Incentives available for commercial solar in 2013 can cover up to 65% of system costs, reducing the payback period as low as 5 years.
Federal Tax Credit
The federal solar tax credit is 30% of the total system cost. There is no cap on this tax credit and it can be carried forward until 2016 if needed. The credit is set to drop to 10% for systems installed after December 31, 2016.
US Tax Code
State Tax Credit
The Arizona state tax credit is 10% of the system cost and is capped at $25,000 per location, $50,000 per business. This tax credit is awarded based on the date the system is placed in service, and there is a $1,000,000 cap on awards state wide. This means that systems which are completed late in the year may be denied this credit if the budget for the year is exhausted. Note: There is a 1% charge for obtaining the necessary certification letter from the Arizona Commerce Authority for the credit.
The income tax credit for installing commercial and industrial applications of solar energy devices is extended six years to the tax year ending Dec. 31, 2018. (The summary of legislation for this extension can be found in HB 2700 – Chapter 294 – solar energy tax incentives; extension. Click here for the summary of legislation.)
AZ Commerce Authority
State Property Tax Increase Exemption
Photovoltaic systems can be depreciated in five years under MACRS rules, or in 1 year under Section 179 rules. The tax basis for depreciation is effectively equal to the total system cost less TEP rebates and 50% of state and federal tax credits.
TEP offers NET metering for solar electric systems. This means that excess kWh production is carried over for use during following months at a retail rate. Once a year, during the October billing cycle, any excess production that has not been used is purchased by TEP at the wholesale cost, generally 3 – 4 cents/kWh.
For a description of how it works, see: http://tfssolar.com/2619/what-exactly-is-net-metering/