Green Your Life

Published on May 9th, 2014 | by James Ayre

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Want Solar Leasing In Arizona? You May Have To Pay A Tax On That Soon

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May 9th, 2014 by

arizona solar rooftopsThe residential solar energy war just continues to heat up more and more in the (already quite sunny and hot) state of Arizona. The State Department of Revenue there has done an about-face on PV tax policy, and is now saying that only solar panels owned outright are exempt from tax, leased panels are no longer eligible for tax exemption.

The move isn’t necessarily surprising, but it is a bit hard to understand from the department’s perspective. Unless of course the department is in bed with the state utility Arizona Public Service and working to undermine the cost benefits of adopting solar power in Arizona, as many observers have suggested.

As it stands currently, in Arizona, solar leasing contracts account for the majority of distributed solar generation, so removing the exemption for such leased panels would likely lead to increased leasing costs for consumers — something that those in the utilities industry would no doubt be happy to see occur.


The move, proposed by Arizona’s State Department of Revenue, would see a reinterpretation of the standing tax policy that says that solar equipment is exempt from property tax. Until now, this had applied to all types of rooftop solar panels, but, if that changes, then homeowners who lease may be facing a $152 increase to their annual property tax bill.

“Arizona is breaking new ground for being an extremely strange political environment,” noted Bryan Miller, president of The Alliance for Solar Choice (TASC). Miller also noted that it was humorous to see such a policy emerge in a state that was otherwise so strongly “anti-tax.”

I wonder… :)

If the new interpretation of the solar tax law ends up sticking, then it will come into effect at the beginning of October 2015.

Arizona has become something of a battleground between utility companies and solar system providers in recent months (and a battleground between Tesla and car dealerships as well, for that matter). Too bad, considering that the turmoil is definitely putting a dent in what would otherwise be a very healthy market.

Considering how sunny Arizona is, it’s a bit funny to see so much opposition to the use of this resource.

Image Credit: crume / Foter / CC BY

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About the Author

's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy. You can follow his work on Google+.



  • Ray Boggs

    Should have purchased a system instead of leasing one. That way at year 4 to 5 your system would have paid for itself and the electricity that it produces would be free for the next 20 to 25 years and a tax wouldn’t have made much of a difference.

    Now, not only are you stuck with 15 years or more of leasing payments, but you may also have to pay this tax. Solar system ownership with its fast payback make much more sense in today’s market.

    • not true

      Sorry, The “4 to 5″ year payback on a PV system is ludicrous, particularly with the low electricity rates in AZ, even after the tax credits. At best you’re looking at 10-12 years. That doesn’t take into account the money you will need to spend on an inverter after it fails. They only have a 10 year warranty anyways, which IS covered under standard lease agreements. If you buy a system, you better hope nothing goes wrong it with it in year six, because your on your own. At least a lease offers you the protection of O&M, provided the company is still around.

      • Ray Boggs

        Sorry but arizonasolar .com sells complete grid tie solar systems for less than $2.20 per watt installed after applying only the 30% federal tax credit (less than $10,000 for an average sized 4.75 kW system).

        Or less than $2.50 per watt installed after applying only the 30% federal tax credit and that includes lifetime online monitoring, shade/cloud mitigation, a 25 year warranty on the inverter, power optimizers, and solar panels. So why would you have to worry at year six with a 25 year warranty ?

        So a 4 to 5 year payback is easily attainable. With the exception of a $200 or less typical fee after the labor warranty has expired to remove of failed inverter or rarely ever a failed solar panel, it’s free electricity for the remaining 20 to 25 year life of the system.

        Solar leases and PPAs absolutely no longer make sense in today’s much lower priced market. Today you can easily purchase a system for 1/3 the cost that a $0 down solar lease will cost you in the end.

        So again, free electricity as described above after a short 4 to 5 year payback versus 20 years worth of lease or PPA payments. It’s a no brainer.

      • http://zacharyshahan.com/ Zachary Shahan

        A 4 to 5 year pay back in Arizona is definitely possible, maybe average. But definitely depends on various site-specific factors.

  • Ray Boggs

    Should have purchased a system instead of leasing one. That way at year 4 to 5 your system would have paid for itself and the electricity that it produces would be free for the next 20 to 25 years and a tax wouldn’t have made much of a difference.

    Now, not only are you stuck with 15 years or more of leasing payments, but you may also have to pay this tax. Solar system ownership with its fast payback makes much more sense in today’s market.

    • not true

      Sorry, The “4 to 5″ year payback on a PV system is ludicrous, particularly with the low electricity rates in AZ, even after the tax credits. At best you’re looking at 10-12 years. That doesn’t take into account the money you will need to spend on an inverter after it fails. They only have a 10 year warranty anyways, which IS covered under standard lease agreements. If you buy a system, you better hope nothing goes wrong it with it in year six, because your on your own. At least a lease offers you the protection of O&M, provided the company is still around.

      • Ray Boggs

        Sorry but arizonasolar .com sells complete grid tie solar systems for less than $2.20 per watt installed after applying only the 30% federal tax credit (less than $10,000 for an average sized 4.75 kW system).

        Or less than $2.50 per watt installed after applying only the 30% federal tax credit and that includes lifetime online monitoring, shade/cloud mitigation, a 25 year warranty on the inverter, power optimizers, and solar panels. So why would you have to worry at year six with a 25 year warranty ?

        So a 4 to 5 year payback is easily attainable. With the exception of a $200 or less typical fee after the labor warranty has expired to remove of failed inverter or rarely ever a failed solar panel, it’s free electricity for the remaining 20 to 25 year life of the system.

        Solar leases and PPAs absolutely no longer make sense in today’s much lower priced market. Today you can easily purchase a system for 1/3 the cost that a $0 down solar lease will cost you in the end.

        So again, free electricity as described above after a short 4 to 5 year payback versus 20 years worth of lease or PPA payments. It’s a no brainer.

      • http://zacharyshahan.com/ Zachary Shahan

        A 4 to 5 year pay back in Arizona is definitely possible, maybe average. But definitely depends on various site-specific factors.

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