The world of solar has been greeted with some very bright news early this year, as we leave a year full of uncertainty. The current federal solar tax credit of 26% has been extended through the end of 2022. Additionally, the Arizona Corporation Commission (ACC) voted to extend APS’ current RCP (buyback rate) through this summer. These are the two main incentives for solar and had both been scheduled to drop this year. If that’s not enough the Arizona Corporation Commission (ACC) also passed a mandate that will be effective this year requiring electric providers to be 100% carbon-free by 2050. Read on to find out what these incentives mean for solar, and to understand how this puts solar on a sunny path going forward.
Federal Solar Tax Credit Extended
The Federal Solar ITC covers 26% of the cost of solar in the form of a tax credit. This was scheduled to drop down to 22% this year and disappear altogether next year, but as a part of the recent Covid package passed by congress, the credit will remain at 26% for two more years. The package of legislation also includes the Better Energy Storage Technology (BEST) Act, which authorizes $1 billion over five years for federal innovation investments in energy storage technology research, development, and demonstration. This is important because battery technology is becoming increasingly competitive, allowing homeowners to store their own energy instead of depending on the electric company.
The solar tax credit can be a major tax break for a lot of homeowners, and often allows new solar customers to invest in other parts of their home or other projects at the same time. For those customers who can’t take the full tax credit in one year, they can take advantage of the credit over multiple years. In either case, there is no limit to the credit amount. The solar investment tax credit also adds an incentive for homeowners to own their own system rather than lease, which comes with even more benefits.
APS Buyback Extended
The ACC voted this year to extend the current APS buyback rate for solar through August 2021 at 10.45 cents per kilowatt-hour. APS has been requesting 10% decreases to the amount they pay homeowners since 2017, but this time the ACC voted to delay the decrease. Buyback is important is because it determines how well you will do with your solar investment. Understanding the rate at which energy is purchased determines how many panels a homeowner needs to power their house. Read more about this here.
Most likely, the ACC will still grant a 10% decrease in the buyback rate this August, but homeowners can be grandfathered into the current rate for 10 years by simply registering their system before then. This is a major break from the yearly attempts by APS to devalue solar, and hopefully, it signals a trend in a move favorable direction for solar customers.
Arizona Carbon Free Rules
The Corporation Commission also passed a mandate at the end of 2020 detailing that electricity providers must produce their energy via 100% carbon-free means by the year 2050. This decision came at the end of an attempt to pass a similar renewable mandate for the utilities, but this part was scrapped at the end. Ordinances like these are a step in the right direction for legislative will and public interest in a restructuring of our energy delivery policies. While more needs to be done to move toward renewable energy, this is a major step in the right direction.
All of these incentives are an important part of what motivates people to go solar and what makes it a good investment. Arizonans want energy independence and are ever-increasingly showing interest in this kind of mandate to not only rely less on utility companies but to ensure a brighter energy future for our state and our planet. Enquire now to see exactly how much money these incentives will save you.