Arizona Utilities May Reduce Customers’ Solar Incentive Rates

A surge in solar power system sales has depleted the rebate funds available from UniSource Energy Services (UES) to subsidize the installation of photovoltaic (PV) arrays at local homes and businesses, the utility says.

UES customers are on track to install 500 solar power systems in 2010, exceeding the total number of systems completed over the previous seven years combined. Rebate requests received in June alone consumed nearly half of the company's $5.2 million budget for up-front incentives in 2010.

New requests for incentives are being placed on a waiting list until the Arizona Corporation Commission (ACC) determines how the company should proceed. UES says it could wait until new resources are available next year, restore up-front rebates by tapping funds now preserved for performance-based incentives or raise additional resources through customer surcharges.

UES has asked the ACC to make $6.7 million available in 2011 for up-front incentives that would be reduced to reflect higher demand and lower PV prices. Residential customers would be eligible for rebates of $2.25/W – down from $3.00/W – while up-front incentives for commercial systems would be reduced from $2.50/W to $2.00/W. The ACC is set to review that proposal later this year.

Similarly, Tucson Electric Power (TEP) reports that a jump in the popularity of solar energy systems has prompted the utility to propose new, lower subsidies for residential customers who install photovoltaic arrays.

Nearly 1,100 local homeowners have reserved TEP SunShare rebates for PV systems this year, exceeding the total number of residential solar power systems completed over the previous nine years combined. In addition, local businesses have drained the funds designated for up-front commercial incentives in 2010, the utility adds.

TEP has also asked the ACC to reduce residential SunShare rebates from $3.00 to $2.25 per watt for grid-tied PV arrays. TEP has requested that the new, lower incentive level be applied to any applications received after the close of business on July 7, 2010.

SOURCES: UES, TEP

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