Some firms have been suspected of cheating to stay ahead. Solar City is among three targeted by the U.S. Treasury Department in an ongoing investigation into whether installation costs are inflated to get more money from the government. The 30 percent federal discount is based on installation cost, so the higher it is, the more money the federal government pays.
Lyndon Rive, co-founder and CEO of Solar City, denies any costs have been inflated, adding that his company installs systems for $4.50 to $5.50 a watt, which meets government guidelines.
This APS solar array near Cooper and Guadalupe roads provides enough electricity to power about 30 homes — for about six hours a day.
Sandy Bahr, director of the Sierra Club's Grand Canyon Chapter
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Solar advocates note that the popularity of rooftop systems has continued in the past year — even as Arizona incentives shrink. Last year, the APS incentive dropped from $1 per watt of installed solar power to 10 cents per watt, or about $600 for a six-kilowatt system. Yet the demand stayed strong, which meant more solar systems were being installed overall.
It appears that Arizona utilities could ditch their direct, upfront payments to customers installing solar panels, and the solar companies would survive just fine, as long as they and, in turn, their costumers still received the 30 percent federal subsidy.
It sounds good, but there's a catch: The hidden, indirect subsidies that the solar industry hopes also will remain in place to help keep solar attractive to people. Industry representatives fought against one change recently made by the state Corporation Commission. Until late this year, solar users didn't have to pay the renewable-energy surcharge most everyone else has to pay. Now they do.
Solar customers and businesses still don't pay sales tax on equipment. Utilities say they don't pay fees charged to all other utility customers — for maintaining and building the likes of transmission lines and transformers, for programs that help low-income utility customers, for environmental cleanup, and for storage of nuclear waste. When solar customers generate more power than they use during a year, they're reimbursed for that power at the full retail rate for electricity paid by customers.
The deficits have to be made up somewhere and result in higher electricity costs for everyone, according to APS. Seeing solar become more popular, the utility's leaders are growing concerned about these "cross-subsidies," and they told the Corporation Commission in a December 6 report that "APS believes that a sustainable [rooftop] solar policy must include an equitable distribution of costs and benefits across all customers."
Another way to put it: Solar customers should start paying their fair share for the infrastructure and for everything else that goes along with providing power.
Rooftop solar still is just a neat experiment for businesses. The vast majority of firms — those in Phoenix included — haven't regarded the technology as ready for prime time.
For now, companies tout their token projects to customers who care about such things, while using electricity from additional energy sources at most of their buildings.
Fresh & Easy, a grocery chain of 177 stores in California, Nevada and Arizona, owned by British retailing giant Tesco, is one of the corporations that uses environmentalism as a marketing tool, its website touting that it works hard to help the planet. Solar has been part of Fresh & Easy's strategy for the past few years. In 2008, the company installed one of the world's largest rooftop solar plants on its California distribution center. Last year, it announced that 10 of its stores had solar panels. The project cost more than $13 million after rebates, according to company spokesman Brendon Wonnacott, with the expectation that the investment will pay for itself in 10 years.
Asked when the company plans to put panels on the rest of its stores, Wonnacott stated, "Well, we'll wait and see. That would be a very, very large investment."
Tesco announced this month it may close its Fresh & Easy stores in the United States because they're not making enough money.
Arizona State University, taking advantage of the 30 percent federal subsidy, a 10 percent state subsidy, and utility incentives, now boasts more than 10 megawatts of peak-time solar power (enough to power 2,500 average Valley homes), mostly at its sprawling Tempe campus. Various private solar businesses invested about $90 million in the projects, and ASU agreed to pay the solar firms a fixed rate over 20 years for power generated by the systems. The university says it expects this arrangement will save money — as long as typical utility costs increase by 40 percent over the 20 years. APS says it can't predict whether that will be the case.
Rooftop solar projects have one major advantage over utility-scale solar projects — they're built on land that's already developed. Some see the Southwest's Sonoran and Mohave deserts as ripe for paneling-over. But one person's wasteland is another's treasured ecosystem. In some cases, environmentalists have been forced to choose between developing desert lands and reducing reliance on fossil fuels. The Sierra Club, long a champion of desert preservation, gave its blessing last year to a solar-farm project on undeveloped federal land just west of 163rd Avenue and south of Pecos Road.
"We think it is critical that we transition to using renewable energy resources, with a major emphasis to reduce climate change," says Sandy Bahr, director of the Sierra Club's Grand Canyon chapter. "That being said, we're not interested in seeing every inch of Arizona covered with solar modules. Every rooftop would be great."
