Arizona Solar Tax Credit and Incentives Guide for 2023
The general concern for our planet in the last few decades has centered around the human impact – more specifically, the impact of our need for resources. Energy consumption has only increased with the advent of technology and innovation. Fortunately, there are renewable energy sources that can help us reduce our carbon footprint.
people are looking toward renewable energy solutions, and Arizona is not getting left behind. As the use of solar energy takes center stage, Arizona has also done its best to help in this fight to make renewable energy accessible and affordable for all its residents.
Solar Power in Arizona
To encourage residents to choose renewable energy resources, the government provides certain incentives for making the switch to solar power. The US has created a set of solar incentives to reward people who choose to make use of renewable energy solutions.
The Grand Canyon State has its 3 largest utility providers – Arizona Public Service (APS), Tucson Electric Power (TEP), and Salt River Project (SRP) – which all provide a solar export credit at a compensation rate approved by the Arizona Corporation Commission. This system is similar to net metering by allowing you to generate credits on your utility bill for the unused electricity that your solar system generates.
The dollar amount varies by the utility and may change slightly over time but stands at this currently:
- Arizona Public Service (APS): Approximately 9.4 cents/kWh
- Tucson Electric Power (TEP): Approximately 7.8 cents/kWh
- Salt River Project (SRP): Approximately 2.8 cents/kWh
Additionally, new homeowners installing solar equipment using these 3 utilities in Arizona switch to time-of-use rates – a billing structure that charges you differently based on the time of day you use energy. This saves you additional money and guarantees a better return on your investment. Apart from this, Arizona state also has a range of incentives and credits that can be taken advantage of to ensure that your move to renewable energy is less expensive.
Arizona Solar Incentives and Tax Credits for 2023
Federal Solar Tax Credit
The Federal Tax Credit – also known as the ITC or Residential Clean Energy Credit – is available to homeowners and businesses that install solar PV energy systems. According to the Office of Energy Efficiency and Renewable Energy. the federal tax credit is worth 30% of the cost of installing solar and battery storage systems.
The department has a comprehensive guide to making good use of the solar federal tax credit. The ITC will remain at 30% until 2032 and – starting on the 1 st of January 2023 – can also be applied to battery storage that isn’t hooked up to solar. This tax credit is worth US 6,000 on a US 20,000 solar system – effectively reducing the net cost to US 14,000.
Arizona State Residential Solar Tax Credit
Most Arizona residents are also eligible for the Arizona State Residential Solar Tax Credit which offers 25% of the total system’s cost – up to a maximum of US 1000 in total.
People owing less taxes than the credit can roll it over for up to five years. Homeowners will need to have a state tax liability to qualify for this solar tax credit. The solar energy devices that qualify for the Arizona Solar Tax Credit include:
- Passive solar building systems
- Solar daylighting systems
- Solar PV systems
- Solar PV phones
- Solar PV streetlights
- Solar swimming pool and spa heating systems
- Solar water heating systems
Energy Equipment Property Tax Exemption
According to the Energy Equipment Property Tax Exemption. your solar panels are eligible for a property tax exemption if the installation increases the value of your home. This means that you may be exempt from paying taxes on that increased value.
To qualify for the property tax exemption, the property owner must provide their county assessor with documentation that can confirm the actual purchase and installation – including the costs of the eligible equipment.
In addition to solar panels, this property tax exemption extends to:
- Solar thermal process heaters
- Solar pool heaters
- Passive solar technology
- Solar space heaters
- Solar water heaters
- Solar thermal electric
- Other solar-powered appliances
Solar Equipment Sales Tax Exemption
The state also provides a sales tax exemption for the retail sale of solar energy devices and the installation of solar energy devices by contractors. This exemption does not apply to batteries, controls, and other elements of the setup that are not part of the system.
Great Benefits of Home Solar Power in Arizona
Change can be difficult and investing in a new energy source can be even more so. That’s why we’ve taken the liberty of listing the top 5 benefits of making the move to solar power in Arizona:
Solar Savings are Driven by Federal and State Incentives
These incentives are usually tax credits, rebates, or other financial incentives offered by governments, utilities, or other organizations. These help to encourage people to choose sustainable solutions by drastically lowering the costs of installing renewable energy solutions. Additionally, solar incentives can help stimulate the growth of the solar industry, create new jobs, and promote economic growth.
Peace of Mind Is Possible with Solar and Storage in Tucson, Arizona
Arizonans affected by power outages from 2008 to 2017. 1
Arizona’s solar price drop over the last five years. 2
Average number of sunny days per year in Tucson, AZ. 3
The costs of rooftop solar panels and energy storage systems are at an all-time low. 2,4 What’s more, Tucson is one of the sunniest cities on Earth, 5 so it could be incredibly cost-effective if you team up with a Tucson solar company like Sunrun. A switch to solar can give you protection during outages, more control over your electricity bills, and lower home carbon emissions for decades.
How to Go Solar in Tucson
Sunrun is the leading residential solar and storage company in the U.S., 6 and we work so you can gain energy freedom and security. Find out which of our solar plans, with or without a home battery in Tucson, is the ideal match for your budget and energy needs.
Solar with incentives
Each Sunrun solar plan offers unique advantages. Whether you pick a solar lease or a purchase plan along with battery storage in Tucson, we’ll work hard so that you can benefit from your Tucson solar panel installation for decades. We’re one of the best solar installers in Tucson that you can team up with. When possible, we’ll even take care of the paperwork for you.
Lease new Sunrun solar panels in Tucson with as little as
Solar Brightbox™
Add Brightbox, Sunrun’s battery storage service, to your solar installation in Tucson. This can help keep you powered during outages, cloudy days, rainy afternoons, at night, or when Time-of-Use (TOU) rates spike. 9
Arizona is one of the hottest, driest, and fastest-warming parts of the country. 10
Utility neglect and climate change are making heatwaves stronger and related blackouts more frequent across Arizona.
Brightbox can help you back up your entire home with a Tesla Powerwall, or you can back up just the rooms you need with an LG Chem solar battery.
When the sun is out, Brightbox can store clean and affordable back-up power for later use.
Brightbox is the Tucson back-up solar storage solution that puts you in control. It can turn on during an outage and will work to recharge until the grid’s restored.
Unlike generators, Brightbox doesn’t run on fossil fuels, which produce carbon monoxide (CO) that’s toxic and dangerous for your health. 11
You can monitor your Tucson solar power production and storage daily with the online dashboard and mobile app.
All monthly plans include 24/7 proactive monitoring and maintenance to ensure your system runs smoothly. This benefit sets Brightbox apart from the average solar battery in Tucson.
down. Lock in predictable monthly rates and stay covered with our industry-leading Sunrun Guarantee.
Prepay for up to 25 years of Tucson solar energy for home use at the best price. Our Sunrun Guarantee also backs it.
Own a new home solar system in Tucson and you could build home value. You may qualify for a federal tax credit 7 and a state tax credit, as well as property and sales tax exemptions. 8
Arizona, It’s Time to Leave Fossil Fuels Behind
Tucson Electric Power’s (TEP) plans to provide its customers with almost three-quarters of their electricity from wind and solar resources by 2035. 12
State electricity generation that will come from renewable energy sources by 2025. 13
When you create and store your own clean energy in Tucson, you can reduce your dependence on toxic, dangerous fossil fuels. This will help build a more modern and more resilient energy system that runs on renewable energy made locally. Ready to take the next step? Use our Product Selector or request a free quote to get one-on-one service from our expert Solar Advisors. Together we can keep Arizona clean and beautiful for generations to come.
Since 2007, hundreds of thousands of people have chosen Sunrun to change the way they power their lives. To date, our customers’ residential solar arrays have generated billions of kilowatt-hours (kWh) of clean, renewable energy and kept millions of tons of carbon dioxide (CO2) from entering the atmosphere. This is equivalent to preventing billions of pounds of coal or millions of gallons of gasoline from burning. 14
American families can help us create a better energy future for the whole nation, one home solar panel system at a time. See what people say about their Sunrun solar and storage systems.
We recommend contacting a tax professional to accurately determine the impact of the solar Investment Tax Credit (ITC) on your federal taxes.
One Tesla Powerwall stores 13.5 kilowatt-hours (kWh) of usable electricity, which can be used to back up the home for a day. An LG Chem solar battery holds 9.8 kWh, which can be used to back up essential parts of the home from 8 to 12 hours.
Major Changes To TEP’s Solar Programs
The Arizona Corporate Commission granted TEP’s request to end the solar net-metering program.
When a solar company designs a custom system for you, it’s designed to purposely overproduce power so when the sun goes down you pull back the overproduction created during the day so you don’t purchase that power from TEP.
Sending the extra power back to the grid is accomplished using net-meters. As you can imagine, TEP does not like this program as it allows each solar customer to separate relie less on TEP receive cheaper electric power.
On September 11th, TEP’s wish to remove the Net-Metering program was granted. It goes into effect in 10 days.
Tucson Electric Power is one of the nation’s leading solar power utilities. Since Tucson AZ has over 350 days of sunshine each year this shouldn’t be a surprise. TEP’s renewable energy programs have generated awards and recognition.
Mango Power E Review. Portable Power with LFP Cells ft. CleanerWatt
TEP has developed 2 new rate plans for new users of roof top solar systems. TEP also ranks among the top 10 utilities nationwide for kilowatt hours per customer provided by solar energy.
Home Solar Units
Home solar power system costs have dropped 40 % over the last two years. As solar power system costs have declined, residential installations have grown. A 53% increase during the first quarter of 2013. Followed by a 48% increase in the second quarter.
In 2014, TEP and UniSource Energy Services added 270 megawatts of solar capacity in 2014. The combination of solar power and wind power will power more than 110,000 homes for a year.
TEP’s Solar Program offers an easy and affordable way to meet your electric needs. TEP customers have the opportunity to buy this solar power on a monthly basis. But TEP is proposing higher charges and fewer credits for homes with rooftop solar.
To Go Solar Or Not To Go Solar
Customers can buy some or all of your power through the program. It will reduce or eliminate the use of energy from “conventional” resources. However, the solar power program will increase your electric bill.
While solar power in Arizona seems to be a no-brainer, it’s not. Arizona solar power is ground zero in a potential battle over solar energy incentives. The battle concerns the ability of homeowners with rooftop solar power systems to sell power back to utility companies.
At the core of the issue is whether or not utilities will be allowed to derail the decentralized “distributed generation” energy movement.
Mango Power E 7.06 KWH Power BoxEnough to power a RV or tiny home
The use of “net metering” is a target for the Arizona Public Service. APS is Arizona’s largest utility. APS is battling solar power system installers over “net metering”.
Net metering allows homeowners to receive a credit on their electric bills for any excess electricity generated by their home solar panels. These credits and the ability to offset future rate increases has been a driver for an increasing number of homeowners moving to Arizona solar power.
So what is the future of Arizona solar power? Well, it should be bright and sunny. Pun intended!
Before you pull the trigger on solar panels for your home, check out these considerations.
TEP’s Residential Solar Program
TEP’s Residential Solar Program is aimed at making solar affordable for all utility customers while minimizing the shifting of infrastructure costs to non-solar customers, a common concern with net metering. In the TEP program, participants pay an upfront 250 fee to guarantee a fixed energy bill for up to 25 years based on their historical consumption, provided their future consumption doesn’t vary by more than 15%.
The program was designed to add solar to the TEP portfolio in 3.5 MW blocks (roughly 500 customers each), and in July 2015, TEP applied to add another 1,000 rooftops to the program. Customers interested in the program fill out a form on the TEP website. Selected participants are then validated by TEP prior to installation kick-off. One of three local solar companies chosen by TEP installs and maintains the PV systems in the utility-owned solar program.
Unique requirements for managing utility-owned solar
One way in which TEP’s Residential Solar Program differs from non-utility-owned solar interconnection programs is that homeowners have more direct contact with the utility. As the owner of the PV systems, TEP is “selling” the idea of going solar to their customers, a function typically handled by installers. TEP also assigns each project to an installer and tracks project progress. As a result, the workflow, application and associated forms required to manage TEP’s Residential Solar Program are substantially different from a “traditional” interconnection program.
TEP needed a business process management platform that could accommodate these unique factors. The flexible, intuitive program design tools in PowerClerk enabled TEP administrators to quickly evaluate different program configurations (i.e., structure and relationship of forms, roles and workflow), and share different iterations with management during the development process.
Using PowerClerk, TEP is able to automatically notify installers and their customers when a project’s status is updated. Contracts are signed electronically online, eliminating the need for paper contracts to be physically ferried back and forth between the utility and the property owner. Also, by housing all of the project data in PowerClerk, TEP can easily report across all the PV systems in the program. As the scope of the Residential Solar Program continues to grow and evolve, TEP will have the ability to evolve the program in PowerClerk and stay on top of any new requirements.
Flexible platform for an evolving solar market
Since 2006, PowerClerk has successfully supported a range of customers, including investor-owned utilities, municipal utilities, state agencies and energy agencies. This diverse customer community is running a variety of programs, including distributed generation incentives, tax credits, customer- and third-party-owned interconnection, and now utility-owned interconnection.
We’re passionate about supporting innovative programs like this one that challenge conventional thinking around solar ownership while lowering barriers to entry for rooftop solar participants. Change will continue to greet this industry, and with it will come new challenges to be met and overcome for contractors, utilities and their customers.