In another instance of “get your ass in gear” while incentives for installing solar power are still available, Tucson-based utility, Tucson Electric Power (TEP) dropped the rebate levels offered through its SunShare program to home and building owners from $3 to $2 per installed watt.

The utility explained that the popularity of the program led to 1,100 people reserving funds through the program in the first half of 2010. It’s no surprise that residents are taking advantage of Arizona's PV incentive programs in this sun-drenched state—the sunniest in the nation—but the applications exceeded “the total number of residential solar power systems completed over the previous nine years combined,” TEP said.

TEP isn’t the only Arizona utility that had to drop it’s rebate rates this year. In April, Phoenix-based Arizona Public Service (APS) cut its PV incentive levels to $1.95 per watt. APS’ move, TEP asserted, encouraged PV installers to stop marketing in Tucson.

In July, the utility applied to reduce the rebate offered to $2.25 per installed watt. The Arizona Corporation Commission—which controls the rebate’s price—decided to lower that amount further, but at the same time, it appropriated $8 million more to help fund the program through the rest of 2010. TEP said that, as of July 14, Tucson homeowners already applied for more than $12.2 million of the $17.6 million in up-front incentives made available through SunShare. For 2011, TEP has proposed increasing the amount earmarked for residential PV rebates to $28.9 million, at $2.25 per installed watt.

PV price drops accounted for at least part of the program’s growth in popularity. The power company noted that “prices of installed PV systems in the Tucson area have dropped to about $5 per watt from nearly $12 per watt in 2006, while TEP's incentives have remained unchanged.”

Since TEP’s electric customers fund the program through a monthly surcharge, the rebate reduction also will help lower customer’s energy costs. The fees are levied to support distributed generation projects to help the Arizona’s utilities to reach the state’s mandated renewable energy standard.

The standard requires utilities to get 15 percent of their power from renewable sources by 2025.