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Clean Power arizona solar energy

Published on October 6th, 2011 | by Reggie Norris


Layman’s Guide to Arizona Solar Rebates

October 6th, 2011 by  

arizona solar energy

Last week I was in Tucson visiting an old college buddy and he kept asking me what I do. So, naturally, the conversation gravitated towards solar. It was fun as he seemed genuinely interested in solar energy, how economically viable solar was, and what it would take for him to go solar.  However, I was a somewhat startled how little he knew about what Arizona offered in terms of financial incentives and how they apply (particularly in conjunction with federal incentives). After working out the numbers for him, I thought it might be useful to spell it out for the masses as well.

First, Arizona offers a Solar Energy Credit for consumers who install a solar or wind energy device at their Arizona residence — used against the consumer’s personal income tax in the amount of 25% of the cost of a solar or wind energy device, with a $1,000 maximum allowable limit, regardless of the number of energy devices installed. The credit is claimed in the year of installation. Arizona exempts the value of a renewable energy source from a property owner’s property taxes.

As far as rebates, the amount of the rebate is dependent on who your utility provider is, as they are the principal provider of cash rebates to solar customers in Arizona. The state’s largest utility, Arizona Public Service (APS), offers homeowners an incentive of up to $1.00 per installed watt of DC capacity for grid-tied solar systems. So, if your system is 4 kW or 4000 watts in size, you’ll receive a check for $4,000. The state’s second largest utility, Salt River Project (SRP), offers homeowners an incentive of up to $1.35 per installed watt of DC capacity, up to a maximum of $6,750. And if you live in Tucson and Tucson Electric Power (TEP) is your utility provider, TEP offers homeowners an incentive of up to $2.00 per installed watt of DC capacity for qualified, grid-tied solar systems.

(Just a side note: if you’re interested in getting solar for your home, it’s best to act now as the APS, SRP and TEP rebate numbers are down from where they were just a couple of months ago. As with all states, particularly California, the state solar rebate is not infinite and declines as more and more people access it. So if you want to take advantage of free money, it’s best to move sooner than later.)

Below is how I modeled it out for my friend who lives in Tucson, using a 4 kW system as my model:

 AZ solar rebate and financing

6.7 years to pay off an investment that will provide you with economic value for over 20 years — not too bad. This, of course, is assuming you decide you want to purchase the panels (and you live in Tucson — obviously, if your utility provider is APS or SRP, the payback period will be longer because the rebate is smaller). Most solar installers offer unique leasing arrangements so you don’t have to come out of pocket up front to buy the panels.

What is great about leasing is that the cost of leasing the panels plus your new electric bill is usually still below your bill without solar. Some installers offer other unique programs, like power purchase agreements, where the solar provider/installer secures funding on their own for the solar project, installs the solar system on your home and then sells the electricity from the solar system to the homeowner at a fixed contractual price for a set length of time.

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 fact, Arizona has one of the best net metering laws in the country. Excess generation is rolled over month to month, and any surplus is returned annually to the consumer at the avoided cost rate. Not all Arizona electric utilities offer net metering. It is necessary to check with the utility serving a specific address to determine if net metering is available to you.

Net metering requires special inverters that are capable of delivering power to a utility, and the utility will want to approve of the inverter and other safety-related equipment in order to protect their equipment, personnel, and other customers. Please note that my model above did not take into account any additional funds received from net metering.

Anyway, this is basically what I told my friend and I think it helped him… he’s got an appointment with a local installer this week! For those Arizona residents who are intrigued but need help finding a solar installer, a solar energy matching service such as that provided by Solar Arizona can also take much of the guess work out of selecting a solar installer. Good luck and happy solar hunting!

Photo Credit: AttributionNoncommercial Some rights reserved by cobalt123


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About the Author

Prior to joining Clean Energy Experts, Reggie ran operations for the first completely carbon-neutral water company in the U.S., Nika Water Company that donates 100% of its profits to support projects that bring clean water and safe distribution to under-developed areas around the world. Prior to Nika, Reggie was a corporate & securities attorney for Wilson Sonsini, Goodrich & Rosati where he represented high-growth consumer and technology focused start-up companies. Earlier, Reggie was a staff attorney for the U.S. Securities & Exchange Commission in Washington, D.C. He holds a LLM from University of San Diego School of Law, a JD from University of California Hastings College of the Law and an AB in English from Stanford University.

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  • Jeffrey Blumenthal

    TEP is not currently accepting residential PV solar applications:


  • Susan Kraemer

    It is the warranty that is for 25 years, and the full life is around 40. Solar panels lose a half percent of output a year, so in 25 yrs, they are outputting at 12.5% less than the original rated power. So mfr cannot call a 200 watt panel that has become just a 187.5 watt panel still a 200 watt. But it is still a perfectly good lower watt panel.

  • Lajollanorris

    Thanks so much for the comments. Just to clarify, this is article is based on assumptions and not an actual quote, so there is going to be some wiggle room.

    However, my sourcing for all data was from DSIRE.org, viewing my friends TEP electric bill and a contact at a national solar installer that works in Arizona regarding output.

    Overall, after taking all sources, I felt that the data was accurate enough to include in the article (with the appropriate disclaimers) as an educational piece about Arizona’s rebates.

    Nevertheless, I really do appreciate the comments as it does highlight some of the variabilities in solar…particularly that rebates can change from location to location as can your electric bill…even the “average” output of a solar system can be variable (ie. where it is oriented, shading issues, quality/type of components and craftsmanship).

  • Jeff S

    The estimates above are incorrect. SRP shows on their website that every 1kW of array size will produce about 1700 kWh of electricity per year (approx $170 worth). Therefore, a 4 kW array like mentioned above will produce a bit under $700/year. The other miscalculation above is the install price. Prices for installation of PV in Tucson are under $5/watt for typical residential applications.

    The numbers would look as follows

    4 kW system
    total installed cost before rebates/incentives < $20,000
    AZ tax credit $1,000
    Current Utility rebate $2/watt = $8,000
    Remaining amount is $11,000
    Federal 30% investment tax credit = $11,000 x .3 = $3,300
    Final out of pocket cost to homeowner ~ $7,700
    Electricity production ~ $700/year
    estimated payback 11 years.

  • Nrgwise Lighting

    I doubt electricity is .30/kwh

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