Arizona - Energy tax credit, solar rebates, grants, incentives

Arizona Renewable and Solar Energy Incentives

Tax Credit for Solar Power and Wind Energy (Residential/Commercial)

A tax credit is available to residential, commercial solar panel installation, corporate and other non-residential entities that utilize solar panel or wind energy systems.

• Qualifying systems: passive solar, solar water heat, solar thermal electric, solar space heat, solar thermal process heat, solar panel (PV), solar cooling, solar pool heating, daylighting and wind.
• Non-residential buildings that qualify are granted a tax credit equivalent to 10% of the installation costs of a solar or wind energy system.  The maximum incentive is $25,000 for a single building in one calendar year and $50,000 total per year.
• Residential buildings are granted a 25% tax credit if they have solar or wind energy systems installed.  The maximum incentive for residential buildings is $1,000 per home.
• There are no system size capacities for this tax credit.
• Surplus credit transfers over to the subsequent year for up to 5 taxable years.

Property Tax Exemption for Renewable Energy Equipment (Residential/Commercial)

Homeowners and commercial business owners are completely exempt of property taxes to the extent of the added value of a given building due to the installation of a renewable energy system.

• Qualifying systems: Solar panel (PV - electric), passive solar space heat, solar water heat, solar space heat, solar thermal process heat, solar thermal electric, landfill gas, anaerobic digestion, small hydroelectric, biomass, geothermal electric, wind, geothermal heat pumps, CHP/cogeneration, solar cooling, solar pool heating, daylighting.

Sales Tax Exemption for Solar and Wind Energy (Residential/Commercial)

Homeowners and commercial businesses are completely exempt of sales taxes for equipment associated with solar or wind energy devices.

• Prior to purchase and installation of solar panel or wind energy system, the solar vendor must be registered with the Arizona Department of Revenue.  Registration is deemed completed upon the submission of Form 6015.
• Qualifying systems: passive solar space heat, solar space heat, solar water heat, PV, solar pool heat, daylighting, solar thermal electric, wind.

SunWatts Loan Program – Sulphur Springs Valley EC (Residential/Commercial)

• Sulphur Springs Valley Electric Coop offers a loan program designed to supplement part of the costs of a PV or wind energy system.
• Loan amounts are offered on a per-watt basis, which is currently set at $2.00/watt and have a maximum incentive of 25% of the total system costs.
• The interest rate is set at 3% for all projects.  Loans exceeding $10,000 must be paid back within 10 years.  For loans $10,000 or less, the payback period is 5 years.

Green Building Incentive – Chandler – Scottsdale – Buckeye – Tucson (Residential/Commercial)

The Green Building Incentive was created for the purpose of promoting the construction of environmentally friendly buildings and homes.

This program generally offers tax credits based on the level of efficiency of a building or home. 

• Any building projects that are approved through the Green Building Incentive receive building permits in a fraction of the time it would take for a standard job or project.
• The GBI provides technical and development assistance.

Utility Rebate Programs (Residential/Commercial)

Arizona offers various rebate programs through its energy distribution companies for subscribers of participating utility companies.

The majority of the programs are reserved for energy efficient appliances.  For qualifying systems, rebates are typically governed one time offer basis.

Federal Energy Tax Credit (Residential/Commercial)

Taxpayers are granted a personal tax credit of 30% of the total expenses, which include installation of residential solar-electric systems, solar thermal systems, fuel cells and labor expenses.  Residential wind energy installations and geothermal pumps are also subject to a tax exemption.  

• Solar panel installations (PV - electric systems) and solar thermal heaters have no maximum incentive.
• If there is excess federal tax credit, it may be carried over to the subsequent taxable year.  
• This may continue on through consecutive years until 2016, under which unused credit may or may not be expunged.

Federal Energy Conservation Subsidy Exclusion (Residential)

Public utilities provide residential purchasers with an exemption of 100% of energy conservation subsidies.

The overall worth of an installation or renewable utility regardless of the energy conservation capacity, will be excluded from the buyer’s gross income.  

Customers who participate in a utility company’s energy conservation program may be given a reduced rate of electricity utilized or a nonrefundable credit of the price of electricity on the customer’s monthly electric bill.

Energy-Efficient Mortgages (Residential)

With this federal loan program, homeowners may utilize energy-efficient mortgages (EEM) to either supplement or completely fund renewable energy systems.

Example: 4KW System – Residential Installation Cost

Average Electric Bill: $250/mo
Projected Annual Bill Escalation: 5%
Cost Per Watt: $6.50

- Estimated System Cost: $26,000
- Federal/State Tax Credit: $6,220
- State/Utility Rebate: $8,600
- Net Cost: $11,180
- Cumulative Lifetime Savings (25 Years): $19,066
- Investment Return: 6.4%

Savings of 56% on the total cost of your solar system through incentives