With its many sunny days, Tucson is a prime location for residential solar installations, and an ever-growing number of homeowners have decided to take the leap and invest in solar. If you’ve been thinking of making the switch, however, you might have been alarmed by the recent news that Tucson Electric Power (TEP) has changed its solar rates. If you’re a new solar customer, TEP will no longer be offering the same credits for the excess power your solar installation produces—it will be offering lower credits, as well as higher monthly meter fees. The good news is that new solar customers will still see a huge advantage by switching to solar. Continue reading to learn more about the effects of TEP’s changes.
How Solar Rates Are Calculated
If you’re a current solar customer, the changing rates won’t affect you at all. New customers, however, might be concerned. The change in policy will indeed affect their solar investment—but the change will not be as significant as you might fear. To understand the change, we first need to understand the complex process of how solar rates are calculated in the first place.
TEP’s previous policy was known as retail net metering, and it entailed reimbursing solar customers for the full value of any excess solar energy that they returned to the grid. In September 2018, the Arizona Corporation Commission voted to change the policy to an export rate. In other words, you will be compensated for any energy you send back to the grid—but it won’t be at the full retail market value. The new rate for power that you export back to the grid will be 9.64 cents per kilowatt hour (export rate), down from 10.8 cents per kilowatt hour under the previous system.
However, new customers shouldn’t let this policy change dissuade them from the idea of going solar! If you purchase a new solar installation, your export rate will be locked in for the next decade; if you wait another year, the export rate will decline by 10% per year with each year’s rate locked for 10 years upon signing up to go solar. So each year the rate will drop, so the sooner you sign up for solar the better your 10 year rate lock will be. The 10-year policy was put in place to enable solar customers to recover the initial cost of their investment, thus making it easier for homeowners to go solar in the first place. The more solar installations there are on the grid, the better it is for everyone.
Another part of the Arizona Corporation Commission’s (ACC) decision was to force new solar customer’s to pick either a standard Time-of-use rate or a Time-of-use rate with a demand charge. Time-of-use rates have been an option for all TEP customers for many years, and if you modify your usage habits to shift loads to off-peak times, you can save money on your monthly bills. The ACC’s solar rate change requires new solar customer’s to pick one of these rate plans, which means that the bulk of your solar produced during the middle of the day will go back to the grid at the $0.964/kWhr export rate. This means a solar customer who has efficient energy consumption habits will experience the full benefit of time-of-use rates while also helping to lessen the grid’s demand during these hours, and saving lot’s of money!
How State and Federal Incentives Benefit New Solar Customers
There are other incentives in place to encourage Arizona residents to invest in solar, and homeowners should be aware of them. If you’ve been thinking about going solar, you should be aware that these incentives won’t be around in their current state forever—in fact, some of them even have an expiration date.
These are the main incentives you should know about:
- Federal Investment Tax Credit. With this tax credit, you can write off up to 30% of the cost of your new solar energy system on your federal income tax return. However, this high credit isn’t permanent—it’s set to decline to 26% in 2020 and 22% in 2021. If you want to be able to get the best deal on your solar installation, you should start the installation process as soon as possible.
- State of Arizona Tax Credit. The state of Arizona has worked to make it easier for homeowners to purchase solar installations. If you buy a solar energy system for your home, the state will reward you with a state income tax credit that you can use that same tax year. The tax credit covers 25% of the cost of solar devices, with a maximum credit of $1,000.
If you want to be able to take full advantage of these incentives, you need to act fast! As solar rates steadily go up—and the available tax credits for these installations simultaneously go down—it’s increasingly clear that there will never been a better time than now to make an investment in solar in the Southwest. Don’t wait another two or three years—start looking into solar today! The sooner you start planning to make this investment, the better the deal you’re likely to get.
Are you curious about the potential benefits of solar power for your home or business? If so, the solar experts at Custom Solar and Leisure are here to help you navigate the solar installation process, from start to finish. We are a full-service solar contractor, and we have been providing services to the community of Southern Arizona for more than 10 years. We’re dedicated to ensuring that each and every one of our customers has access to the best possible solutions—and at the best prices! From solar pool heaters to rooftop solar installations, we can handle all of your solar needs! If you’re looking for a reliable solar company in the Tucson area, you can get in touch with us today by calling (520) 314-3768.