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:
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!
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