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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!

Geothermal Energy

Geothermal energy is, literally, the heat of the earth. The heat itself derives from radioactive decay beneath the earth's surface and, in certain locations, it is concentrated enough and is close enough to surface waters to be brought to the surface for a variety of purposes. When it is above 150 degrees C (302 F), it is usually considered hot enough to be used to generate electricity as it is in Italy, El Salvador, Mexico, Japan, Iceland, and Indonesia, among other countries. No such operations exist in Arizona, but several power plants are currently in operation just west of Yuma, Arizona in the Imperial Valley of southeastern California. Although some high temperature geothermal resources exist southeast of Phoenix near the now-retired Williams Air Force Base, they have never been deemed economically feasible.

Resources less than 150 degrees C, have wide non-electric applicability. Indeed, the worldwide potential of such temperatures is many times larger than that used to generate electricity. Such temperatures are used in greenhouses, hot baths, onion dehydration, laundries, and even hotel space heating. The capital of Iceland is almost entirely heated with geothermal water. Several heating districts exist in the US, although none are as large as those in Iceland. These include projects in Reno, Klamath Falls, Boise, Susanville, and other locations. The best source of information in the US on such non-electric applications is the Oregon Institute of Technology Geo-Heat Center.

In Arizona, the opportunity to use geothermal water is limited, in part by population distribution, yet at least three locations are well known. These are Buckhorn Baths in Apache Junction, Castle Hot Springs in the Bradshaw Mountains, and Childs on the Verde River. Additionally, the two highest temperature springs in the state are Clifton and Gillard, both in the Clifton-Morenci area of southeastern Arizona. The water temperature at these springs ranges from 158-180 degrees Fahrenheit. Even though temperatures may exceed 284 degrees Fahrenheit at depth, these two sites are only suitable for low grad steam.

The only types of geothermal energy to be commercially developed are those called "hydrothermal". These include steam, as developed at The Geysers (north of San Francisco), and liquid, as developed in southeastern California. Geothermal energy is also available in several other forms. One of these forms, known as hot-dry rock has attracted some attention in the volcanic areas of the White Mountains, east of Phoenix. In such resource areas, heat is available, but there is insufficient water to conduct the heat to the surface. In some of these cooler climes, geothermal heat pumps might be a sensible application. The Geothermal Heat Pump Consortium maintains a web site with more information.

In summary, major geothermal resources exist near but not in Arizona. The resource that exists in the state has been recognized and, to some degree, explored, but no sites are considered economically commercial at this time. For more information on geothermal power, visit:

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Hydropower has been used for millennia in most countries of the world. Its longest application has been for use in mechanical tasks, such as grinding grain. With such simple mechanical devices as a "noria", it has also long been used to lift water. Within the last 100 years, hydropower was applied to the conversion of its kinetic energy to electrical energy. Today, hydropower produces 24 percent of the world's electricity and supplies more than 1 billion people with power.

The obvious advantage of generating electricity in this manner is the very high (around 90%) conversion efficiency (compared to a typical conversion efficiency for a fossil fuel power plant of about 35%.) Additionally, there are no emissions to the atmosphere associated with this generation. The most controversial drawback is that the flooding produced behind the dams. canyons.

Well-known examples of hydroelectric facilities in Arizona include Hoover Dam (on the border with Nevada) and Glen Canyon Dam (near the border with Utah). Together these dams can generate about 3,000 MW of electrical power. The reservoirs that each dam creates (Lake Mead and Lake Powell) are heavily used for recreation. Other hydroelectric dams include those on the Salt River and the Colorado River below Hoover Dam. Several sites have been suggested over the years for additional large projects. These have been successfully resisted in all cases because they would infringe on scenic areas, such as Grand Canyon.

At least 22 sites have been identified in Arizona for pumped storage facilities, that is, ones that use off-peak power to pump water back behind dams, making the water again available for the generation of electricity during periods of peak demand. At least 37,000 MW of potential installed capacity has been identified for the state. To date, only a few have been built, all of which are associated with existing dams.

For more information on hydropower, a technology analysis is available from the National Renewable Energy Lab (NREL) web site.

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Other Renewable Energy Sources

Hoover Dam


Hydropower has been used for millennia in most countries of the world. Its longest application has been for use in mechanical tasks, such as grinding grain. With such simple mechanical devices as a "noria", it has also long been used to lift water. Within the last 100 years...

Geothermal Geyser

Geothermal Energy

Geothermal energy is, literally, the heat of the earth. The heat itself derives from radioactive decay beneath the earth's surface and, in certain locations, it is concentrated enough and is close enough to surface waters to be brought to the surface for a variety of purposes. When it is above...

Wind Turbine

Wind Power

Like hydropower, wind power has been used for centuries, to lift water, propel boats, grind grain. It is an attractive and non-polluting source for electricity. It has only been since the mid 1980s, however, that wind power has contributed appreciably...



This section in progress...

In the interim, visit this site for information:



This section in progress...

In the interim, visit this site for information:

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President Obama Announces New Light Bulb Standards

Biggest energy saver in history of Energy Department

Washington D.C. (June 29, 2009): New national minimum energy efficiency requirements for light bulbs will save more energy than any other standard ever issued by any administration, according to a coalition representing environmental and consumer organizations, state government, and utilities. The new standards, announced by President Obama today, will make the hundreds of millions of fluorescent tube lamps that light offices, stores, and factories more efficient. They also will phase out conventional incandescent reflector lamps, effectively extending the phase out of inefficient incandescent products initiated by Congress in 2007 to the common cone-shaped bulbs used in recessed light fixtures and track lighting.

Continue reading
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California's Attorney General Says Feed-in Tariffs Legal in USA

In a significant filing June 25, 2009 California's Attorney General (AG) argued that feed-in tariffs as proposed in California are not only permitted under federal law but that they should be used to encourage the rapid growth of renewable energy.
Continue reading
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This website is for information purposes only. The Arizona Solar Center attempts to keep the information relevant and up-to-date. However, any product descriptions, performance specifications or equipment pictures displayed on this site should not be construed as a guarantee that the products or technologies are available on the market, that they perform as described or that they are appropriate for any application similar to what is represented on the website.
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Privacy Statement

We respect your right to privacy! Any and all information collected at this site will be kept strictly confidential and will not be sold, reused, rented, loaned, or otherwise disclosed. Any information you give to the Arizona Solar Center will not be used in ways to which you have not consented.

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Solar Architecture

Solar Application and Integration

A comprehensive look at solar application and integration - 69 images here.

Passive Solar Heating and Cooling Design Manual

Passive Solar Heating and Cooling Design Manual

Booklet contains four sections:

  • Introduction to Solar Energy
  • Passive Solar Architecture - Heating
  • Natural Cooling
  • Glossary

Solar Building Design in Arizona

The idea of using the sun to meet the energy needs in our buildings has been with us since the time of the Greeks...

Zero-Energy Buildings (958 kb PDF)

Read about "Zero-Energy Buildings" in the October 2005 Environmental Building News (a publication of BuildingGreen, Inc.)

The Value of Concentrating Solar Power and Thermal Energy Storage

National Rewable Energy Laboratory Report from February 2010.

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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.

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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
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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







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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.

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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
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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

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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.
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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.
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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 (

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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.

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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.



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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.

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