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Arizona House Passes Solar Energy Tax Credit

By Jesse Broehl, Editor, RenewableEnergyAccess.com
March 29, 2005 | 21 Comments

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Peterborough, New Hampshire [RenewableEnergyAccess.com] Anyone who spends more than an hour outside in Arizona knows that the state's strongest incentive for solar energy is right above them. Legislation and utility incentives in the state have gradually evolved to help consumers and businesses to tap the strong solar resources. If it passes out of the State Legislature, a new bill in the Arizona will expand that effort.

"Arizona should emerge as a major center of solar economic activity that would include all the jobs associated with deploying solar electricity."

- Glenn Hamer, President of Americans for Solar Power (ASPv)

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.

Solar Energy, Wind Power

21 Reader Comments

Comment
1 of 21

guest-user-0

March 29, 2005

What we really need in Arizona is statewide net metering. This will have the single largest effect on the economics of grid tied PV systems and really help to increase the potential market as in CA and NYJ.

Comment
2 of 21

guest-user-0

March 29, 2005

We need higher percentages at a faster pace. 5% by 2015 is way less than what some of the other countries are shooting for. Aim for the stars and settle for the moon, aim for the mountains and settle for the hills. It makes it look like our technology is alot farther off than it really is.

Comment
3 of 21

guest-user-0

March 30, 2005

On average what rebate % is required for PV to have a simple 10 year payback... 75%?...85%?

Comment
4 of 21

guest-user-0

March 30, 2005

Does bcmehalic mean to say there is NO net metering in Arizona? Just in spots? Or what?

Comment
5 of 21

guest-user-0

March 30, 2005

Net metering means that your kWh-meter can run back-wards. This means you get full retail price for the kWhs you do not use yourself.

Comment
6 of 21

guest-user-0

March 30, 2005

Please explain "net metering" and its effect on economics.

Comment
7 of 21

guest-user-0

March 31, 2005

Hey, guys and gals, I wish you all could have what we have in NJ: net metering AND up to 70% rebate on equipment and installation AND "solar Renewable Energy Credits" which are "green tags" and are currently selling for between 15 and 17 cents per kWh produced. Business can do even better with a 5 year accelerated depreciation and the fed 10% tax credit. PLEASE -- for the sake of the planet, yours and your children's health -- copy our system in your state. With all that sun, Arizona should be ashamed of itself if they don't copy this program -- and it costs the state virtually nothing!!! IF ONLY THE FEDERAL GOVT WOULD CATCH ON?!?!?!

Comment
8 of 21

guest-user-0

March 31, 2005

How important the net metering is, depends on how well the PV production matches your use. For example if you have airconditioning and work at home there will be an almost perfect temporal match and you consume the solar energy on your side of the meter. However, if you live allone and consume most of your elektricity at nigth, most of the solar electricity will flow into the grid and then net metering becomes extremely important.

Comment
9 of 21

guest-user-0

March 31, 2005

Arizona metering varies by utility company, depending on how they decided to meet the state mandated RPS requirements. In my area (APS, central and northern arizona) grid tied systems sell power at the wholesale rate, approx. 3 cents/kwh, and buy it back at the retail rate, about 9 cents. Thus you must generate 3 kwh to offset each individual kwh that you draw from the grid at night. This dramatically raises the payback period of PV systems versus net metering as in CA (or the premium paid for RE power as in Germany).

Comment
10 of 21

guest-user-0

March 31, 2005

To achieve net metering would require highly motivated lawmakers totally and completely unswayed by the very powerful Utility lobby we have in this state. The utilities are deathly afraid of net metering but the actual impact would be negligable, even with lots of solar generation. It hasn't put the California utilities out of business yet.

Comment
11 of 21

guest-user-0

April 1, 2005

4) If you can afford to put enough solar on your house to spin the meter backwards, even with incentives, then you are likely not doing this for the money. If you aren't doing it for the money, why do you try to use the Government to forcefully take money from other individuals so you can have your 'free' solar power? I choose a hybrid car not because it 'pays,' but because I choose to pay the extra money to decrease my negative impact on our environment.

5) For anyone installing solar on their home, they should do two things first: a) Figure out where their energy usage is, and implement changes to make your home more energy efficient, and b) Install a Solar Hot Water Heater. These two things will actually provide true payback, and will often times be better than a simple 10-year payback.

6) Green credit trading is a good thing, but in AZ the Utility buys the Green Credits for the Rebate. Between $3 and $4/watt, or 50% of the cost of the system (including installation).

Comment
12 of 21

guest-user-0

April 1, 2005

Costs the state virtually nothing? Please explain...

1) Rebates cost the customers, particularly those who don't own solar.

2) Tax Incentives cost the Taxpayers. Please don't believe that our lawmakers won't collect the money from somewhere else.

3) Netmetering isn't a big factor, those who've implemented in AZ have seen extremely little application of it. In addition, solar doesn't negate the need for all the transmission lines and therefore their costs. The full cost of retail electricity includes a considerable amount of transmission line operation, repair, and maintenance costs (figured on a per kWh basis). Why shouldn't you pay the transmission operator to operate, repair, and maintain the very wires that you use to transmit your electrons to your neighbors?

Comment
13 of 21

guest-user-0

April 3, 2005

Hey Guest User 4_1_05:
4) Work your tax sob story on Bush. The market does not work miracles. Read Ray's comment again. Enjoy paying the deficit.

Comment
14 of 21

guest-user-0

April 3, 2005

Hey Guest User4_1_05
Why do you put forth arguments that mirror the present administration's energy policy, when big oil/coal and sicko nuclear industries are the winners in a $30 billion dollar tax subsidies energy bill? Try watchin HBO's Children of Chernobyl and think about Moad UT and the uranium mess that tax payers will have to pay to clean up! How abut amortizing the cost of storing Nuke waste for over 10,000 years and tell me that it is not sick to suggest that the USA continue its present energy policy when they can not find the missing $9 billion spare change given to Haliburton in Iraq?

Comment
15 of 21

guest-user-0

April 4, 2005

The fact is, public utilities are in business for the benefit of their shareholders. If they perceive a threat to their bottom line (i.e. slower revenue growth or increased costs) they are going to fight it. Distributed generation sources such as home installed PV systems are one of these threats. It is the job of the regulators and politicos to demand changes that have a public interest benefit, especially when it goes against the interests of the utility shareholders. The problem in Arizona is that the utility executives have convinced most of the regulators and politicians that what is good for their shareholders is also good for the general public. Until there is a strong and vocal public interest movement to support solar technologies like there is in CA, Arizona will likely be a reluctant follower at best, irrespective of it solar abundance. Maybe when we start paying CA prices...

Comment
16 of 21

guest-user-0

April 5, 2005

Finally, there isn't enough roof space in much of AZ to offset someone's energy needs enough to truly worry the Utility executives. They cannot dissappear, ever. They are regulated, which means they are allowed to charge whatever the Corporation Commission determines. A certain return to the shareholders is included in the ACC's determination. Say 1000 people totally cut the utility cord (went off-grid), during the next rate case, the ACC/Utility would need to adjust rates accordingly to pay for the production and a certain return to shareholders.

Comment
17 of 21

guest-user-0

April 5, 2005

I'm very much against the current administration and its tax policies. Our government has been subsidizing the fossil fuel programs for years, and continue to do so. I was appauled when the 10-yr PTC was pulled because 'there is no need to subsidize technologies that are commercially available and affordable.' (That is not a direct quote, but a paraphrase of what was said). What a crock, because (as I said) they've been doing it for years with the fossil fuel industry!

Regarding a world without nuclear, I just don't see how we get there. There isn't enough sunlight or wind to 'reliably' provide all of our energy needs. I say this because solar is intermittent in nature (as is Wind) and there will require a huge storage breakthrough to accomplish daytime reliability, let alone energy at night. I hope such a breakthrough IS accommplished during my lifetime, but until then...

Comment
18 of 21

guest-user-0

April 6, 2005

As a new resident of Gold Canyon, AZ, I was very surprised to learn that there is little incentive to install inidvidual photovoltaic systems. At my former home in Palm Desert, CA, I installed a 4.5KW (rooftop system in a gated community) that reduced the first year's electric bill to a credit of $9 (that's a year, not a month) and the second year of use to a debit of $30! That's the total bill!!

The cost of the system came close to $40,000 but the instant rebates and tax incentives brought the cost to about half. Couple that with virtually no electric bill (in Palm Desert, mind you!) and you have viable payback. With an average monthly electric bill of ~$250 (3 A/C's in a 2600 sq ft home), payback occurred in the 6th or 7th year.

Arizona, sitting inside one of the greatest solar resource areas, should implement similar incentives if they are serious about renewable energy participation.

Comment
19 of 21

guest-user-0

April 7, 2005

Why are you people okay with stealing other people's money to reduce your energy bill? How about an affordable energy solution that is clean and doesn't rely on a simple REBATE program? At least Germany requires your system to operate to get your $.

For financial incentives in your state, see http://www.dsireusa.org/

Comment
20 of 21

guest-user-0

April 19, 2005

I just can't help the feeling that if the government really wanted to develop solar energy, they would make the incentives so much the more attractive.
There is still some condition going on placing consumers, in this case, power generating consumers at a predatory disadvantage.
The laws should be created that power companies WILL pay market rates for all power consumed and redistributed by them. It doesn't matter that at times it may not be much, but when they pay higher rates for outside energy, all who produce ought to benefit. ESPECIALLY the little guy.
WE pay 30,000 for the systems. Why should they scoop up the energy like baleen whale?
They sure have their attractive little flim flams going on.

Comment
21 of 21

guest-user-0

April 19, 2005

Is the current rebates considered lifetime rebates or are the rebates calculated on yearly purchases. i.e.(the first year(2005), I spend $4000.00, and take a rebate 0f $1000.00 under the current program. Can I do this three years in a row in order to take maximum advantage of the rebate program????

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