Arizona has seen some of the hottest solar growth in the country since 2010, but also some of the hottest debates about how utilities can and should manage distributed generation.
Despite recent public turmoil regarding he future of rooftop solar in Arizona, the state installed a record 701 megawatts of new solar capacity in 2013 and ranks second in the country for installed solar capacity with more than 1,900 megawatts as of early 2014.
While much of Arizona’s solar capacity comes from utility-scale projects in the desert that supply electricity to Arizona and California cities, a growing number of home and business owners are putting solar panels on their roofs and properties. The cost of an installed rooftop solar system dropped 14 percent between 2012 and 2013, according to the Solar Energy Industries Association. That’s almost twice the price decrease the rest of the nation saw.
While Arizona has been in the spotlight for political debates resulting from the largest utility in the state campaigning for measures that would reduce the economic viability of net meter, Arizona has strong policies and incentives supporting increased solar adoption.
The state’s renewable portfolio standard mandates utilities to get 15 percent of their electricity from renewable resources by 2025. Of that, 30 percent must come from distributed generation on homes and businesses.
Tax credits and rebates are available to property owners who upgrade or maintain renewable energy sources. One such program is Arizona’s Energy Equipment Property Tax Exemption, which has recently come under fire. So far, it has survived.
Many utilities in Arizona offer rebates or payback programs to customers who install solar or wind equipment on their properties. Depending on the rebate program, the utility may reimburse the system based on how many kilowatt hours the system is anticipated to produce over a 20 year lifespan. The utility will use those calculations to determine what the rebate for a system is. However, reimbursement funds are limited, so its a good idea to check with both solar installers and local utilities to determine what current rebates are. Installers will also help home or business owners understand how much they can expect in incentives and rebates.
(Updated September, 2014)
Corporate Tax Credit
Green Building Incentive
Personal Tax Credit
Property Tax Assessment
Property Tax Exemption
Sales Tax Exemption
Utility Loan Program
Utility Rebate Program
Rules, Regulations & Policies
Appliance/Equipment Efficiency Standards
Building Energy Code
Energy Standards for Public Buildings
Green Power Purchasing/Aggregation
Line Extension Analysis
Renewables Portfolio Standard
Solar Access Law/Guideline
Solar/Wind Permitting Standards
Related Programs & Initiatives
Alternative Fuels and Advanced Vehicles Data Center
The U.S. Department of Energy's Alternative Fuels and Advanced Vehicles Data Center (AFDC) provides a wide range of information and resources to enable the use of alternative fuels and other petroleum-reduction options, such as advanced vehicles, fuel blends, idle reduction and fuel economy. The AFDC site offers a database of state and federal laws and incentives related to alternative fuels and vehicles, air quality, fuel efficiency, and other transportation-related topics.
Green Power Network
The U.S. Department of Energy's Green Power Network provides news and information on green power markets and activities, including opportunities to buy green power. This site provides state-by-state information on green power marketing and utility green power programs. In addition, the site lists marketers of renewable energy credits (RECs), also known as green tags or renewable energy certificates, which represent the environmental attributes of the power produced from renewable energy projects.
Weatherization Assistance Program
The U.S. Department of Energy's Weatherization Assistance Program (WAP) enables low-income families to reduce their energy bills by making their homes more energy-efficient. Through this program, weatherization service providers install energy-efficiency measures in the homes of qualifying homeowners free of charge. The WAP program web site offers a state-by-state map of opportunities, projects and activities.
Wind Powering America
The U.S. Department of Energy's Wind Powering America site provides state-by-state information on wind projects and activities, including wind working groups, validated wind maps, anemometer loan programs, small wind guides, state-specific news, wind for schools, workshops and web casts.
|Program Type||Personal tax credit|
|Technologies||Solar: Photovoltaics, passive solar space heating and cooling, solar hot water, solar ovens, solar cooling, solar pool heating, daylighting, and wind.|
|Amount||$1,000 maximum credit|
|Required Documentation||Receipt of cost|
|Official Web Site||http://www.azdor.gov/Portals/0/Brochure/543.pdf|
Residents in Arizona are eligible to claim a personal income tax credit for up to 25 percent of the cost of various types of solar (including photovoltaics, water heating and more) and wind equipment and installation. However, the homeowner can only claim up to $1,000 annually. But the credit also can be claimed until it reaches the 25 percent threshold or up to five years after the first year’s claim.
Equipment covered under the program include solar water heaters, daylighting, ovens or other solar energy devices. The state requires residents obtain a certificate from the seller of the equipment stating that the equipment complies with Arizona’s solar energy equipment requirements.
|Program Type||Property tax exemption|
Solar: Photovoltaics, passive solar space heat, solar hot water, solar space heat, solar thermal electric, solar thermal process heat, solar cooling, solar pool heating, daylighting. Landfill gas, wind, biomass, geothermal electric, geothermal heat pumps, CHP/cogeneration, anaerobic digestion, small hydroelectric.
|Amount||Exempts any increased value of the property due to installation of energy equipment|
|Required Documentation||Documentation of purchase and installation of equipment|
|Official Web Site||http://www.revenue.state.az.us/|
Arizona does not consider renewable energy generating devices to add value to property—which means consumers don’t get taxed on the value added to the property by the energy installation.
Under Arizona’s law, both “active” and “passive” systems are eligible for the credit.
The exemption was created under state law HB-2429 and expanded by HB-2332 defines “energy equipment” as equipment that harness energy equipment to produce energy primarily for on-site consumption from renewable resources, including wind, forest thinning, agricultural waste, biogas, biomass, geothermal, and low-impact hydropower. It also includes high performance building components in buildings or building components that meet or exceed the energy efficiencies of programs including Energy Star or LEED.
To qualify for the exemption, property owners need to provide their county assessor with documentation of the purchase and installation of the equipment within six months. There’s no limit on this exemption—consumers can install as much qualifying equipment as they want, property tax-free.
|Program Type||Utility rebate|
Residential solar hot water heating
Residential Solar Water Heating: $0.30/kWh-displaced
|Required Documentation||Forms as required by APS|
|Official Web Sites||
Arizona Public Services and smaller utilities in the state used to offer aggressive rebates to customers who installed solar panels at their homes and businesses. In 2013, utilities started scaling back on rebate programs.
The reductions resulted from falling system prices that reduced the need for rebates to make solar installation affordable. It was also a pushback from utilities that started to fear solar would grow to the point it would threaten the utility business model.
Today, APS only offers a rebate for solar hot water heating.
Residential systems: $50,000 or 50% of system costs, whichever is less
Commercial systems: $75,000 or 40% of system costs, whichever is less
|Program Type||Utility loan|
|Technologies||Energy-efficient upgrades to residential and multi-family properties|
|Required Documentation||Utility application|
|Official Web Site||http://www.azcommerce.com/Energy/Energy-Related+Incentives.htm|
While these utility loans don’t cover the installation of solar equipment, they can help homeowners make their properties more efficient so that new solar installations will make a bigger impact on their energy bills.
Sulphur Springs Valley EC will loan up to $20,000 at 0% interest for building envelope improvements designed to make spaces more energy efficient – up to $10,000 for single-family residences.
In addition the utility loans up to $10,000 at 7% interest for new heat pumps in residential and multi-family properties.