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What is the future of solar in Arizona


The recent history of rooftop solar panels in Arizona has been marked by rapid growth and falling prices for solar. It also has been turbulent as the industry spurred many electricians and roofers to jump into the industry, and tens of thousands of homeowners and businesses to take advantage of generous subsidies and install the panels. As the industry grew, it gained clout, and the negotiations with state regulators on how to bill solar customers grew raucous. Many renewable-energy advocates want the subsidies, particularly net metering, to continue. Utilities contend that those subsidies were a nonissue when only a few thousand customers used solar, but that as tens of thousands of people install panels, they are overly generous and unfair to customers who don’t have solar.


Arizona Corporation Commission approves the Renewable Energy Standard and Tariff. This requires regulated utilities to get 15 percent of their power from renewable sources like wind and solar by 2025, starting with just over 1 percent that year and increasing over time. They also must get 30 percent of that renewable power from “distributed” sources such as rooftop solar panels. Utilities like Arizona Public Service Co. begin charging a tariff on customers to meet the goal, and paying incentives approaching $20,000 or more to customers who install rooftop solar. The rooftop solar industry, which was mostly limited to rural homes off the grid up to that point, begins to grow.


It cost more than $7 per watt to install residential solar panels, and utilities like APS and Salt River Project offer customers incentives worth more than $3 per watt to install panels. They also offered “net metering,” where the energy from solar panels that was not used in a home was sent to the power grid and customers got a full retail credit on their bill for each kilowatt hour. Net metering was considered a simple, broadly accepted manner in which to credit solar customers and a means to help spur a fledgling industry.


California-based SolarCity Corp., founded by Lyndon Rive, the cousin of Tesla Motors founder Elon Musk, announces it will sell no-money-down solar leases in Arizona. It had already begun offering such leases in California. This allowed customers unable to afford the high, out-of-pocket cost for solar to get solar on their home for no money down if they had good credit. This ramped up the rate of solar installations in Arizona significantly. APS briefly offered a loan program backed by GE Money that allowed customers to buy renewable-energy systems, but it was discontinued.


APS increases the REST tariff on customers to $3.17 a month to continue funding renewable-energy projects to meet the state REST mandate. Regulators frequently debate how to balance the renewable-energy rules, dividing money among homeowners, businesses and large-scale renewable projects. They also face disagreement over how the money collected from customers should be spent to meet the energy goals.

April 2010

The cost to install solar in Arizona falls to about $5 a watt, and because the large incentives are no longer needed, APS reduces the payments it provides customers to little more than $2 per watt from $3 per watt. The utility reports more than 100 people a week installing solar in its territory, much more growth than the utility or Corporation Commissioners anticipated. Meanwhile, SRP is facing a similar matter, and by October, that utility runs out of money to offer customers as solar incentives, and is unwilling to increase customer bills to fund more solar immediately.

May 2011

SRP’s board approves a goal of providing 20 percent of its energy from “sustainable” sources by 2020. SRP is not regulated by the Corporation Commission and doesn’t share the same energy goals. SRP’s goal combines energy efficiency and renewable power. Regulated utilities such as APS must get 15 percent of their energy from renewable sources by 2025 and additionally reduce their usage through conservation by 22 percent in 2020. SRP also has no carve-out for rooftop solar.


The cost per watt to install residential solar falls to about $3.50 per watt, and APS stops offering any incentive for customers to install panels. The Arizona Corporation Commission, following months of debate and protests, approves a compromise between APS and the rooftop-solar industry. The deal charges new solar customers an average of $5 a month through an existing line item on their bill. APS had suggested either a “demand charge” for solar customers or fees of $50 or more a month so that the costs of maintaining the power grid were not shifted onto non-solar customers. Three of the five elected commissioners had suggested that fees of $20 a month or more were appropriate, but the state consumer advocate and solar industry offered the last-minute deal for $5.


Despite the $5 fee approved in 2013, APS set a record in 2014, with 7,800 customers adding rooftop solar. Company officials continue to press for the need to change rates so that solar customers pay higher bills. They contend the solar users rely on grid elements such as interstate transmission lines, transformers and utility poles, but don’t pay much to support that infrastructure because they are getting retail credits on their bill through net metering, and thus pay little to the utility. Solar advocates say this argument ignores benefits of solar like reduced water usage and carbon emissions.

December 2014

SRP proposes putting all solar customers, including those who already have panels installed, on “demand rates” that will charge them a fee based on their highest use of power at once during the month. This prompts protests at the public utility, but in February 2015, the elected board members approve the new rate, though they agreed to “grandfather” the 15,000 or so customers who already had solar and continued to bill them on a traditional net metering rate.

July 2015

The Sandstone Solar large-scale power plant breaks ground in Florence. The 45-megawatt plant can provide enough power to supply more than 11,000 homes at once when the sun is shining. SRP will buy power from the plant at 5.3 cents per kilowatt-hour. The utility’s managers suggest this is a better way to promote solar than paying rooftop solar customers retail credit, which is worth 10 cents or more per kilowatt-hour. Like other utilities, SRP managers contend they can get more solar on the grid for less in this manner than by crediting customers through net metering. Solar advocates argue that central solar plants like Sandstone don’t give customers the opportunity to reduce their bills like rooftop panels.

April 2016

Solar companies announce a ballot measure to mandate Arizona utilities maintain net metering, and are swiftly met by two competing ballot measures from state lawmakers threatening the opposite, and more. All sides agree to stand down if solar companies and APS will negotiate.

June 2016

APS will file its next rate case with the Corporation Commission, and has told investors it will seek to amend net metering.

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