Sunny Solutions

Tucsonans move to solar energy with the help of rebates and tax credits

When Chuck Dunn, a self-professed solar-energy lover, built his Tucson home in 2007, he says it made sense to install 96 solar panels on his roof.

Now, when those sweat-inducing summer months arrive, Dunn's 6,000-square-foot house produces no electric bill.

"They just do their job every day," he said. "They start with the sunlight in the morning, and they work right through the evening."

Dunn is one of the pioneering Tucson home and business owners who are going solar and taking advantage of local, state and federal incentives.

Tucson Electric Power spokesman Joe Salkowski said interest in solar systems continues to climb. In 2009, 304 TEP customers installed residential or small commercial solar systems, which accounts for more than one-third of the 894 TEP customers now using photovoltaic systems.

Through its SunShare program, TEP offers incentives that can reduce the initial cost of installing photovoltaic systems. TEP typically pays residential customers an upfront rebate of $3,000 per kilowatt, Salkowski said. The rebate varies for businesses.

John Wesley Miller, a Tucson homebuilder who specializes in energy-efficient and alternative-energy homes, said TEP's rebates eliminate a considerable portion of the solar-system cost.

"Let's say you've got a two-kilowatt system. That's $6,000 cash," he said. "As soon as you turn it on, they write you a check."

That's not all. Arizona residents can also receive tax credits for 25 percent of the total system cost, up to $1,000. For businesses that install solar systems, Arizona offers a 10 percent tax credit, with a max of $25,000. Federal tax credits chip in an even bigger chunk: 30 percent of the cost of a residential or business solar system, with no cap.

This federal tax credit is part of the American Recovery and Reinvestment Act of 2009, aka the stimulus package. Solar systems must be installed prior to Dec. 31, 2016, to be eligible.

The available incentives reduced Dunn's total cost by more than half. His system initially cost about $100,000, but after he applied for the appropriate rebates, his final total was down to roughly $47,000, he said. Had he installed the system two years later, after the passage of the stimulus package, Dunn could have received an even larger federal tax credit—$30,000 instead of $2,000.

The cost of solar systems varies. For someone like Dunn, whose residential system is the largest in Southern Arizona, the upfront cost was high. For those customers who choose to think on a smaller scale—perhaps only installing two or three panels—the cost is significantly lower.

Tony Vaccaro, owner of Brooklyn Pizza Company, installed 68 solar panels on his restaurant's rooftop in September 2008. It cost about $100,000, but rebates and tax credits covered about $78,000. He said he expects to earn back the rest within seven or eight years.

Dunn's outlook is similar. Three years after the installation, he expects to break even within the next three years.

"Whether you're opening a store or buying property or any type of investment out there, if you can get your money back out of it in six or seven years, anybody who is thinking will say, 'I'll take that deal,'" he said.

It all comes down to how large a person's solar system is: The more panels that customers install, the more electricity is generated, and the faster the cost will be recouped. In general, customers with smaller systems can expect to recoup costs in 12 to 15 years, said Erika Roush of Technicians for Sustainability.

Lon Huber, who works as a policy program associate at Arizona Research Institute for Solar Energy, said that going solar is "a better investment than anything you'll get at the bank right now." He likened installing a solar system to buying a magazine subscription, as opposed to buying each magazine individually: There's a high upfront cost, but in the end, it saves money, he said.

Beyond the monetary advantages, environmental benefits offer another incentive.

Using solar energy eliminates the need for power plants to burn fossil fuels, thereby eliminating waste and reducing the amount of air pollutants created when fossil fuels burn.

But every advantage is accompanied by its own set of drawbacks. Besides the obvious problem of high upfront costs, panels can only be installed on a roof that a person owns, which eliminates renters.

Vaccaro said he would've installed solar panels sooner, except he rented his property until three years ago.

"It's a lot easier to install solar panels on a roof that you own," he said.

Dunn acknowledges that there are "a lot of reasons why even if you love solar, (many people) can't really put solar panels up at this time."

Beside the logistics of panel placement, solar energy is only produced on days when the sky is clear and the sun is shining—and never at night. No sunlight, no energy.

On cloudy days and at night, solar-energy homes use electricity from the TEP grid to power electrical systems. But on sunny days, when the panels produce more energy than the home requires, the energy goes back into the grid for others to use—and TEP credits homeowners.

In Dunn's case, his solar system produces about 85 percent of his energy needs. Credits eliminate a large portion of the other 15 percent.

Dunn says he was shocked when he found he didn't have an electric bill that first summer.

"I'm just completely blown away that ... right now, we have the technology that can eliminate your electric bill," he said.

Dunn said that many people he talks to remain hesitant about installing a solar system now, fearing that the panels will soon be outdated. His response?

"Of course they're going to get better, and of course they're going to get cheaper over time," he said. "But if you asked me, 'Would I change my mind on them?' No, I'd still get solar panels."

(This story was edited to remove an incorrect statement.)

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