Layman's Guide to Arizona Solar Rebates

Last week I was in Tucson visiting an old college buddy and he kept asking me what I do so naturally the conversation gravitated towards solar. It was fun as he seemed genuinely interested in solar energy, how economically viable solar was and what it would take for him to go solar. However, I was a somewhat startled how little he knew about what Arizona offered in terms of financial incentives and how they apply (particularly in conjunction with federal incentives). After working out the numbers for him, I thought it might be useful to spell it out for the masses as well.

First, Arizona offers a Solar Energy Credit for consumers who install a solar or wind energy device at their Arizona residence that is used against the consumer’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. Arizona exempts the value of a renewable energy source from a property owner’s property taxes.

As far as rebates, the amount of the rebate is dependent on who your utility provider is as they are the principal provider of cash rebates to solar customers in Arizona. The state’s largest utility, Arizona Public Service (APS), offers homeowners an incentive of up to $1.00 per installed watt of DC capacity for grid-tied solar systems. So if your system is 4 kW or 4000 watts in size, you’ll receive a check for $4,000. The state’s second largest utility, Salt River Project (SRP), offers homeowners an incentive of up to $1.35 per installed watt of DC capacity up to a maximum of $6,750. And if you live in Tucson and Tucson Electric Power (TEP) is your utility provider, TEP offers homeowners an incentive of up to $2.00 per installed watt of DC capacity for qualified, grid-tied solar systems.

(Just a side note: if you’re interested in getting solar for your home, it’s best to act now as the APS, SRP and TEP rebate numbers are down from where they were just a couple of months ago. As with all states, particularly California, the state solar rebate is not infinite and declines as more and more people access it. So if you want to take advantage of free money, it’s best to move sooner than later.)

Below is how I modeled it out for my friend who lives in Tucson using a 4 kW system as my model…

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