Will Arizona’s Solar Industry Survive?

arizona Will Arizona’s Solar Industry Survive?

Arizona’s renewables standard requires 15 percent of the state’s powerto come from renewable sources by 2025 and 30 percent of that must comefrom distributed sources like rooftop solar.

To meet the standard’s annually escalating requirements, Arizona’sutilities offer one-time, ratepayer-funded per-watt payments in addition to the 30 percent federal tax credit and $1,000 state incentive. Theutility-regulating Arizona Corporation Commission (ACC) sets thoseper-watt amounts yearly, according to anticipated market dynamics.

As a result, demand has skyrocketed. Arizona Public Service (APS), Arizona’s biggest utility, is about to exhaust its incentive fund. Smaller utilities such Salt River Project (SRP) and Tucson ElectricPower (TEP) still have incentive money to allot but industry watchersexpect those funds to be used quickly.

“They’ve basically burned through all four quarters of the 2011standard allotment for the residential incentives even though it’s onlyJuly,” said 10-year solar industry veteran Mark Holohan, Solar DivisionManager for Wilson Electric, Arizona’s biggest commercial electricalcontractor.

APS “started the year paying $1.75 per watt,” Holohan said. “Thosefunds were exhausted by January 16. Then it dropped to $1.60 per watt.That was exhausted by March 25. On March 25, it dropped to $1.45 perwatt. That was exhausted on June 10. By that point, it had exhausted atotal budget for the year of $27.9 million.” Barely two million dollarsremain. “What’s left is only the budget for rapid reservations and only a dollar per watt,” Holohan said.

Some solar insiders say demand is now compromised. And solar installers, Holohan said, “have an interruption of their ability to sell and aninterruption to their cash flow. And they will have idle people. That’s a difficult position for them to recover from.”

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