Arizona Solar Tax Credits, Incentives and Rebates (2024)
Harnessing solar energy in Arizona presents an incredible opportunity for residents to tap into renewable resources while enjoying financial incentives. Moreover, Arizona offers a range of benefits that significantly reduce the cost of installing solar systems. In this guide, we’ll explore the array of statewide and local incentives available. Thus empowering Arizona residents to make informed decisions about adopting solar energy solutions.
Key Takeaways
| Arizona provides a 25% tax credit on solar installation expenses, up to $1,000, along with property tax exemptions and a 30% federal tax credit, making solar more affordable for residents. |
| Various electric cooperatives offer rebate programs, such as Mohave Electric Cooperative's SunWatts program, providing incentives for solar installations and energy-efficient upgrades. |
| Arizona employs a net billing system rather than net metering, affecting how homeowners are compensated for excess solar energy fed back into the grid. |
| While statewide energy storage incentives are currently unavailable, Salt River Project (SRP) offers rebates for home battery installations, enhancing energy resilience for residents. |
Statewide Arizona Solar Rebates and Incentives
The second sunniest state in the country, Arizona, is an ideal location for utilizing solar energy. Furthermore, now is an opportune time to do so with the decreased cost. Arizona residents can benefit from various financial incentives, such as a state tax credit, exemptions on property and sales taxes, and the 30% federal solar tax credit, which all work together to significantly lower the overall cost of installing a solar system.
Arizona State Residential Solar Income Tax Credit
Additionally, Arizona provides a solar tax credit equal to 25% of the expenses incurred while installing your solar system, with a cap of $1,000. Residents can claim this tax credit on their income tax returns in the state.
Basically, if the credit amount surpasses the taxes owed, it can be carried forward for five years. However, individuals who lease their solar systems or participate in a power purchase agreement (PPA) are not eligible for this tax credit.
Energy Equipment Property Tax Exemption
Adding a solar power system to your home can boost its value. Moreover, in Arizona, you can take advantage of a property tax exemption that allows you to avoid paying taxes on the increased value. Baiscally, this exemption also applies to other solar and energy-efficient upgrades. Examples of such are passive solar technology like Trombe walls. Moreover, we also have solar pool heaters, solar space heaters, solar thermal electric systems, solar water heaters, etc. To qualify for this tax break, you must provide detailed documentation of your energy system purchase, installation, and expenses to your county assessor. For more information on the Arizona property tax exemption, visit the DSIRE website.
Solar Equipment Sales Tax Exemption
Arizona’s Department of Revenue offers a sales tax exemption. Arizona’s solar energy equipment and installation services are carried out by authorized contractors. It should be noted that this exemption does not apply to solar battery storage or any additional accessories that are not included in the original solar power system.
To receive the sales tax exemption, the solar installer must register with the Arizona Department of Revenue (ADOR) by completing and submitting Arizona Form 6015. As the customer, you are not required to act in this process.
Local Arizona Solar Rebates and Incentives
| Local Arizona Solar Incentive | Who’s eligible? | Estimated Savings | Description | Frequency |
|---|---|---|---|---|
| Mohave Electric Cooperative SunWatts Renewable Energy Incentive Program | Mohave Electric Cooperative customers | $0.05 rebate per watt, up to $2,5000 for solar photovoltaic installations | The SunWattsprogram incentivizes Mohave Electric Cooperative customers to install solar with a $0.05 rebate per watt of solar installed and $0.75 per kWh of energy saved for solar water heating for the first year. | One-time rebate for solar installations, payout for solar water heaters is through the first year of system operation |
| Trico Electric Cooperative SunWatts Incentive Program | Trico Electric Cooperative customers with solar water heaters | $0.40 per kWh savings with solar water heaters through the first year | Trico Electric Cooperative offers a SunWatts rebate program for energy saved with solar water heaters. | Payout for solar water heaters is through the first year of system operation |
| Sulphur Springs Valley EC-SunWatts Rebate Program | Sulphur Springs Valley EC customers with solar water heaters | $0.50 per expected first year of kWh savings with solar water heaters | Sulphur Springs Valley EC offers a SunWatts rebate program for energy saved with solar water heaters. | Payout for solar water heaters is through the first year of system operation |
How To Claim Local Arizona Solar Rebates and Incentives
Additionally, it may be beneficial to speak with a local solar installer or renewable energy consultant who can provide guidance on available incentives in your area. They can help you understand the specific requirements and steps to claim any incentives for installing solar panels or other renewable energy systems.
Remember that incentives and rebates can vary by location and change frequently, so staying informed and seeking professional guidance can help you maximize your savings when going solar.
For further information on local incentives and how to redeem them, check out the DSIRE website. Contact your utility provider to inquire about qualifications for solar incentives and rebates.
Net Billing vs Net Metering
Arizona does not have a net metering program, but instead, requires investor-owned utilities to provide a different compensation system known as ‘net billing’. This results in homeowners receiving reduced’ solar savings, as any extra electricity generated is not credited at the total retail rate but at a lower rate.
What is Net Metering?
An incentive called Net Energy Metering (NEM) is a policy that enables solar customers to receive credits for the surplus energy produced by their solar panels and fed back into the grid. These credits can offset electricity expenses when their solar panels are not generating sufficient power.
Is Net Billing A Better Thing?
In Arizona, Net billing is similar to net metering in that your home uses the solar energy your panels produce and any excess solar electricity is sent to the grid and purchased by your utility. Net billing differs from net metering in how much the utility has to pay you for that excess solar energy.
Under Arizona’s net billing program, utilities purchase excess Arizona “excess generation credit rate” worth less than the” retail value of electricity.” So, if your utility charges you $0.10 per kWh you use, they might only pay you $0.08 per kWh of solar you send to the grid.
And don’t expect your utility to cut you a check for the excess electricity you send them. Instead, you’ll get paid back through a credit on your electricity, which can be used to offset a portion of your future electricity cost. Net Energy Metering (NEM) policy enables solar customers to receive credits for the surplus energy produced by their solar panels and fed back into the grid. These credits can be used to reduce future electricity expenses when solar panels are not generating sufficient power.
Excess generation credit rates
The excess generation credit rate varies between utilities, but no matter your utility, it will be lower than the full-retail electricity rate. Arizona Public Service (APS), for example, values excess solar energy at about 60% of what they charge homeowners for electricity.
The following table outlines the excess generation rate for the three major utilities in Arizona in 2023:
| Utility | Excess generation credit rate | Estimated retail rate* |
|---|---|---|
| Arizona Public Service (APS) | $0.09 per kWh | $0.12 per kWh |
| Tucson Electric Power | $0.08 per kWh | $0.15 per kWh |
| UNS Electric | $0.08 per kWh | $0.11 per kWh |
*Actual retail rates will vary depending on the rate plan you choose.
Arizona Solar Rebates and Incentives for Batteries
There are no statewide energy storage incentives available in Arizona at the moment. However, Salt River Project (SRP) customers can take advantage of a rebate program that can result in substantial savings on an energy storage system for their homes.
If you are a customer of SRP, you may be eligible for significant savings on purchasing a battery through their storage incentive program. Currently, the utility company is offering a rebate of $300 per kilowatt-hour (kWh) (up to $3,600) for customers who install a home battery and agree to participate in their battery research study. This rebate equates to $2,790 for an LG Chem RESU 10H battery.
Having solar panels in conjunction with your storage system is unnecessary to qualify for this incentive. However, only lithium-ion storage technologies with UL 1973 or UL 9540 certification are eligible for the rebate.
Conclusion
As Arizona continues to embrace solar energy, residents stand to benefit from many incentives and rebate programs. By leveraging these opportunities, homeowners can not only reduce their carbon footprint but also save substantially on energy costs in the long term. Making the switch to solar power not only contributes to a sustainable future but also offers tangible financial rewards.
Ready to Go Solar?
For those considering solar energy in Arizona, it’s essential to explore available incentives and consult with local experts to maximize savings. Embrace solar power today to secure a brighter, cleaner tomorrow for Arizona and beyond.
FAQ – Frequently Asked Questions
1. What is a tax credit?
A tax credit is a tax reduction that a taxpayer owes to the government. In the context of solar energy, individuals or businesses may be eligible for a solar tax credit as an incentive to invest in solar panels and renewable energy systems.
2. How do solar incentives work?
Solar incentives are financial benefits provided by various entities, such as government agencies or utility companies, to encourage the adoption of solar energy systems. These incentives can include rebates, tax credits, and property tax exemptions.
3. What are the benefits of installing a solar system?
Installing a solar system can lead to long-term savings on energy costs and reduce reliance on traditional power sources. Additionally, individuals may be eligible for income tax credits and other tax incentives for going solar.
4. How can I find solar companies in my area?
To find solar companies in your area, research online, ask for recommendations from friends or neighbors who have installed solar energy systems or contact local solar energy organizations for referrals.
