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Executive Summary
Homeowners, businesses and industries across Arizonaare starting to take advantage of solar energy.Thanks to programs designed to advance the market for solar photovoltaic (PV) systems, solar is becoming a cost-effective and mainstream energy solution, helping to reduce Arizona’s contribution to global warming while also saving consumers money.
Incentives and tax credits for solar energy recognize that solar power provides value not just for people with solar systems, but for everyone who uses the electricity grid. Solar PV generates the most electricity during long hot summer days when electricity is the most expensive to produce, reducing the need to build new power plants and transmissions lines.
However, the state can do a lot more to put the sun to work. By requiring new homes in Arizona to be equipped with solar energy and hot water systems, Arizona can reach a goal of 250,000 solar homes and businesses by the year 2015 – more fully capturing the environmental and economic benefits of solar energy.
Homeowners in Arizona are taking advantage of rebates and tax incentive policies to install solar systems.
• For example, the Burgess family installed a 3.2 kilowatt solar PV system on their home in Surprise in 2005. After state rebates and state and federal tax credits, the solar system cost the Burgesses $11,500. The Burgesses will generate energy valued at $570 dollars a year on their own roof. If energy prices remain constant, their solar system will pay for itself in less than 20 years. This system will prevent the release of nearly 240,000 pounds of carbon dioxide – the leading global warming pollutant – over its 25-year warranty.
Businesses in Arizona are using solar power to lower energy costs over the long term.
• Businesses have the ability to install larger-scale solar PV systems than residences. Larger scale often means shorter payback periods and greater cost-effectiveness.
• For example, Taylor and Associates, a law firm in Phoenix, installed a 60 kilowatt solar PV system in November 2006. Without incentives, the system would have cost nearly $400,000 – but rebates and state and federal tax credits reduced the total cost to $75,000. Assuming constant energy prices, the system Taylor and Associates installed will pay for itself in energy savings in about seven years – and then provide profit for the rest of its 25-year warranty. Additionally, the system will prevent the emission of 4.4 million pounds of global warming pollution during its useful life.
Governments and public agencies in Arizona are also putting solar to work.
• Solar PV systems installed by government agencies not only help generate more solar power, they also serve to educate and inform the public about the potential of solar energy.
• For example, Luke Air Force Base, near Glendale, worked with Honeywell to install a large 375-kilowatt solar PV system on the base in 2006. This system received $1.5 million in rebates, and Luke Air Force Base expects to save nearly $22 million in energy and operational costs over the next 20 years. The system is one of the largest non-utility solar systems in Arizona. Over its 25 year lifetime, the solar system will prevent 28 million pounds of global warming pollution.
State policy is driving the progress of Arizona’s solar energy market, in recognition of the benefits that solar energy provides to Arizona as a whole.
• Solar energy benefits everyone who uses the electricity grid in Arizona – not just the owner of the solar system. Solar energy provides value because it produces energy during bright daylight hours, when demand for electricity is at its highest. As a result, it prevents the need to build peaking power plants that burn natural gas, which is growing more expensive and is vulnerable to price spikes. Solar energy, when installed near where the electricity will be used, also reduces the need for electricity transmission and distribution infrastructure, saving all electricity customers money.
• In recognition of these benefits, the Arizona Legislature and the Arizona Corporation
Commission have created incentives to increase Arizona’s use of solar energy. Policies ranging from tax exemptions to rebates have reduced the up-front costs of solar systems and helped make solar PV a cost effective option for homeowners.
Arizona could do much more to accelerate the progress of its solar energy market.
• Arizona has the best potential for solar PV energy of any state in the U.S. The U.S. Department of Energy estimates that sunlight captured on less than one quarter of one percent of Arizona’s land (an area roughly the size of Lake Powell) could generate all of the state’s current electricity needs.
• Arizona is currently using just a fraction of that potential. Current incentives have resulted in the installation of 13 megawatts (MW) of solar power.
• With stronger incentive programs, Arizona could accelerate its solar PV market to reach a goal of 250,000 homes and businesses with integrated solar PV systems by 2015. At this level, solar energy would generate about two percent of Arizona’s electricity needs. Introducing this level of scale into the solar market would also rapidly accelerate the point in time where incentives will no longer be necessary and the solar market will be self-sustaining.
To build a successful and large-scale solar energy program, Arizona should:
• Incorporate solar energy into new construction. The most cost effective time to install solar power is during construction. State decision makers should change the building codes to require solar energy devices on new homes built in Arizona.
• Ensure the successful implementation of the Renewable Energy Standard and Tariff. Ensure that the state generates 15 percent of its energy from renewable sources like solar by 2025.
• Maintain and expand tax credits. By allowing individuals to claim more tax credits for installing solar energy devices, state decision makers can encourage more people than ever to “go solar.”
• Make net metering a uniform statewide policy. Requiring utilities to offer meters that run backwards when solar PV devices generate more electricity than homeowners consume will allow consumers to take better advantage of the economic benefits of solar power.
• Dedicate funds for a solar incentive program. Creating a new state-funded rebate program that will help homeowners offset installation costs will increase the use of solar PV.
• Remove barriers to solar energy created by homeowners’ associations and related groups.
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