The EarthWise Solar Energy rebate program, sponsored by SRP in Arizona, will soon reduce the amount of money available to homeowners and businesses who install solar photovoltaic (PV) panels or a solar water heating (solar thermal) system. According to SRP’s Web site, “[e]ffective June 1, 2009, the EarthWise Solar Energy program will be changing. All applications postmarked on or after June 1, 2009, are subject to these new incentive levels.”

What are those new incentive levels, you say?

SRP is reducing the residential solar electric incentive from $3.00 per watt to $2.70 per watt, and is reducing the commercial solar electric incentive from $2.50 per watt to $2.25 per watt. The current residential and commercial solar water heating incentive level of $0.50 per kilowatt-hour will remain unchanged.

In addition, SRP is revising the cap on commercial solar water heating incentives to $250,000 per site, limiting the size of eligible residential solar electric systems to 5 kilowatts and limiting the commercial solar electric incentive cap to $450,000.

The incentives have been adjusted to accommodate the tremendous increase in requests for participation. We believe that increasingly generous federal tax credits, coupled with declining solar costs, will help offset the slight decrease in the SRP incentives. Ultimately, these changes will allow more customers to take advantage of the funding provided by SRP.

Essentially this means that if you’re an SRP customer — either commercial or residential — and you’ve been meaning to install some solar panels or a solar hot water system, you’ve got about two weeks to get your stuff together. If you act fast, it’s not too late to get set up with an installer and apply for the current (higher) rebate amounts. While the reductions are by no means huge, those dimes and quarters really add up when you’re talking about installing thousands of watts of solar PV power.

Get started on your project by filling out our solar energy information form. It’s free and takes just a few minutes to complete. For more info on AZ solar power incentives, check out our Arizona solar energy incentive pages for residential systems and commercial systems.

More on solar rebates:

Solar energy rebate programs for businesses and homeowners are available in many states. The rebates lower the upfront cost of installing solar panels, thus reducing the system’s payback period and improving the return on investment. Such rebates can reduce installed costs by a quarter or a third — or, in some instances, even a half. It’s no wonder, then, why some state’s programs — like those of Connecticut and New Jersey — have in the past had trouble staying capitalized: consumers literally line up to receive the solar rebates, quickly depleting available funds. (The SRP announcement above — with its reference to a “tremendous increase in requests for participation” in the rebate program — further bears this out.)

Three more quick observations about declining rebate levels.

(1) From a policy perspective, it may make sense to provide more incentive for early ad0pters — especially if you’re trying to stimulate demand to kick start the market. Then, as more solar PV capacity is installed over time, the incentive level may be reduced. Ideally, these reductions are made at clearly established benchmarks — say, when 50 megawatts of PV have been installed statewide, the rebate drops from $2.25/watt to $2.00/watt. Predictable rebate pricing is key for enabling solar market participants — like residential, commercial and industrial buyers — to plan effectively. Indeed, this has been the approach of the California Solar Initiative (CSI), arguably one of the most successful state-led solar rebate programs in the country. To get an idea of what I’m talking about, check out CSI’s solar incentive step chart.

(2) As the SRP announcment above suggests, the 30-percent federal renewable energy tax credit is no longer capped at $2,000 for residential systems. With added support at the federal level, it makes sense that state- and utility-sponsored solar incentive programs adjust accordingly. Example: Xcel Energy’s November 2008 decision to cut its solar rebate.

(3) Finally, as time progresses, so too does technology: the installed costs of solar energy will continue to fall; efficiency rates will continue to rise; and total installed capacity will continue to grow. In the ideal end game, solar photovoltaic (PV) technology acheives grid-parity — that is, the ability to produce electricity that is as cheap as the stuff that comes from the electrical grid. In sentence: as solar becomes cheaper, the need for incentives declines…

But for now, if there’s a rebate or other incentive out there, take advantage of it!