Will Residential Solar Survive in Arizona?


Residential solar faces more challenges in Arizona. A new analysis from GTM Research finds that the combination of two recent policies would deal a major blow to residential solar in the state by putting it out of reach of grid parity.


How’s residential solar doing in Arizona? It’s hard to say. The state has had its share of ups and downs in the last couple years. At the moment, the state is on a bit of a downswing.

Early this month, protesters descended on the state capitol to rally against plans by the Arizona Department of Revenue to impose a new solar property tax on leased rooftop solar systems. Estimates are that this would add a significant cost for the average residential solar lease customer — about $152 per year.

That comes after last year’s decision to impose what amounts to a $5 a month fee on residential solar customers, which some say has slowed down solar adoption in the state.

Add to that some recent concerns being expressed about the potential difficulties in selling a house with a solar lease, and that could spell trouble for residential solar in Arizona, especially when it comes to third-party ownership (TPO).

GTM Research seems to agree that the Arizona residential solar industry could be in trouble.

A new GTM Research analysis looks at the levelized cost of electricity (LCOE) for solar PV to see which states will achieve grid parity and when. The reason they examine this is that distributed solar is considered competitive when the LCOE is “below the applicable retail rate of electricity.”

Some states are already achieving grid parity, but it doesn’t look so good for Arizona.

The GTM Research analysis starts by noting that in Arizona, the LCOE for TPO solar in 2014 is 11.1 cents per kWh — not bad. That’s a sliver below Arizona’s average residential retail rate of electricity, 11.3 cents per kWh. So far, so good. Not a huge margin to play with, though.

Sure enough, when you add the new fixed charge, the LCOE goes up to 11.6 cents per kWh, a bit above the average rate. And when you add the potential property tax, the LCOE goes up to 12.1 cents per kWh — quite a bit above the 11.1-cent average.

This is not good news for a state that’s #2 overall for solar and #3 for residential solar, at least for 2013. How Arizona will fare in 2014 and beyond remains to be seen.

Where’s Barry Goldwater Jr. when you need him? His organization, TUSK (Tell Utilities Solar won’t be Killed), plus others like TASC (The Alliance for Solar Choice) have been staunch advocates of solar in Arizona.

Though these groups seem to be fighting an uphill battle, it’s a good sign that solar is experiencing such broad support. The recent tax decision has become a contentious issue, including in an upcoming race for two open seats on the Arizona Corporation Commission, with Republican candidates speaking out against the tax. Let’s hope enough pressure is applied in the state to resuscitate residential solar there.