When Arizona homeowners go solar, one of the key factors considered is the rate the utility will pay for any excess solar the system produces or the buyback rate. It was not long ago that solar homeowners received a one-to-one buyback ratio with what’s called APS net metering. This means that for every excess kWh (energy unit) the system produced, the utility would credit the customer the very same amount. Net metering was altered years ago when the governing body granted Arizona Public Service a restructuring of solar buyback at the behest of the utility. APS currently has a buyback rate that makes solar beneficial to its customers and continues to meet with the ACC each year to discuss what’s fair for Arizona net metering fees. They are currently on a track to decrease buyback each year but read on to find out why this trend may reverse and why even without full net metering, Arizona has one of the strongest arguments in the country for solar, and why the sooner you invest the better in order to make the most out of your system!
A Change to Net Metering
In Arizona, net metering was long a major part of what made solar financially strong. In 2016, APS brought a case to the Arizona Corporation Commission (ACC) which is the elected governing body over energy utilities in Arizona. In this request, they asked for a massive decrease in solar buyback which would have been quite damaging to solar. Thankfully, they were only granted a fraction of what they requested in the form of a 10% decrease from their 1-to-1 buyback rate. Following this, APS has met with the ACC each year and requested subsequent 10% decreases which have been granted each year except for 2021. The good news is these decreases have been minimal enough to keep the financial argument for solar strong, and there are some other advantages to these changes as well.
As a part of the initial decision, the ACC grandfathered all current solar customers into net metering for 20 years. Customers who go solar each year since have also been grandfathered into the buyback rate at the time and will continue to be grandfathered going forward. There is still hope for this plan to be reversed in the future as the ACC must reconsider APS’s request each year in order to be granted the decrease. Some customers may see an advantage with these new rules when electing to slightly over-size their solar. Particularly with smaller systems and particularly in Northern Arizona customers can actually make more money during high production months. This is because under the new plan, ‘net billing’ plans give credits to customers each month instead of annually. These rulings are often what people refer to as the Arizona net metering law.
Where Are We Now?
Under Arizona net metering, all solar customers were kept on one meter. That meter turned backward or forward to track customer credits in a simple system. These days, solar customers are equipped with a second meter to track their exported solar energy. Currently, APS offers 10.45 cents per kilowatt-hour (kWh) for solar contributed to the grid. APS net metering was not decreased last year because of Covid, and the policy will be under review again this year in September with APS once again asking for a decrease of 10%. These proposals come despite the benefits to the economy and the grid and are to the benefit of APS, which is a privately owned company with large profits.
The future has yet to show what form of net metering Arizona adopts next. The current trajectory has been opposed by solar advocacy and other groups as they develop improved solar policy and a more solar-friendly ACC. A lot of this advocacy work has come as a response to campaign funding which has been significant from Pinnacle West Capital Corp to certain ACC board members. Pinnacle West Corp is the parent company of APS itself (source: azcentral). This has led to high levels of public distrust for the commission with one commissioner even going to trial for corruption in 2018 leaving homeowners feeling the utility does not work for them (azcentral).
These efforts have led to more awareness by the public in the past and have given Arizonans hope that we can see some changes in our solar community’s path this year and in years to come. For the sake of Arizona solar, net metering has been a very important tool, and for the time being, we can have some hope for fair buyback rates to continue. The commission’s appetite for solar-friendly policy is greater than it’s been in the past, but regardless of the decision this year, we do know that customers who act in time will be grandfathered into the current rate of 10.45 cents/kWh for the next 10 years. 10 years tends to be longer than the average return-on-investment for solar. This guarantees the viability of the investment, even if we do not see immediate positive policy changes.
A Great Time to Invest
In order to be grandfathered into the current rate, homeowners will need to have their solar plans registered with APS before October 1st, 2021. Rooftop Solar can run the numbers for solar as well as battery backup systems, and our experts are able to tell you your exact savings year-over-year under current Arizona net-metering law. We expect a sunny future but your savings can still be very bright today! Request a quote to have us design a custom proposal for you today.