Renewable Energy Incentives in Arizona | The Renewable Energy Hub USA

Renewable Energy Technology Incentives in Arizona


Arizona has a large number of local, state and national incentives for both business and residential installations of renewable energy initiatives. As you might expect from a state that gets so much sun, Arizona ranked second in the US for utility scale electricity production through solar, though it still has a strong mix of gas, coal and nuclear supplies.

Compared with other states and parts of the world, Arizona has fairly modest plans for renewables, hoping to have just 15% of their energy needs met from it by 2025. It’s location and climate however make it viable for innovations such as the recently commissioned Solar Wind Energy Tower which could produce 1,200 MWh during the state’s hottest and driest months. There is also one of the largest solar PV facilities based in Yuma.

To meet their renewable energy target for 2025, state legislature demands that 30% of the provision needs to come from non-utility driven sites, split 50-50 between residential and commercial. It therefore offers a range of both state wide and national incentives to promote take up of renewable production, particularly for solar and wind.

State Renewable Energy Tax Credits

Both commercial and residential premises can benefit for small tax credits if they have a certified energy generator installed. This usually means one that is capable of producing over and above 5MW and applies to solar PV, thermal and wind power generation.

Solar PV Incentives in Arizona

Arizona has been one of the leaders in promoting solar both for domestic and commercial enterprises. Home owners can choose either to lease the solar panels, where they benefit from the reduced utility bills but don’t get a cut of the profits, or purchase them outright. Those who choose to install solar get the nationwide federal tax credit of 30% which knocks off a big chunk of the purchase price. Because of the high level of sunshine residential and business installations can look forward to higher levels of energy production throughout the year.

The level of rebate from the utilities companies has dropped in recent years but still represents a substantial amount. In 2009 they were paying $3,000 for each kW hour installed but by 2014 this had fallen to just $100. With Net Metering there was an incentive for people to take on solar panels in the early days but the payment has been influenced by the state’s low 15% renewables target and the fact that utility companies are easily going meet expectations. Production rebates are now only available for a select few cooperatives and the level is fairly low.

Solar PV Case Study in Arizona

Despite the lower payouts from utility companies, installing solar PV in Arizona still represents a good investment for both residential and commercial premises. A 5 kW array would cost in the region of $17,500 and comes with a federal tax rebate of $5,250. Estimates say that electricity savings will be around $1,000 and the return on investment after 25 years could be as much as $30,000. There is also the added factor that installing solar PV is expected to boost house prices by around $21,000.

Solar Thermal Incentives in Arizona

With the high levels of sun in Arizona state, installing solar water heaters is highly desirable and there are incentives out there to help businesses and residential premises to convert. The Salt River Project provides $0.3 per kWh for certified heating systems. A similar rebate is administered by the Arizona Public Services Company. There are tax credits for personal and commercial installation of solar water heaters between December 31 2010 and January 1 2021.

Small Hydro Incentives in Arizona

Small hydro across the US has suffered from variations in legislation over the years even though there are national incentives such as the Renewable Electricity Production Tax Credit. Most of the problems arise with the need to control valuable water resources particularly in areas that are subject to drought.

Geothermal Incentives in Arizona

The climate in Arizona is ideal for geothermal installations like ground heat pumps that draw on the natural temperature of the earth to provide hot water and warmth. Incentives are dellivered through schemes such as the Salt River Project and the Arizona Public Service rebates. There are also tax credits through national schemes such as the Residential Energy Efficiency Tax Credit.

Biomass Incentives in Arizona

Like other areas of the United States, Arizona is starting to embrace biomass with several large scale plants opening in recent years. This has led to grants being available to produce more woodland for biomass use in the future, something that has been neglected in the past. The Renewable Energy Incentive Program is available for biomass and other renewable installations, though take up on a domestic scale is not high at the moment.

Wind Power Incentives in Arizona

Arizona has a number of large scale wind farms including the Dry Lake Wind Plant which generates 63 MW through 30 turbines. There are generous tax credits for wind power installation for both commercial and residential premises assuming that they meet local planning legislation. These include Federal Tax Credits with no maximum rate set for the number of turbines installed.

For wind and other renewables such as solar and geothermal, properties are exempt from additional property tax for the equipment they install.

There are plenty of incentives for a range of renewable technologies in the state of Arizona as well as those provided by the US government to encourage uptake. You can find out about all the incentives available on the Database of State Incentives for Renewables & Efficiency.

Press Esc to close
Press Esc to close