Two bills introduced by Rep. Lucy Mason (R-Prescott), which passed in Arizona's House of Representatives, will boost energy efficiency and provide new incentives for solar photovoltaic energy. One of the two bills, (HB 2374), improves upon current state legislation that offers a tax credits for the installation of renewable energy systems. The other bill provides incentives for energy efficient appliances.

Currently, the state offers consumers and small businesses a tax credit of 25 percent of the cost of a renewable energy project, limited to a total of $1000 dollars. The new bill sets out a specific residential credit for solar PV systems of 15 percent project cost with a total cap at $3000 dollars. The credit can be applied toward taxes during a five-year period beginning 2005.

Sean Seitz, who is the President of Arizona Solar Energy Industries Association and also the president of his own design/build solar energy firm, says the credit improves upon the existing credit structure but puts it more in line with the high up front cost of solar PV systems.

"The goal is to balance the state tax credit so PV systems reach that simple 10 year payback period," Seitz said.

Almost 90 percent of Arizona's residents can qualify for some level of rebate or incentive from utilities in the state, according to Seitz. Investor-owned utilities like Arizona Public Service are required through the state's renewable portfolio standard (RPS) legislation to source 1.1 percent of their power from renewables -- a requirement they have partially satisfied by offering rebates for residential solar systems. Municipal utilities like Salt River Project have followed suit by voluntarily enacting similar rebates.

The Arizona Corporation Commission (ACC), which regulates the state's investor-owned utilities, is currently reviewing options to expand the RPS standard, perhaps to as much as 5 percent by 2015 and 15 percent by 2025, according to Seitz.

If the RPS moves beyond 1.1 percent, the tax credit bill (HB 2374) will help streamline additional renewable energy deployment in the state according to Glenn Hamer, President of Americans for Solar Power (ASPv) and former Executive Director of the Washington D.C.-based Solar Energy Industries Association.

"In general, it's part of an effort coinciding with what's going on with the ACC to create a distributed PV market -- creating a choice for consumers," Hamer said. "The legislation, coupled with expected changes (to the RPS) should create a climate where companies are interested...Arizona should emerge as a major center of solar economic activity that would include all the jobs associated with deploying solar electricity."

Changes to the state's RPS could emerge within the next few weeks. The solar bill, HB 2374, remains to be finalized or approved on the Legislature's Senate side, the last step required before it could head to the Governor's desk for a signature.