New solar-qualified homeowners in APS territory should expect to see a 10% decrease in the value of home solar energy as the Arizona Corporation Commission nears their annual APS buyback hearing. However, homeowners this month are in a great position to be grandfathered at the current buyback rate for the next 10 years. Rooftop Solar can compare what you are currently paying APS to what you could save with solar before the September 30th deadline.
There is one other major change on the horizon for solar in the U.S. as the federal tax credit is currently in the process of phasing out. While this is going to take a couple more years, it is important to at least start considering the savings now. The federal government currently offers 26% of the total cost of a solar system back to the homeowner in the form of a tax credit, but to qualify for this tax credit, a homeowner is going to need to have the system installed before the end of 2022. Homeowners installing solar the following year will see a 22% tax credit, and the credit is scheduled to sunset entirely by 2024.
Many Phoenix and Arizona homeowners will see a greater increase in their home value now than they will in the coming years. The 4% difference in the tax credit this year gives homeowners a 4% more valuable solar system than in 2023, and 24% more valuable than in 2024.
A Little Background
APS’ buyback decrease is a request through the ACC and affects the way they value electricity exported from home solar. The way the electric company values the power solar homes export is a significant part of solar’s return on investment. There is a chance that the ACC could deny APS’s upcoming request, but since 2017, they have only approved such decreases. APS argues that residential solar hurts their bottom line. This argument has been credibly challenged both in Arizona and in other states where utility companies have proposed such changes (energy.gov). These studies indicate that the contribution of residential solar is a net positive for the economy and the utility. It is also noteworthy that in this state the electric company is not a publicly-owned utility but rather a privately owned one.
It is also worth considering the tremendous benefit solar provides to the economy and the grid itself. For instance, solar provides distributed energy to the grid which is good for reliability, sustainability, and lowering infrastructure costs, yet APS’ main argument for lowering buyback is that solar adds cost to their grid management. Most of the ACC’s debate with APS centers around this very topic.
A Great Time to Invest
APS first lowered solar payback in September of 2017 when it was granted its first 10% decrease. They have since asked for the same decrease every year, and the ACC has obliged each year except last in response to the covid crisis.
Prior to the inception of the RCP Rate, APS followed a system applied widely across the U.S. called net-metering. This is a system where the electricity exported from home solar is valued the same as APS’s electricity sold, but since 2017 APS has been allowed to value exported solar energy at a lower rate.
Despite these changes, solar still makes sense in Arizona, and it is important to get a quote before October this year. Again, there is always the chance that the ACC will choose to deny APS this year, and Rooftop Solar is very hopeful for the future of solar valuation. In the meantime, however, it still makes more sense to start saving today rather than wait!