Arizona Solar Center Blog

Commentary from Arizona Solar Center Board Members and invited contributors.

While blog entries are initiated by the Solar Center, we welcome dialogue around the posted topics. Your expertise and perspective are highly valued -- so if you haven't logged in and contributed, please do so!

Initiatives & Programs

Arizona Initiatives

Governor's Solar Energy Advisory Task Force

Arizona Energy Consortium
(November 2011 Report: Arizona's Solar Strategic Plan)

Environment Arizona
(March 2010 Report Summary: Building a Solar Future - Repowering America's Homes, Businesses and Industry with Solar Energy)


National Initiatives

Information about current and past initiatives and programs at a national level may be found on the Solar Initiatives page of the US Department of Energy EERE Information Center website.


Past Initiatives in Arizona

Arizona Solar Initiative (1999-2001)

The Mission of the Arizona Solar Initiative was to encourage individual, local, and statewide action that capitalized on the national Million Solar Roof Initiative and the region's explosive growth. This Initiative sought to enable Arizona to become a national leader in solar energy utilization, manufacturing, and exports.

Goal 1: Establish an Arizona Solar Initiative sub-committee of the Arizona Solar Energy Advisory Council. The sub-committee will be comprised of invited parties and a representative from the Energy Office.

Goal 2: Install 100,000 new thermal and photovoltaic systems in Arizona by 2010.

Goal 3: Establish technical capabilities to utilize solar in government and non-government application.

Goal 4: Educate consumers about the benefits of using passive and active solar systems.

Goal 5: Coordinate industry and government efforts to overcome institutional barriers.

Goal 6: Develop and support solar manufacturing capacity in the state.

21495 Hits

Legislation (Federal & State)

Incentive Programs across the U.S. (Prepared by DSIRE)

Comprehensive inventory of incentive programs prepared by Database of State Incentives for Renewable Energy (DSIRE Main Page)

State Bills Overview

  • Arizona House Bill summaries and updates
  • Arizona Department of Commerce Energy Office Monthly Updates
19848 Hits

State Legislative Tracker

Updated: April 26, 2014:
The Arizona Legislature adjourned on Thursday, April 24 at 1:42 am -- bringing an end to the 51st legislature – second session. Of the bills the Az Solar Center was tracking – SB 1484 was signed into law by the Governor earlier this month. Two other bills, SB 1301 and HB 2403, passed the legislature and have been transmitted to the Governor for her signature.

  • HB 2403: Strike All Amendment to H.B. 2403, relating to valuation; tax; renewable energy equipment is on the calendar for the Senate Committee of the Whole for April 21, 2014

    Specifies procedure relating to the full cash value and depreciation of renewable energy equipment.

    The Department of Revenue (DOR) determines valuation of centrally assessed property. Centrally assessed property in Arizona includes mines, railroads, private car companies, electric, gas, and water utilities, pipelines, airlines and telecommunications providers that are located in more than one county.

    Current statute defines renewable energy equipment as electric generation facilities, electric transmission, electric distribution, gas distribution or combination gas and electric transmission and distribution and transmission and distribution cooperative property that is used or useful for the generation, storage, transmission or distribution of electric power, energy or fuel derived from solar, wind or other nonpetroleum renewable sources not intended for self-consumption.

    The centrally assessed value of renewable energy equipment is statutorily set at twenty percent of the depreciated cost of the equipment. Depreciation is an annual allowance for the wear and tear, deterioration or obsolescence of property. The value of a depreciated property is arrived at by subtracting the acquisition cost of that property from the appropriate depreciation for that property as prescribed by DOR. The depreciated value may not be lower than fair market rate for the property.

    The fiscal impact to the state General fund associated with this legislation is unknown.


    1. Stipulates depreciated cost for renewable energy equipment must be calculated by subtracting the depreciated value from the taxable original cost.

    2. Defines the following:
         a) depreciation means a straight line depreciation of value, as defined by DOR, over the useful life of equipment, and prohibits depreciation exceeding 90 percent of the adjusted original costs;
         b) original cost means the actual cost, without trending, of the acquisition or construction of property. Acquisition or construction includes additions, retirements, adjustments and transfers of property; and
         c) taxable original cost means the original cost of the renewable energy equipment minus the value of applicable investment and production tax credits or cash grants.

    3. Makes technical and conforming changes.

    4. Becomes effective on the general effective date.

  • SB 1484: tax credit, manufacturers; renewable energy

    Senators Worsley, Pierce: McComish (with permission of Committee on Rules)

    Status (Updated 4/18/14): Signed into law by Governor Jan Brewer 4/11/2014.
    Description: Creates individual and corporate tax credits for investment in new renewable energy facilities that produce energy primarily for manufacturing. The amount of the credit is capped at $2 million per facility per calendar year, with the aggregate amount of credit capped at $20 million per calendar year. To be eligible for the credit, the taxpayer must invest at least $300 million in new renewable energy facilities in Arizona that produce energy for self-consumption using renewable energy resources; at least 90 percent of the energy produced at each renewable energy facility is used for self-consumption in Arizona; and the power is used primarily for manufacturing.

  • SB 1227: limits energy efficiency regulations

    Sponsored by Sen. Crandell.

    Status (Updated 3/29/14): Had its third reading in the Senate on March 4, 2014. No further action has occurred since 3/4/14.

    Description: Prohibits municipalities and counties from certain actions relating to energy efficiency, energy conservation or green construction regulations in new construction.

    Amendment: The Crandell Floor Amendment exempts any, or part of any, ordinance that solely regulates outdoor lighting from the mandated energy efficiency or conservation prohibition.


    1. Prohibits cities, towns and counties from the following actions related to energy efficiency, energy conservation or green construction in new construction:
            a) adopting any mandatory building codes, ordinances, stipulations or other legal requirements; and
            b) denying licenses or building permits, or imposing any fines, penalties or other requirements for non-compliance.

    2. Exempts any building code, ordinance, stipulation or other legal requirement related to energy efficiency, energy conservation or green construction in new construction that was adopted and effective prior to this act's effective date or any ordinance that solely regulates outdoor lighting.

    3. Defines building code.

    4. Becomes effective on the general effective date.

  • HB 2553: political subdivisions; energy incentives; prohibition

    Sponsored by Rep. Allen

    Status (Updated 3/29/14): Had its second reading in the House on February 6, 2014. No further action has occurred since 2/6/14.

    Description: Prohibits the state and any county, city, school district or other political subdivision from claiming or accepting any incentive or subsidy from an incentive program offered by a public utility. Restricts any third-party vendor or contractor from accepting any incentive on behalf of the government entity.

  • HB 2358: tax; valuation; renewal energy equipment

    Sponsored by Rep. Fann

    Status (Updated 3/29/14): Last action occurred on 2/10/14 in the House Energy, Environment and Natural Resources Committee. No further action has occurred since 2/10/14

    Description: Outlines the method for determining the full cash value of renewable energy equipment and the full cash value of land on which the equipment is located. 

  • HB 2182: electric utilities; renewable energy standards

    Sponsored by Rep. Seel
    Status (Updated 3/29/14): Had its second reading in the House on January 23, 2014. No further action has occurred since 1/23/14.

    Description: Gives the legislature exclusive authority to determine renewable energy policy for Arizona, including targets, mandates, tax credits, incentives and other direct means to determine or encourage the production, distribution and use of renewable energy sources. Does not include setting utility rates. Establishes a renewable energy standards for public and private power entities in this state.

  • SB 1030: Solar School Grant Program

    Sponsored by Sen. Farley
    Status (Updated 3/29/14): Never heard in committee. No action has occurred on this bill since it was assigned to Committees on January 13, 2014.

    Transfer funds from the Arizona Commerce Authority to the Department of Education to provide grants to school districts for solar education programs in schools that use solar technology. The solar education programs may include solar open houses and other demonstration projects. School districts may apply to the Department of Education for grants from the fund.


  • SB 1402: renewable energy; definition

    Primary Sponsor Sen. Melvin

    Status (Updated 3/29/14): Passed the Senate on Feb. 27, 2014 (17-13) and transmitted to the House. House first read on March 4, 2014 and assigned to Energy, Environment and Natural Resources and the Rules committees on March 4, 2014. Had its second read in the House on March 5, 2014. No further action since 3/5/14.

    Description: Defines energy sources that are considered renewable energy. Defines renewable energy as including: a) solar; b) wind; c) hydroelectric; d) pumped storage; e) flywheel storage; f) hydrogen; g) geothermal; h) biomass and biomass baseload; and i) nuclear energy fueled by recycled uranium fuel rods that include 80 percent or more recycled nuclear fuel or natural thorium reactor resources under development.

  • SB 1073: green technology and manufacturing incentives

    Introduced by Senators Ableser, Bradley, Farley, Gallardo, Hobbs, Tovar; Representatives Mendez, Sherwood: Senators Meza, Pancrazi

    Status (Updated 3/29/14): First and Second Read in the Senate on Jan 15 and 16, 2014 and assigned to committees for action on 1/15/2014. Never heard in committee.

    Description: Provides definition and criteria for the owner of a green manufacturing business to qualify for an income tax credit and property reclassification

  • HB 2595: tax; renewable energy; on-site consumption

    Introduced by Representative Allen

    Status (Updated 3/29/14): Held in Committee on February 17, 2014. No further action since 2/17/14.

    Description: Specifies that, for the purposes of property valuation, a solar energy device owned by a homeowner, for their own use, adds no value to the property on which it is installed.

  • SB 1467: Solar energy devices; on-site electricity

    Sponsor: Sen. McComish

    Status: Stalled in committee

    Description: Would clarify state law by stating that leased or third-party owned grid‑tied photovoltaic systems are considered to have no value and to add no value to the real property on which such device or system is installed.


  • HB 2304: prime contracting deduction; waste facility

    Introduced by Representative Pratt

    Status (Updated 3/29/14): Never heard in Committee. No action since Second Read on January 23, 2014.

    Description: Would exempt mixed waste processing facilities from prime contracting transaction privilege tax, if that mixed waste processing facility is located on a municipal landfill and that it is constructed for the purpose of recycling waste or producing renewable energy.

We encourage interested parties to interact with elected officials at the legislature:
An additional source for information on legislative and policy developments in the energy sector is: logo

Arizona Governor's Energy Office Newsletter

This newsletter is published by the Arizona Governor's Office of Energy Policy and is provided free of charge to the public. It contains verbatim excerpts from international and domestic energy and environment-related publications reviewed by the Education and Community Outreach personnel.


If you would like to review summaries of past legislation, please see our archives:

Legislative Summary Archive

State Bills - 2012
State Bills - 2011
State Bills - 2010
State Bills - 2009
State Bills - 2008
State Bills - 2007
State Bills - 2006
State Bills - 2005
State Bills - 2004







20223 Hits

Solar Leasing & Lending

Updated Feb. 16, 2014

In 2014 solar adoption makes up a very small percent of the electrical generation mix in Arizona. But the trend is accelerating in favor of solar utilization not only in Arizona, but across the country.

What is the driver behind this growing trend? Most point to financial (business model) innovation. And one only needs to consider that it was not a technology innovation, rather a financial innovation, that fueled the automobile market in the U.S. in the 1910s, to understand why solar adoption rates are soaring.

The introduction of financing through GMAC finance took the American auto market from 7.7 percent adoption to 80 percent adoption in less than a decade.

A financial innovation unlocked the car market 100 years ago and is having a similar impact in the solar marketplace today. A new business model innovation (leasing) has fueled an increased adoption rate for solar electric which in turn is pushing costs down and further fueling the market.

In 2008, a company called SunEdison introduced a version of what is known today as the solar lease. Residential and commercial solar customers no longer need to invest capital in purchasing solar rooftop systems.

SunEdison offered to finance, install, own and maintain the solar panels on the rooftop of its customers. Homeowners did not have to take any risks. At the end of the (20-year) contract, the customer had a choice of purchasing the equipment at deep discounts or having them taken off the roof.

Soon after SunEdison, Solar City started offering a Solar Lease option and the solar market exploded. The concept caught on and other companies such as Sungevity and SunRun as well as local and regional companies joined the long list offering 'Solar Leases' or 'Solar PPAs'.

Partly as a result of these financial innovations, the solar market in America quadrupled from 2008 to 2012. Since 2012 the market has expanded even further as about 80 percent of all residential and commercial installations nationwide are now financed by third party-companies. In Arizona the number is closer to 90 percent.

But the economics of a lease versus out-right ownership is different in many ways. The lease is a contractual document that sells the property owner the solar output of the system. The 3rd party (system owner) in a lease maintains the RECs, and is the recipient of any rebate and tax incentive. A property owner that chooses to purchase their system outright receives all of the upfront incentives of a system but is also responsible for any maintenance of the system over its life.

There are a number of loan vehicles that a property owner may tap in order to purchase and own a solar system outright. These programs offered through lending institutions and government entities (i.e. property assessments) have been subject to considerable change. Please contact individual institutions to learn of any current financing options.

15796 Hits

High potential pv market California still ten times smaller than Germany

Conference in San Francisco will discuss a realistic approach of the Californian PV market opportunities

Rotterdam, San Francisco, 12 June 2009

The solar industry is desperately looking for new high potential markets as the Spanish market will collapse this year. Many eyes are focused on the US and in particular California as one of the markets with the highest potential with abundant sunshine, several incentive programs, high electricity prices, good infrastructure and the best developed US State market. And, California is also the leading indicator for what might happen in other States later on. Some experts say it will take less than 3 years before solar electricity generated in California is cheaper than electricity from the Grid for residential consumers. Will this sunny State turn into a GigaWatt plus market soon?

Continue reading
3358 Hits

Solar Videos


Pioneers of the Sun

Runtime 4:03
Go to Viewing and Download Page

Masters of the Sun

Runtime 3:51
Go to Viewing and Download Page

Plugging into the Sun

Runtime 2:26
Go to Viewing and Download Page


Cool Way to Hot Water

Runtime 2:08
Go to Viewing and Download Page

Videos produced by the Arizona Department of Commerce Energy Office under a grant from the Million Solar Roof program of the US Department of Energy.

These videos can also be found on Youtube at

22893 Hits

Quick Facts: Solar Electric

Updated January 20, 2014
  1. A home solar system is typically made up of solar panels, an inverter, wiring (meter and disconnect switch) and support structure.
  2. A typical rooftop solar electric system is connected to the utility grid and relies upon the grid infrastructure for backup power. It will not operate in the absence of utility power.
  3. A modest PV system will pay for itself during the life of the equipment, generally several times over.
  4. Solar increases the value of your home.
  5. Solar equipment helps protect you from rate increases and fuel cost uncertainties.
  6. Use of solar helps decrease air pollution problems related to burning fossil fuels.
  7. Solar Energy is measured in kilowatt-hours. 1 kilowatt = 1000 watts. 
  8. To figure the cost of a photovoltaic system the system size is multiplied by the installed cost per watt.  A 1 kW system that costs $4 per installed watt would cost $4,000 (1,000 x $4 = $4,000).
  9. Larger systems have a lower cost per watt.
  10. Solar energy systems qualify for state and federal tax credits and exemption from state sales tax.  The cost of a solar system is further reduced by a state tax credit (25 percent up to $1000) and a federal tax credit (30 percent).
  11. A one kilowatt solar system that cost $4,000 to install would be reduced by a $1000 state tax credit and $1200 federal tax credit.  The out-of-pocket cost would be $2800.
  12.  A solar energy system generates units of energy measured in kilowatt-hours.  One kilowatt-hour (kWh) is the amount of electricity needed to burn a 100 watt light bulb for 10 hours.
  13.  A 1 kilowatt home solar system will generate approximately 1,680 kilowatt-hours per year in Arizona.  The average Arizona utility electric rate is $0.12 a kilowatt-hour – meaning the energy offset by a 1 kilowatt solar system is equal to $201.60 (1680 x $0.12 = $201.60).
  14. If a 1 kW photovoltaic system cost $2800 to install (after incentives), and saves $201.60 a year in electricity costs – the payback period would be 14 years.
  15. A typical Arizona home generally has an electric utility service rated at 200 amperes.  This generally limits the size of the inverter to about 8,000 watts without extra costs.  An inverter rated at 8,000 watts can generally use a photovoltaic array rated at up to 10,000 watts (10 kilowatts).
  16. If the photovoltaic array is in an area without shadows, or must face other than South, the performance will be affected.
  17. In one hour more sunlight falls on the earth than what is used by the entire population in one year.
20901 Hits

Quick Facts: Solar Hot Water

Updated: January 20, 2014
  1. Solar water heaters pay for themselves in 3-10 years, depending on your hot water use and whether you are comparing to gas or electric water heating.
  2. A simple passive system only adds about $15/month to your mortgage and pays for itself long before your mortgage is paid off.
  3. The total costs (initial cost, fuel, maintenance) over the life-ycle of a solar water heater is one of the lowest of all water heating systems available.
  4. Solar increases the value of your home and provides an appealing sales feature.
  5. Your solar equipment has value independent of your house. You could sell your solar equipment or take it with you when you move.
  6. Take advantage of state and federal income tax credits (25% up to $1000 state; 30% federal) and exemption from state sales tax.
  7. Utility companies offer rebates for the purchase of solar equipment including solar water heaters. Check with your utility to see if any rebate applies in your area.
  8. Increased use of solar will help decreases environmental problems caused by burning fossil fuels.
  9. Use of solar energy creates quality local jobs by expanding the local solar industry.
  10. Use of solar provides you with more independence in your personal life.
19535 Hits

Economics of Solar Swimming Pool Heating

Updated Feb. 16, 2014

Swimming pools are popular in Arizona with more being built each year. However, the cost of heating a pool can be an expensive proposition. To extend the swimming season beyond just the hot summer months, pools require a heating device to maintain comfortable swimming conditions.

Solar heating of swimming pools is an economical alternative in Arizona since it can extend the swimming season for outdoor pools significantly - by at least two months in both spring and fall - more if a pool cover is used. Thus the time pools can be used is at least doubled.

solar-pool-heating-economicsInitial costs of a solar installation are estimated in the $3,000 to $4,000 range for a typical home pool, which is similar to the cost of natural gas installations. However, the cost of heating pools with gas can run to several hundred dollars per month so that the payback period for solar units is very short (average 18 months).

Advantages of solar pool heaters extend beyond just economics in terms of payback. Solar pool heaters last significantly longer than gas or electric heaters. A solar pool heater last nearly twice as long as either gas or electric heaters.

As with a solar water heating system, it is important to consider local building codes and regulations before purchasing a system.

U.S Department of Energy (

21013 Hits

Economics of Solar Hot Water


Updated Feb. 16, 2014

Solar energy can provide all normal domestic water needs. Backup may be required for cloudy days.

Initial investment is in the $4,000 - $7,000 range, though some systems, cost less. State tax credits (25% of the purchase price with a maximum of $1,000 per installation) and, federal tax credits (30%) and in some cases utility rebates, can reduce initial costs significantly. If conventional heaters need replacement, initial costs are further lowered by the cost of the conventional unit.

How much money you save versus a traditional water heater depends on a number of factors:

The amount of hot water you use Your system's performance Your geographic location and solar resource Available financing and incentives The cost of conventional fuels (natural gas, oil, and electricity) The cost of the fuel you use for your backup water heating system, if you have one.

On average, if you install a solar water heater, your water heating bills should drop 50%–80%.

Costs and payback periods for residential SWH systems with savings of 200 kWh/month
System cost After tax credits/rebates Electricity cost/kWh Electricity saving/month Payback period
$5000 $1540 11.2 cents per kWh $22.40 5.7 years


If you're building a new home or refinancing, the economics are even more attractive. Including the price of a solar water heater in a new 30-year mortgage usually amounts to between $13 and $20 per month. The federal income tax deduction for mortgage interest attributable to the solar system reduces that by about $3–$5 per month. So if your fuel savings are more than $15 per month, the solar investment is profitable immediately. On a monthly basis, you're saving more than you're paying.

19071 Hits

Economics of Photovoltaics

Updated January 4, 2014

PV arrays can be used to generate electric power for many end-uses including utility-scale PV projects, or in distributed applications such as homes, cabins, businesses, telecommunication equipment, lighting, and other electrical equipment.

The economics of utility-scale PV projects (solar farms) is difficult to discern given the small and diverse sample of projects and the proprietary nature of third-party contracts. However, the economics of distributed PV systems is well-known. The financial-side of distributed PV is determined by the capital and operating costs and will vary according to the type of PV power system; off-grid and grid connected.

Off Grid PV

Off-grid PV systems in Arizona are cost competitive with electric utilities in situations requiring utility line extension at high-cost (generally for extensions of over 0.5 miles, charged to the customer), and in situations requiring low amounts of power (irrigation control equipment, small lights, etc.) for which the minimum utility charges exceed the amortized cost of the PV system.

Like solar in general, the capital (initial) costs of off-grid PV systems have been falling in recent years; they currently are between $5 and $8 per peak watt of the PV module, including the storage batteries - less if rebates and tax credits are available. Off-grid systems are typically combined with energy efficiency measures to make sure the solar electricity is not going to waste. When designing an off-grid system a quick-rule to follow is that for every dollar spent on energy efficiency measures will save $5 or more on solar generating equipment.

A small house (or larger house with extensive energy efficiency improvements) with a low usage can function with an off-grid PV system as small as 2 kW (peak), thus would call for a capital outlay of $10,000 to $16,000 (before incentives). Assuming a 20-year simple amortization, this would be equivalent to about 10-20 cents per kWh. Such a unit can supply power for many appliances (refrigerators-freezers, computers, televisions, consumer electronics, etc.) and many lighting systems. It will not provide power for air conditioning or other large energy consuming appliances like clothes dryers or electric ovens. Comparable costs for alternatively home generated power vary but are typically significantly more than the solar alternative.

PV power costs for uses that do not require batteries, such as agricultural water pumping, are substantially lower than off-grid residential systems that include batteries.

Grid Connected PV

While solar has a ways to go to compete with conventional power plant generation costs at 4-6 cents/kWh, it is much closer to grid-parity when compared to the cost of electricity charged to residential, commercial and industrial consumers. This is especially relevant because when the PV is sited at the consumers' premises, then the customer is comparing the cost of PV electricity to the cost of the utility retail power, not to the cost of power generation.

Grid connected PV systems can be of two types, customer-owned or third-party owned (leased).

Leasing a solar electricity system is similar to leasing a car with the biggest exception being the contract terms are much longer in length for solar (typically 15 to 20 years). However, like a car lease, you pay a monthly fee to use the system over a specified period of time. The property owner benefits from the electricity produced by the system. Ideally, the cost of the monthly lease payment is less than the cost of the utility supplied-electricity that is offset by the solar system.

A customer-owned system is not cost-effective compared to utility electric power, but when combined with other considerations become more attractive and economical. Government subsidies, tax rebates/exemptions, the time of day value of summertime PV power, the enhanced value of "Green" power to a utility, etc. can and have made PV systems practical in Arizona.

Net Metering

The value of a PV system's electricity will depend on how much you pay your utility for electricity and how much your utility will pay you for any excess that you generate. The average cost of electricity from Arizona utilities is displayed on the chart below. Net metering is the mechanism by which Arizona utilities pay customers for any excess solar electricity they generate. The Arizona Corporation Commission allows for a kilowatt-hour (kWh) credit at the utility's retail rate for each solar kWh not used by the customer and fed back into the grid. At the end of each month any net excess solar generation is carried over to the customer's next bill. Any remaining credits on the customer's last monthly bill on an annual basis will be paid to the customer, via check or billing credit, at the utility's avoided cost payment.

This net metering arrangement was implemented as a way to help encourage PV system interconnection. It allows system-owners to offset some of the costs of purchased electric power by selling surplus electric power back to the utility. In an Off-Grid situation this excess power is typically stored in a battery bank for later use, but in a grid connected system with net metering, the excess power can be "sold" to the utility for use by other customers, and is generally an offset to the purchased power (such as night-time use).

Net metering rules differ among Arizona electric utilities. It is necessary to check with the utility serving a specific address to determine what rules apply for net metering customers in their service territory.



Solar Energy Economics - Main Page

23877 Hits

Economics of Passive Solar

Updated December 29, 2013

Solar energy is harnessed, converted and distributed using a range of ever-evolving technologies and strategies. Passive solar energy is characterized by building orientation, strategies that integrate the house with its climatic environment, and materials that have favorable thermal mass.

Although passive solar building principles are based on science and a variety of lessons learned through the years – they aren’t necessarily expensive.  Passive solar construction costs can vary from no additional cost, to a little more than conventional construction to considerably more. Many forms of passive solar energy are economical because of the large savings of utility bills that can be achieved - typically in the 50 percent to 70 percent range.

Unlike “traditional” construction, it takes more thought to design with the sun’s location in mind; however, passive solar features such as additional south-facing windows, added thermal mass, larger roof overhangs, or other shading features can easily pay for themselves. In fact some modest passive solar designs like sun tempering, a design fit for cold climates, can reduce heating costs from 5 percent to 25 percent at no added cost to the construction budget.

Since passive solar designs require substantially less mechanical heating and cooling capacity, costs of the design can be offset by reduced unit size, and by reduced installation, operation, and maintenance costs. Overall, passive solar homes are often less expensive for the homeowner when the lower annual energy and maintenance costs are factored in over the life of the building.

If you are designing a new home, consider passive solar design as it is usually much more cost-effective to reduce energy use with passive solar design than it is to pay for that energy use with other forms of energy (including solar electricity). 

For more information:

Passive Solar Case Study (by U.S. Department of Energy) – General Daylighting

  • Daylighting—the use of windows or skylights for natural lighting and temperature regulation—is one passive solar building strategy that can save money for homeowners and businesses.

Passive Solar Case Study (by Homes Across America Program) -- Harmony Home, Flagstaff, AZ (Cost -- $200 per square foot)

  • Orientation for Solar Energy Systems: The home was oriented to capture maximum solar gain to the south while maintaining views to the north.
  • Orientation for Daylighting: The orientation of this single-story home with the long edge toward south and careful placement of rooms (with eastern windows) within provides ample daylighting throughout. The daylighting requirements are practically zero during daylight hours.
  • Window Sizing, Location and Shading: A conflict between solar gain to the south and great views to the north was overcome with design, which carefully placed rooms to ensure all had a view as well as solar exposure. Maximum windows were installed on the southern side of the home. Windows on the north were minimized but placement allows the view to be seen from any point in a room. A roof overhang was selected to block excessive summer sun from the windows, while allowing winter sun to enter the home.
  • Thermal Mass: Heat radiates from the colored concrete floors (with tile inlay), which provide thermal mass to complete the passive solar design.

Passive Solar Case Study (by Homes Across America Program) – Hopi Nation Straw Bale House, Hotevilla, AZ (Cost -- $60 per square foot)

  • Straw Bale: An affordable and energy-efficient building material.
  • Thermal Mass: A radiant floor heating system in the slab is augmented by passive solar. The slab acts as a thermal mass.

Passive Solar Case Study (by Homes Across America Program) – Southwest Solar, Prescott, AZ (Cost -- $175 per square foot)

  • Building Envelope: This home/office was built into the hillside and uses the earth to insulate against heat and cold. A well-insulated roof reduces heating in summer while conserving heat in the winter.
  • Thermal Mass: The passive/active space heating and cooling utilizes 300 tons of building mass as heat/cool storage. The mass is created using poured earth walls that utilize local soils.
  • Attached Solar Greenhouse: A solar greenhouse heats the main living area from below while providing an environment for growing food.

Passive Solar Case Study (by Homes Across America Program) – The S.E.E.D. (The Super Energy Efficient Design) Home, Tucson, AZ (Cost -- $150 per square foot)

  • Structural Framing: Exterior walls and roof are made of polyurethane foam core SIPS (structural insulated panels). This allows for solid and continuous foam core resulting in an R34 exterior wall. The roof is an R41.
  • Roof: Standard Built Up Roofing system with Energy Star rated white roof coating.

Solar Energy Economics - Main Page

19519 Hits

Economic Benefits of Solar

Updated December 15, 2013

Five years ago Forbes magazine proclaimed that “a new era for solar power is approaching.”

It isn’t the first time that the promise of solar has been touted as ushering in a new era in energy.

During the 1920s and 1930s solar water heating was gaining in popularity before cheap fossil fuels and products were introduced into the market. Sixty years ago, in 1954, US News and World Report magazine proclaimed that solar cells may one day “provide more power than all the world’s coal, oil and uranium.”

But the solar industry, largely identified today as an equipment industry, has seen its promise thwarted over the decades that followed because of economics. The entry costs have been the single largest barrier to the adoption of solar energy.  Consumer concerns over equipment payback times have impeded the solar industry from facilitating a transition to an alternative future (the “payback standard” does not apply to traditional energy sources as they do not have paybacks).     

Today, however, technological improvements, plummeting solar costs and increases in the price of traditional energy sources have all contributed to solar energy finally becoming a viable alternative, and in some cases the economical choice as well.

Since the solar leasing model began to take off in 2010, U.S. solar adoption has increased so dramatically that in January 2013 the Edison Electric Institute warned its utility clients that solar energy had become a "disruptive" technology posing a threat to the traditional utility business model.

Homeowners are embracing leasing because it eliminates the big upfront cost of going solar.  The leasing model is also eliminating the question of payback.  Leases are structured in such a way as to save customers money from the very first day.

The growing popularity of rooftop solar electric systems today is also challenging the role that electric utilities have historically played.  This has led to debate about whether solar customers should pay additional fees to sell excess solar generation into the grid and to have access to grid power when the sun isn’t shining.  This debate over new fees is changing the economics yet again while encouraging innovation from the solar industry to offset their impact.

While the economics of solar energy is ever-changing and improving, most of the energy used in Arizona to heat and power our homes, businesses and industries continues to come from in-state generators fueled by nuclear, coal and natural gas, and imports from a variety of generation sources throughout the west. But the contribution of passive solar energy designed homes, solar water heating systems and solar electricity generation is increasing, and even large scale solar is beginning to generate a substantial amount of power for utility customers.

Arizona Solar Economic Facts

  • A solar water heater can save $140 annually or $2,900 over the lifetime of the water heater, if you combine solar with a backup gas storage water heater instead of using the gas water heater alone. If you have an electric tank water heater for back-up, you'll save about $280 or $5,200 over the lifetime of the water heater each year on electricity bills. Large families with greater hot water needs can save even more. The average life expectancy of certified solar water heating systems is 20 years, much longer than standard gas or electric storage water heaters. (Source: Energy Star, US Environmental Protection Agency)
  • The value of a PV system’s electricity will depend on how much you pay your utility for electricity and how much your utility will pay you for any excess that you generate.
  • Incentives add to the saving on monthly bills for solar users. Some of these incentives can significantly reduce or offset the initial installation costs.
    • Arizona's Solar Energy Credit is available to individual taxpayers who install a solar or wind energy device at the taxpayer's Arizona residence. The credit is allowed against the taxpayer's personal income tax in the amount of 25% of the cost of a solar or wind energy device, with a $1,000 maximum allowable limit, regardless of the number of energy devices installed. The credit is claimed in the year of installation. If the amount of the credit exceeds a taxpayer’s liability in a certain year, the unused portion of the credit may be carried forward for up to five years. (Source: Database of State Incentives for Renewable and Efficiency)
    • Arizona’s property tax exemption was established in June 2006 and originally applied only to “solar energy devices and any other device or system designed for the production of solar energy for on-site consumption.” For property tax assessment purposes, these devices are considered to add no value to the property. (Source: Database of State Incentives for Renewable and Efficiency)
    • Arizona’s utilities offer customers who install various renewable energy systems cash rebates.  Check with your utility on the availability of funds.
    • Arizona provides a sales tax exemption for the retail sale of solar energy devices by qualified vendors and for the installation of solar energy devices by contractors. The sales tax exemption is scheduled to expire in 2016.
    • Federal tax renewable energy tax credit allows a taxpayer to claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer. The federal tax credit is scheduled to expire at the end of 2016.  (Source: Database of State Incentives for Renewable and Efficiency)
  • The 2006 Energy Dollar Flow Analysis produced by the Arizona Department of Commerce estimated that 55 cents of every dollar spent in Arizona on electricity flowed out of state.  The analysis also estimated that 63 cents of every dollar spent on natural gas flowed out of state. Arizona benefits from solar directly by keeping a portion of this money in the State for spending and saving by Arizona citizens.
  • The Arizona solar design, construction, and equipment industry is a job creator that contributes significantly to employment within the State. The equipment industry, and portions of the solar construction industry, are labor intensive in nature since there is use of materials and equipment manufactured in the State, and installation and maintenance is done by local technicians. A 2013 report by the Solar Energy Industries Association estimates that 9,800 Arizonans are employed in the renewable energy industry in Arizona.


Application Specific Economics











40768 Hits

DSIRE - Database of State Incentives for Renewable Energy


Established in 1995, DSIRE is currently operated and funded by our colleagues at the N.C. Solar Center at N.C State
University, with support from the Interstate Renewable Energy Council, Inc. DSIRE is funded in part by the U.S. Department of Energy.

DSIRE provides comprehensive information on state, local, utility, and federal incentives and policies that promote solar energy. For Arizona solar-specific policy information that affects consumers, policy makers, businesses, utilities, researchers and other stakeholders, visit the DSIRE Website’s Arizona solar-specific page.

Financial information specific to Arizona includes:

  • Corporate Tax Credit
  • Green Building Incentive
  • Industry Recruitment/Support
  • Local Rebate Programs
  • Personal Tax Credits
  • Property Tax Incentive
  • Sales Tax Incentive
  • Utility Loan Program
  • Utility Rebate Program

Arizona solar-specific rules, regulations and policies include:

  • Local Building Energy Code
  • Local Energy Standards for Public Buildings
  • Equipment Certification
  • Local Green Power Purchasing
  • Interconnection Guidelines
  • Line Extension Analysis
  • Net Metering
  • Renewable Portfolio Standard and Tariff (see also AZ Solar Center)
  • Solar/Wind Access Policy
  • Solar/Wind Contractor Licensing
  • Local Solar/Wind Permitting/Construction Standards

The information presented in the DSIRE database provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making decisions about solar energy.

(back to top)

22691 Hits

Arizona Renewable Energy Standard & Tariff (REST)

In 2006, the Arizona Corporation Commission (ACC) established a requirement that 15 percent of retail energy sales from ACC regulated electric utilities come from renewable energy resources by the year 2025. A portion of that energy (30 percent) must come from distributed resources (DR), or what is commonly referred to as distributed generation (DG) technologies. Half of the DG requirement must come from residential applications and the other half from non-residential/non-utility applications. The requirement applies to investor-owned utilities and electric power cooperatives serving retail customers in Arizona. Distribution companies with more than half of their customers outside Arizona are exempt.

The Goldwater Institute challenged the REST rules in court and in 2007 Arizona's Attorney General Terry Goddard certified the rule as constitutional.

The compliance schedule by year is outlined below:

  • 2006: 1.25%
  • 2007: 1.50% (5% DR)
  • 2008: 1.75% (10% DR)
  • 2009: 2.00% (15% DR)
  • 2010: 2.50% (20% DR)
  • 2011: 3.00% (25% DR)
  • 2012: 3.50% (30% DR)
  • 2013: 4.00% (30% DR)
  • 2014: 4.50% (30% DR)
  • 2015: 5.00% (30% DR)
  • 2016: 6.00% (30% DR)
  • 2017: 7.00% (30% DR)
  • 2018: 8.00% (30% DR)
  • 2019: 9.00% (30% DR)
  • 2020: 10.00% (30% DR)
  • 2021: 11.00% (30% DR)
  • 2022: 12.00% (30% DR)
  • 2023: 13.00% (30% DR)
  • 2024: 14.00% (30% DR)
  • 2025: 15.00% (30% DR)

Contact Your Utility for Details About REST Program Incentives

The following links connect to the REST program details for Arizona electric utilities and cooperatives regulated by the Arizona Corporation Commission. Salt River Project, which is not regulated by the ACC, also offers incentives similar to REST incentives.

The funding available for the each program is limited. The incentives are funded by a small surcharge approved by the ACC and added to customers' electric bills. The approved amounts vary among the utilities. Each utility has an application and reservation process for obtaining funding. It is important for customers to contact their utility directly before investing in renewable energy equipment to obtain specific information on program requirements, funds availability, and the process followed by the utility for approvals and installation.

For more information, see the complete ACC docket (~10 MB PDF):

The Renewable Energy Standard and Tariff rules, Arizona Administrative Code ("A.A.C.") R14-2-1801 through -181 5
80995 Hits

Icon & Symbol Key

Icons Embedded in Content

  • link PDF File : PDF File: file opens in a separate window or available for download. Adobe Reader is required. The file may be internal or external.
  • link MS Excel File : MS Excel File: file opens in a separate window or available for download. The file may be internal or external.
  • external link External File : External Site - file hosted on external website and opens in separate window.
  • internal link : Internal link (Highlighted in red and underlined.)

Icons for Functions on Each Page

  • PDF File : Print page to a printer.
  • PDF File : E-mail page to a friend.
17393 Hits


Disclaimer: This section of our website provides an overview of financial and other incentives available to Arizona residents and businesses for installing and operating systems that utilize solar energy.

The Arizona Solar Center provides this 3rd Party information as a service. The policies and status of programs change frequently. The Solar Center is not responsible for information that is out-of-date or inaccurate. The reader is individually responsible to fact-check all program details before making financial or other types of decisions.


You will find information about the following topics:

32398 Hits

Federal Residential Solar Investment Tax Credit (ITC)

clockThis 30% residential solar property tax credit is currently in effect for property placed in service after December 31, 2008 through to December 31, 2016. The credit enables individual taxpayers to offset AMT liability, and to carry unused credits forward to the next succeeding taxable year.

For a review of how to apply the tax credit, see IRS Provides Guidance for Residential PV in ASES' Solar Today Magazine Online or via a one-page reprint (PDF)
(Solar Today - ISSN: 1042-0630 - is published by the American Solar Energy Society - ASES,

For more information on how the solar industry is involved in tax policy, please see the Solar Energy Industries Association (SEIA) Solar Tax Policy Page.


13025 Hits

Federal Business Solar Investment Tax Credit (ITC)

3468The federal business energy tax credit is a 30% tax credit available to commercial businesses that invest in or purchase energy property in the United States.  Energy property is defined as either solar or geothermal energy. Solar energy property includes equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. Geothermal energy property includes equipment used to produce, distribute, or use energy derived from a geothermal deposit. For electricity produced by geothermal power, equipment qualifies only up to, but not including, the electrical transmission stage.

The energy property must be operational in the year in which the credit is first taken. The property must also be constructed by the taxpayer and used by the taxpayer. Energy property does not include public utility property, passive solar systems, pool heating, or equipment used to generate steam for industrial or commercial processes.

Credit may not be taken if financing for the project is subsidized or from tax-exempt private activity bonds. The tax credit is limited to $25,000 per year, plus 25% of the total tax remaining after the credit is taken.  Remaining credit may be carried back to the three preceding years and then carried forward for 15 years.

The Energy Policy Act of 1992 ensures that this tax credit in ongoing and has no expiration date. Use Form 3468 to claim the investment credit. The latest forms can always be found on the IRS web site from the "Forms and Publications Finder."

Information provided by J. Arwood, Arizona Department of Commerce Energy Office

12015 Hits

Arizona Solar Devices Sales Tax Exemption

Arizona provides state tax incentives for the sale or installation of “solar energy devices,” as these devices are defined within the Arizona Revised Statutes (A.R.S.). Transaction privilege (“sales”) tax exemptions apply to retail sales of solar energy devices, and installations of such devices under the prime contracting classification. Certain state income tax credits are also available.

Transaction Privilege (“Sales”) Tax Exemptions:

A.R.S. § 42-5061(N) provides that a registered solar energy retailer may exclude from tax up to $5,000 from the sale of each solar energy device. A.R.S. § 42-5075(B)(14) allows a registered solar energy contractor to exclude up to $5,000 of income derived from a contract to provide and install a solar energy device. For more information, please contact the Arizona Energy Office at (602) 280-1402.

To take advantage of these exemptions from tax, a solar energy retailer or a solar energy contractor must register with the Arizona Department of Revenue prior to selling or installing solar energy devices. (Arizona Form 6015, Solar Energy Devices – Application for Registration, is available on the Arizona Department of Revenue’s website at The Arizona Energy Office (Arizona Department of Commerce) has compiled a guide to the solar energy devices that qualify for exemption under the statutory definition [See A.R.S. § 42-5001(15)]. It is possible to petition the Arizona Department of Commerce to add additional items if they qualify per the statutory definition.

Most cities have a 0.5 to 2% city privilege (“sales”) tax that is applicable to sales or installations of solar energy devices, unless a city specifically exempts such sales under its city tax code. Solar energy retailers should check with the city in which the retail business is located to find out whether city privilege tax is applicable. Solar energy contractors should check with the city in which the installation will be performed to find out whether city privilege tax is applicable. (updated 2/15/05)

16339 Hits