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Solar Industry Gets Burned in Arizona

Linda Hardesty

The Arizona Corporation Commission (ACC) has eliminated all incentives for commercial solar installations in one of the sunniest states in the US.

The ACC determined the solar industry in Arizona is self-sufficient and no longer needs to rely on incentives, which are paid for by ratepayers. The Commission intimated in December that it was proud of its work to gradually reduce incentives as the Arizona solar industry becomes more independent. But it was a shock this week for solar companies to learn there will be no more performance-based incentives provided to commercial solar system buyers by the state’s two investor-owned utilities.

Arizona Public Service was scheduled to reduce its performance-based incentives for commercial systems to $20.8 million for 2013; and Tucson Electric Power was scheduled to go to $10.5 million for 2013, according to GreenTech Media. Both utilities will now offer zero performance-based incentives for commercial solar systems in 2013.

The incentives had been about $0.06 to $0.07 per kilowatt-hour, according to GreenTech Media.

The ACC’s motive for the cuts was to save money for ratepayers. But the Renewable Energy Standard and Tariff (REST) premium added to Arizona ratepayers’ utility bills to fund solar amounts to a few pennies per month.

Solar Energy Industries Association (SEIA) Senior Vice President Carrie Cullen Hitt said there are other incentives for residential that weren’t cut as deeply. “It looks like the private commercial sector was called out. We don’t really know why,” said Hitt. “Hopefully the cost of solar will come down enough so that incentives won’t be required.”

In December, 2012, an ACC statement said “a report issued by SEIA shows Arizona was second only to California in the capacity of solar installations in the Third Quarter of 2012. SEIA’s Solar Market Insight Report 2012 Q3 showed Arizona saw 192 MW of installed solar capacity in the third quarter, just below California’s 194 MW. This achievement comes as a direct result of the Commission’s approach of reducing incentives as demand for solar increased. This shows that Arizona’s responsible approach to increasing the adoption of solar while protecting the ratepayer from untenable surcharges is yielding success.”



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