Arizona's Rebates and Incentives for Solar Energy Systems

It would appear that Arizona is ramping up to make its solar move. Existing solar incentives are average at best but; with a Renewable Portfolio Standard (RPS) requiring 15% renewables, utilities are going to have to work hard to reach that goal. However, it would be nice to see more from the state legislature to get the ball rolling. Two things that Arizona is visibly lacking right now: Net metering and interconnection standards. Right now the utilities are making up all the rules themselves and customers just aren't biting. On the bright side are Arizona's tax exemptions.

TAX INCENTIVES

Residential Solar and Wind Energy Systems Tax Credit

Pretty much any level of solar energy system, including solar ovens, can qualify for this tax credit. The only problem is that it does not encourage larger systems such as solar thermal electric or photovoltaics (PV). How?
Limits on the tax credit are set at 25% of the system cost with a cap at $1,000. This is not bad for small systems from solar ovens up to solar hot water systems. However, 25% of a PV system will be much more than $1,000. Perhaps some language to differentiate between high and low end systems is in order.

Solar and Wind Sales Tax Exemption

This tax credit exempts 100% of the cost of equipment for solar installations, both passive and active, from the state sales tax.
In order to qualify, solar retailers or contractors must be registered with the Arizona Department of Revenue prior to installation. For more info, check out the Arizona Solar Center.

Solar Energy Property Tax Exemption

Once again covering the spectrum of solar technologies, the property tax law exempts the owner from increased taxes equal to 100% of the assessed increase in property value.
Combined with the sales tax exemption, this means that you can purchase, install, and use a solar system in Arizona tax free, a valuable factor when calculating an investment in solar.

Arizona's tax exemptions are a vital step in the right direction. But it is not just tax exemptions that have gotten solar off the ground in so many other states. Tax exemptions are great but it is the up-front costs that keep so many homeowners on the fence. Rebate programs, coinciding with worthwhile net metering rules and regulations, are key to solar incentive programs. Arizona, much like its neighbor New Mexico, is trying to push the state's utilities to in turn push solar and other renewables into the limelight. But will it work?

With a new RPS just approved last year, it is too early to tell. Certainly utilities are adopting rebate programs, and decent ones at that (see DSIRE for a list of programs), so things should get moving. One missing piece of the puzzle would be uniform net metering rules and interconnection agreements. Right now, in every case, excess generation is granted to the utility at the end of the annual billing cycle.

USEFUL LINKS

Arizona Department of Commerce: Energy

Arizona Solar Center

DSIRE: Arizona

Solar Power Rocks: Arizona