Will Arizona’s Solar Industry Survive the Summer?
July 14th | Greentech Media

Arizona’s renewables standard requires 15 percent of the state’s power to come from renewable sources by 2025 and 30 percent of that must come from distributed sources like rooftop solar.

To meet the standard’s annually escalating requirements, Arizona’s utilities offer one-time, ratepayer-funded per-watt payments in addition to the 30 percent federal tax credit and $1,000 state incentive. The utility-regulating Arizona Corporation Commission (ACC) sets those per-watt amounts yearly, according to anticipated market dynamics.

As a result, demand has skyrocketed. Arizona Public Service (APS), Arizona’s biggest utility, is about to exhaust its incentive fund. Smaller utilities such Salt River Project (SRP) and Tucson Electric Power (TEP) still have incentive money to allot but industry watchers expect those funds to be used quickly.

“They’ve basically burned through all four quarters of the 2011 standard allotment for the residential incentives even though it’s only July,” said 10-year solar industry veteran Mark Holohan, Solar Division Manager for Wilson Electric, Arizona’s biggest commercial electrical contractor.

APS “started the year paying $1.75 per watt,” Holohan said. “Those funds were exhausted by January 16. Then it dropped to $1.60 per watt. That was exhausted by March 25. On March 25, it dropped to $1.45 per watt. That was exhausted on June 10. By that point, it had exhausted a total budget for the year of $27.9 million.” Barely two million dollars remain. “What’s left is only the budget for rapid reservations and only a dollar per watt,” Holohan said.

Some solar insiders say demand is now compromised. And solar installers, Holohan said, “have an interruption of their ability to sell and an interruption to their cash flow. And they will have idle people. That’s a difficult position for them to recover from.”

SolarCity is one of the biggest solar providers in Arizona. Though the situation is "not ideal," said Director of Communications Jonathan Bass, his company has been able to “manage around” the quarter-to-quarter starting and stopping. A lower incentive “makes a purchase more expensive,” Bass said, but SolarCity can still provide “affordable solar options” in Arizona, where “a solar system generates more electricity than almost anyplace else in the U.S.”

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