Arizona is one of the sunniest regions in the entire United States, with Yuma ranked as the sunniest city in America by NOAA's National Climatic Data Center. Since the 1800s, the Grand Canyon State has utilized this abundance of solar energy to heat and pump water.
How to Reduce the Cost of Installing Solar Panels?
With advancements in technology, legislators and energy providers are taking advantage of this renewable energy source. Unlike traditional fuel sources, absorbing solar energy and converting it to power your business or home can be done nearly anywhere on Earth.
In 2006, the Arizona Corporation Commission approved the Renewable Energy Standard and Tariff (REST), which requires that electric utilities generate 15 percent of their energy from renewable resources by 2025. In order to meet that goal, Arizona will need between 7.9 million MWh and 8.5 million MWh of renewable energy.
Since 2011, solar generation has been hastily growing in popularity in the state for electric utilities. In 2013, the state harnessed enough solar energy to power more than 145,500 homes. In addition, solar heaters and water pumps are still being utilized, and the increased popularity of photovoltaic panels on the rooftops of businesses and homes is assisting in making these technologies more inexpensive as the years go by.
While the industry is expanding and will continue to grow over the next decade, affordability remains a major challenge to consumers. Despite sliding prices, the cost and installation of solar technologies is still more expensive than what is needed for traditional fuel sources.
In order to remain competitive and to continue to advance solar energy technologies, federal and state tax credits, deductions, rebates and grants are being offered to help business owners and homeowners of Arizona upgrade to this renewable energy source.
Federal Solar Tax Credits
Uncle Sam is also encouraging the expansion and use of cleaner energy alternatives by providing taxpayers with incentives to upgrade to renewable energy sources like solar energy for corporate, commercial or residential use.
One of the most well-known tax credits regarding renewable energy is the Federal Residential Renewable Energy Tax Credit. If you were to install a photovoltaic system, solar water heating or other solar electric technologies into your home or business, you would likely be eligible to take advantage of this 30 percent credit when filing your income tax return. When considering the Federal Residential Renewable Energy Tax Credit it might be advantageous to check with a qualified tax advisor, as the maximum incentive is determined by the type of technology installed and year of installation.
For homeowners and homebuyers, other federal incentives are also offered in the form of loans that are insured by the Federal Housing Authority and Veterans Affairs programs.
For those looking to upgrade to a renewable energy system in their homes, Federal Energy-Efficient Mortgages are offered for photovoltaic systems, solar water heating and solar electric technologies.
In addition, for those looking to buy a home with these type of energy systems already in place, the program secures lenders from loan default and allows borrowers to be approved for loans they might have been denied for homes that utilize traditional energy sources.
Arizona Solar Tax Credits
For Arizona state residents, a range of tax credits are available to individual and corporate taxpayers who meet certain requirements with the installation of solar energy systems.
A personal tax credit is available for homeowners who have installed photovoltaic systems, solar water heat, passive solar space heat, solar space heat, solar ovens, solar cooling or solar pool heating systems at their private residence. These incentives allow a maximum of a $1,000-tax credit or a credit of 25 percent of the system's total cost that is filed on the homeowner's income tax return.
For certain types of solar equipment, Arizona offers a tax exemption for 100 percent of the sales tax. Technologies that are eligible include photovoltaic panels, solar water heating, solar space heating, solar thermal electric systems and other solar energy technologies. These exemptions, which have no maximum amount, are available for eligible equipment utilized in residential, commercial and public installations.
Arizona property owners are eligible for a tax exemption of 100 percent of the increased value of a property that has an eligible energy system installed. By installing solar energy systems into your Arizona residence or business, you are eligible for a property tax break. This applies to residential, commercial and industrial properties and also extends to other energy-efficient building components.
Tax credits are available to Arizona industrial, commercial, state, educational, nonprofit and agricultural institutions that utilize solar technologies including photovoltaic panels, solar thermal electric systems and other solar technologies. While there is a maximum credit of $25,000 for a single building and a total of $50,000 per business each year, there is no restriction on the size of the system installed. The program budgets $1 million annually and is scheduled to expire on December 31, 2018.
For Arizona corporate taxpayers that utilize eligible renewable energy systems to produce electricity each year over the period of a decade, an incentive of up to $2 million is available. Photovoltaic systems or solar thermal electric systems installed after December 31, 2010 are eligible for this tax credit, but they must maintain a minimum of 5 MWh. The annual program budget is $20 million, and the credits may be applied to corporate or personal income tax returns.
In order to attract investors and businesses to produce renewable energy products in Arizona, the state offers incentives to commercial and industrial organizations. Whether it be photovoltaic producers or other solar technologies, a tax credit of up to 10 percent of the investment amount is available. In addition, there is no limit on individual property tax reductions offered to help maintain and draw in manufacturers to the state. Since 2010, the total amount of $70 million in tax credits may be approved in a single tax year, but the program is set to expire on December 31, 2019.
Which Incentives Are Best for Me?
Depending on if you are a homeowner, a small business owner, in charge of a non-profit or have many corporate buildings, you may be eligible for several of the incentives offered during your solar installation.
Under the federal tax credit program, nearly any taxpayer that has upgraded to an eligible photovoltaic, solar thermal electric or solar heating system can take advantage of the tax credits when filing their income tax return.
For those living in the state of Arizona, solar equipment sales tax credits are also available to anyone who has invested in eligible equipment with installations that have been done in recent years and qualify.
For businesses, up to $50,000 can be garnered each year per building if you meet the requirements set by the corporate solar tax credits in Arizona. In addition, companies that manufacture and install renewable energy systems are also eligible for additional incentives under the state's other tax programs.
When installing a solar system into your home and business, it is important to check the available credits and deductions offered locally. While many utility’s rebates have been drastically reduced due to shrinking costs, some rebate incentives are still available to nearly anyone utilizing a solar electric system. Different states also have varying regulations, and the same solar technology may be more expensive to install outside of Arizona.
Under the Department of Energy, other renewable energy technologies excluding solar may also be eligible for many of the same tax credits, deductions, grants and loans available.
Questions to Ask Yourself When Upgrading to Solar Technology:
- What are my business or residential energy needs?
- What kind of solar technology would best serve my business or home?
- What are the projected costs of an installation, and how quickly will I see a return on my investment?
- Will this add value to my property?
- What are the federal and state incentives I am eligible for?
- How will these incentives factor into my overall installation cost?
Cost of Solar Panels in Arizona
While the cost of your system will depend on the size of the installation and the type of system, solar electric technology has been proven to reduce energy expenses and is a clean alternative to traditional fuel sources.
As solar technology continues to advance and grow in popularity, the cost of purchasing and installing solar electric systems into businesses and homes continues to decline.
In recent years, there has a drop in the price of solar cells. These photovoltaic shingles are designed to be implemented alongside traditional asphalt shingles on a building's rooftop. While the expense to install these systems could cost thousands of dollars for a business owner, the long-term energy savings and incentives offered have helped boost the utilization of these types of energy systems in businesses and homes.
How Can Empire Help You?
Empire offers a range of services for businesses and homeowners when it comes to solar technology. Roof-mount solar installations are popular options for both Arizona businesses and homeowners. If having solar shingles on your roof is not an option, ground-mounted solar systems are also available.
For 65 years, Empire has offered the highest quality in products and workmanship to industries including education, warehousing, retail, recreation, healthcare, food service and manufacturing throughout Arizona.
Solar panels will make an immediate impact on your power consumption and prove to be an investment that will pay off for decades.
Through our partnership with SunPower, Empire offers the most efficient solar panels available. With an operating efficiency of up to 24 percent, SunPower solar cells produce nearly 20 percent more energy than competing products and outperform competitors in conditions with lower sunlight.
Please contact our team today to learn more about solar installation that will help reduce your energy expenses and provide you with long-lasting efficiency in the years to come.