fourth highest installed solar PV capacity among US states. Yet, even with 46 megawatts of installed solar PV capacity already installed, the state is doing its best to continue to grow its solar generation capacity even further. In fact, the total solar generation capacity installed in 2009 was up 250% from the prior year.
Arizona’s government institutions have supported this growth, blazing a trail that other states may eventually follow. The Arizona Corporation Commission has set an aggressive goal of generating 15% of the state’s electricity from renewable sources by 2015. And to help meet this goal, Arizona offers favorable incentives to consumers and businesses that opt to install a solar system:
- Businesses are eligible for a rebate of up to 10% of the installed cost of a system.
- The state’s largest utility, Arizona Public Service, offers homeowners an incentive of up to $1.95 per installed watt of DC capacity (for example, $7,800 for a 4 kilowatt system).
- The state’s second largest utility, Salt River Project, offers homeowners an incentive of up to or $2.15 per installed watt of DC capacity (for example, $8,600 for a 4 kilowatt system) and Arizona’s other utilities also have their own rebate depending on where you live. To see if you local Arizona utility offers a rebate program, please click here.
- On top of the utility rebate, most Arizona residents are also eligible to receive a $1,000 tax credit for installing solar power.
To see how Arizona’s solar incentives might work for a residential solar power system, please see the chart below:
Please note that there many different ways to finance the purchase of a residential solar system so that you do not have to come up with a large cash outlay at one time yet ensure that you are still spending less than your current electric bill even with financing. Your solar installer should be able to help you with any financing mechanisms.
On top of the state subsidy, the entire state of Arizona has a net metering policy which means that you only pay for the net amount of electricity that you use. With net metering, homeowners with solar installed are able to “bank” the excess electricity their solar system generates and receive credit up to 100% of their electric use bill at the full retail electricity price that they can use later. In addition, Arizona’s government has even gone so far as to exempt the value of a renewable energy source from a property owner’s property taxes. Unlike other home improvements, you do not have to pay increased property taxes even though the value of your home will increase with a solar electric system.
In spite of its existing solar capacity and fast solar installation growth, Arizona has faced its share of challenges. For one, the available rebates have been extremely popular, perhaps too popular. The budgeted funding has not been able to keep up with demand in some instances. Salt River Project (the 2nd largest utility in the state) had to cut its incentive in early 2010 because it was at risk of running out of funding. In addition, Arizona only recently allowed solar to be finance with a power purchase agreement (PPA), yet these PPA’s must be regulated like a utility are essentially available for large scale solar farms that contribute power directly to the grid. However, even with lower utility and/or state incentives, solar continues to be very popular with Arizona homeowners and businesses.
Colorado: Sun Country USA?
Despite Colorado’s fame as a skiing destination, Denver actually ranks 30th of 174 major U.S. cities in terms of sunshine potential, not far behind Honolulu and Miami. In fact, Colorado has the third highest installed solar PV generation capacity of any U.S. state (source: IREC US Solar Market Trends 2009). As a result of innovative policies and greater awareness of environmental issues, Colorado was an early adopter of solar energy systems. As of the end of 2009, the state had 59 megawatts of installed solar PV capacity, third highest among U.S. states despite the fact that the state ranks 22nd in terms of population.
Partly as a result of its early adoption of solar technology, Colorado’s installation capacity has not been growing as quickly as Arizona’s: the capacity of solar systems installed in 2009 was only 8% higher than the prior year (source: IREC US Solar Market Trends 2009). Still, the state offers some of the most attractive incentives available in the US. In addition to the 30% federal tax credit, the state government and local utilities offer a variety of programs that can make a solar system more affordable:
- The Colorado Residential Renewable Energy Rebate Program offers an incentive of up to $1.50 per watt. (for example, $6,000 for a 4 kilowatt system) plus a $0.45 per watt REC (see below).
- The state’s largest utility, XCEL, offers an incentive of up to $2.00 per watt (for example, $8,000 for a 4 kilowatt system) plus a $0.50 per watt REC, while the second largest state utility, Black Hills Energy, offers an incentive of up to $2.00 per watt (for example, $8,000 for a 4 kilowatt system) plus a $0.50 per watt REC for systems up to 10 kWh. To see if you local Colorado utility offers a rebate program, please click here.
- Colorado also offer Renewable Energy Credits, or RECs, which are essentially environmental credits for producing green energy on your home and doing something good for the environment. RECs are calculated based on the value your solar panels will produce based on a 20-year utility life. Ultimately, the value of REC depends on the state that you live in but if you were to sell your RECs in Colorado you would net around $0.85 per watt.
- PACE financing may be available in some areas. With this special type of financing, homeowners are able to pay for the cost of a solar system with a special property assessment that they can off over many years. Check with a local solar installer to see if these programs are indeed available in your area, as many have been suspended due to recent Federal Housing Finance Agency (FHFA) policy changes.
To see how Colorado’s solar incentives might work for a residential solar power system, please see the chart below:
Please note that there many different ways to finance the purchase of a residential solar system so that you do not have to come up with a large cash outlay at one time yet ensure that you are still spending less than your current electric bill even with financing. Your solar installer should be able to help you with any financing mechanisms.
Like Arizona, Colorado is a net metering state but unlike virtually every other state in the U.S., Colorado requires its utilities to pay you for the net excess solar power that a solar system produces over the course of a year. This means that if you reduce your electric usage during the year with a home solar system, the utility has to actually pay you a check at the end of the year for any extra solar power that you have contributed to the grid. You also have the option to have that payment be used as extra credit for your subsequent electric bills.
Prior to moving forward with a solar installation, it is always a good idea to seek professional advice. This is especially true in today’s climate, with many solar incentive programs struggling to keep up with demand. A licensed solar installer can help you figure out the cost of a system, financing options, and the incentive for which you qualify.
For those interested consumers – homeowners and commercial business owners – that are unsure about solar power and how they should go about evaluating whether solar is right for their situation, please know that there are answers to your problems and all you need to do is a little research at great sites like the U.S. Department of Energy, Solar Energy Industries Association, and Solar Energy Installers. Remember, solar power is potentially a large investment, so it’s advisable to look into both the technical and financial considerations before either getting the wrong solar panel system or dismissing the chance to save with solar.
Text Courtesy: MyEnergySolution.com – Arizona and Colorado Solar Power
Photo Credits: U.S. Army Environmental Command via flickr (CC license); Dave Dugdale via flickr (CC license)
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