A day after an Arizona utility announced it was cutting and capping incentives for customers who install solar rooftop systems, the chair of the Arizona Corporation Commission condemned the move.
Writing on her blog, Renewable Energy Policy Center, ACC chair Kris Mayes said the Salt River Project‘s (SRP) action “demonstrates an unfortunate lack of seriousness” in the company’s attitude toward solar and other renewable energy sources.
“In every category of renewable energy, the Project is vastly underspending the state’s other utilities, which are regulated by the Corporation Commission and must comply with the Commission’s Renewable Energy Standard. The problem here is that SRP isn’t just a little irrigation ditch company anymore — it’s one of the largest utilities in the state, and by ratcheting back its solar program, SRP is sending the wrong signal to the rest of the country at precisely the time Arizona is trying to brand itself as the solar energy capitol of the country.”
On Tuesday, an SRP official told the Arizona Republic that the program was being cut back because it was no longer necessary. SRP officials claimed that new federal tax credits combined with falling solar prices made the utility’s incentives less important to customers wanting to go solar.
Lori Singleton, who manages SRP’s sustainable initiatives program, told the paper, “We never meant to subsidize the industry forever. The market needed to step up.”
On her blog, commission chair Mayes appeared to challenge that point directly.
While I have never been an advocate of keeping the per watt incentive high forever, I think what SRP has done is premature…
Singleton added that SRP was not cutting back the incentives for solar water heaters. “We find [they are] a more popular program for our customers.”
Data provided to the Sun on Tuesday by SRP bear that out. According to that information, SRP has installed 516 residential solar power systems under the incentive program and 1,174 water heaters.
But the reason solar water heaters are “more popular” is simple — they’re far cheaper than solar electric systems.
So, why did SRP cut financial incentives for the less affordable product and keep them for the one that doesn’t appear to need them?
Maybe it’s because the utility stands to save millions of dollars by their action.
The information below comes from the SRP Website.
The company currently pays customers an incentive of $3.00/kW for solar rooftop systems. For a typical 5kW system (selling for $35,000), the price would be reduced by $15,000.
The incentive for an average-sized solar water heater ($5,000) is $1,300.
Put another way, the incentive for each solar power system costs SRP twelve times more than the one for a solar water heater.
Federal and state tax credits also favor hot water heaters. Again, using SRP’s own example, an average solar heater with a price tag of $5,000 receives government tax credits totaling $2,110. That results in a final purchase price of $1,590 — 70% off the original price.
The final cost of a typical solar power system, on the other hand, is at best reduced by 50%. (Which is great, just not as good as for water heaters.) That leaves customers having to come up with around $17,500 to produce solar electricity.
Mayes is right.
The Republican chair of the ACC has a vision for the state’s economic future that is both practical and hopeful. If Mayes has her way, Arizona will emerge from its current economic crisis far stronger, well-positioned to lead the nation in cheaper, renewable energy production, well-paying green jobs and a cleaner, healthier environment.
SRP has a vision, too.
Unfortunately, it doesn’t reach beyond their own corporate bottom line.