Some Arizona lawmakers and the solar energy industry are pushing for tax incentives intended to make generating electricity from the sun more popular among businesses, homeowners and schools.
While sunshine is Arizona’s most abundant source of renewable energy, solar generation provides only a tiny portion of the electricity used. Experts blame relatively high costs and technical challenges presented by summer heat and low humidity.
But solar’s expense has been dropping as the technology improves. Other Western states are looking to take advantage of a potential boom in the manufacturing of solar equipment, with New Mexico offering $3 million in new tax credits last year.
Arizona officials said this state must protect its position as an innovator in solar energy.
“We really are in a race with other states at this point, which you haven’t seen in the past,” said Rep. Ken Clark, D-Phoenix. “That tipping point is coming. It’s going to be a race to see who gets there first.”
Clark is part of a bipartisan group backing four bills that would expand income tax credits to include businesses, offer tax breaks on business property taxes and open the door to using state tax dollars to install solar equipment in new schools.
Bud Annan of Scottsdale, a former director of the federal solar energy program, said the package could spark interest in solar energy as a long-term alternative to fossil fuels.
Annan recently installed a two-kilowatt solar electrical generator in his north Scottsdale home. He relied on the state tax credit and a subsidy from Arizona Public Service Co. to reduce his out-of-pocket cost from $13,600 to about $5,000.
“I walk away saying more people would do this if they were made more aware of opportunity, especially if they were going into a brand-new home,” Annan said. “They could just fold it right into the mortgage, and they would never know. All they would see would be cheaper electricity payments.”
Last month, the Arizona Corporation Commission reaffirmed its commitment to compelling electric utilities that it regulates to use more solar and other renewable energies. But the commission’s goals are comparatively modest, with only about 1 percent of the state’s electrical capacity coming from nonfossil fuel sources this year.
Solar industry representatives said the state hasn’t started to tap the potential of sun power. The technology just needs a little more encouragement, said Michael Neary, president of the Arizona Solar Energy Industry Association.
“Americans pay a good portion of their energy bill on April 15, because there’s so many subsidies at the federal level for traditional sources for fossil fuels,”
Neary said. “If we didn’t have the federal subsidies for the fossil fuels, solar would have competed a long time ago. We all would be all using far more solar today.”
The main focus of the legislative package is first-ever incentives for commercial buildings. Experts said businesses offer more possibilities than homes because they can install solar equipment that generate many more kilowatts.
“Whether it’s a manufacturing facility or a Wal-Mart, if there’s a flat roof, a solar panel could be mounted on it and offset some of that electricity use,” said Heather Murphy, a commission spokeswoman. “To me, it makes long-term sense because there’s a payback and a savings to the utility customer to consider. It allows less to be drawn from the grid and less that needs to be generated in fossil fuels.”