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U.S. Department of Energy Energy Efficiency and Renewable Energy

Energy Incentive Programs, Arizona

Updated January 2013

What public-purpose-funded energy efficiency programs are available in my state?

In late 2009, the Arizona Corporation Commission adopted a landmark energy efficiency standard that requires utilities to achieve cumulative energy savings of at least 20% of retail energy sales by 2020. Arizona's restructuring law provides for a systems benefits charge (SBC) to fund energy efficiency programs. The SBC is collected through a non-bypassable surcharge on electricity bills. Some of these funds have been devoted to renewable energy programs, but in 2011 Arizona utilities budgeted almost $145 million to promote energy efficiency and load management in the state (including residential and low-income programs).

What utility energy efficiency programs are available to me?

Arizona Public Service (APS) offers incentives for an extensive list of prescriptive and custom energy-efficient equipment measures including lighting, HVAC, IT equipment, motors and variable speed drives, refrigeration, building envelope and custom measures, as well as for efficient whole building design in new construction.

APS also offers the following incentives:

  • Tuition discounts of up to 50% to facilities staff and building owners for technical training sessions;

  • Incentives of up to 75% (maximum $12,000 per year) of the cost of installing a meter to enable use of their Energy Information Services online energy management tool:

  • Partial reimbursement for feasibility studies, design, and commissioning (including re- and retro-commissioning):

  • Express Solutions for small customers (average monthly demand of 100 kW or less) for specific lighting and refrigeration improvements. Incentives may cover up to 90% of the project cost. Participation in the program typically results in a return on investment of less than one year.

Tucson Electric Power (TEP) has put its business energy efficiency programs on hold. Customers can sign up for email notification of new offerings on the company website.

The Salt River Project (SRP) offers its PowerWise™ Business Solutions program, which provides rebates for lighting, occupancy sensors, HVAC, motor upgrades and refrigeration equipment, as well as custom energy efficiency projects and retro-commissioning. The program also offers design assistance for energy efficient new construction projects.

Southwest Gas offers several programs for commercial and industrial customers:

UniSource offers gas and electric energy efficiency programs that provide incentives for installing energy-efficient equipment including lighting, controls, refrigeration, HVAC, water heaters, boilers, furnaces and commercial kitchen equipment.

What load management/demand response options are available to me?

APS offer the Peak Solutions demand response program, which provides financial incentives to customers for allowing APS thermostat control to reduce air conditioning load during the "conservation period," from 12 to 8 p.m., on a few selected days during the summer (June through September). "Conservation periods" will last no longer than 6 hours each on any called event day. Large customers (monthly demand > 200 kW and summer bills > $8,000/month) receive payment based on the amount of capacity (kW) and energy (kWh) reduction achieved during the program year. Small customers (monthly demand ≤ 200 kW and summer electric bills < $8,000/month) receive an annual payment of $5/ton of enrolled AC plus an initial $20 sign-up bonus.

SRP offers the PowerPartner program for customers with demand greater than 100 kW that can reduce or shift load during periods of high demand on the system. SRP pays incentives for reducing load during peak events, which can be called during peak demand hours (noon to 8 p.m., June 1 through September 30) or occasionally during off-peak periods (5 a.m. to 9 p.m. year-round). Events last from one to four hours. SRP's partner in the program, EnerNOC, works with the customer to identify automated curtailment strategies that meet the facility's needs and preferences. Events require very little effort to respond, however the customer always retains the ability to opt-out of an event if operational needs prevent participation. Customers receive payment directly from EnerNOC and EnerNOC assumes all performance risk.

TEP's DemandSMART program is a year-round demand response program open to commercial, institutional and industrial customers who can reduce electricity load with a 30-minute notification. TEP compensates program participants for reducing electricity usage during peak demand events which can last for one to four hours and be called weekdays 11 a.m.-6 p.m., May-October, and 7 a.m.-7 p.m., November-April.

What distributed energy resource options are available to me?

Arizona's Renewable Energy Standard (RES) requires that utilities obtain 15% of their portfolios from renewable energy by 2025; 30% of that amount (4.5% of total retail sales in 2025) must come from distributed generation.

The Database of State Incentives for Renewables and Efficiency (DSIRE) provides information on programs that offer incentives for renewable distributed generation. The following renewable and distributed energy incentive programs are relevant to federal customers:

  • The State of Arizona offers the Commercial/Industrial Solar Energy Tax Credit Program, which provides an incentive of 10% of the installed cost of solar installations in non-residential facilities. Government and other tax-exempt agencies are eligible to take advantage of the program by assigning the credit to a third-party organization that finances, installs or manufactures the system; in exchange, the third party passes a percentage of the tax credit to the agency as a buydown or payment. The maximum credit is $25,000 for any one building in a single tax year and $50,000 in total credits per business per tax year. Eligible technologies include solar space heat, solar water heat, solar thermal electric, photovoltaics, solar pool heating and daylighting.

  • Arizona Public Service (APS) offers incentives for customers on a first come, first served basis for on-site renewable energy systems installed in the APS service area. Incentives are available for solar PV, solar water heating, wind, geothermal, biogas, biomass, hydro, and other distributed generation sources. Incentive amounts vary depending on the type of technology used, whether the incentives are up front or production-based, and other factors. The Solar for Schools & Government program offers financial incentives for five solar technologies: solar electric, daylighting, water heating, space heating and space cooling.

  • The Salt River Project (SRP) Commercial Solar Electric Program currently offers up-front rebates for photovoltaic (PV) systems sized up to 30 kW. Rebate amounts ratchet down in tiered steps as more of the available funds are allocated. In January, 2013, the rebate was $0.50/watt DC (maximum $50,000).The program for larger PV systems (30 kW and greater) operates under a production-based incentive (PBI) that provides customers a long-term fixed rate payment (currently $0.04/kWh of metered generation for 20 years. The solar hot water program pays a one-time incentive of $0.40/kWh of metered first-year energy savings for solar water heating systems (up to $350,000). As of January 8, 2013, only $72,870 of the original $600,000 in funds remains. Check the Earthwise incentive levels page for the current schedule. To receive the incentives, customers must agree to let SRP take ownership of the renewable energy credits generated from their systems.

  • Tucson Electric Power and UniSource offer financial incentives for renewable energy self-generation options (e.g., geothermal, biomass/bio-fuel, solar, hydro, and wind), as well as solar daylighting and solar hot water and space heating systems. Larger solar PV installations (greater than 70 kW) receive incentives (up to 50% of total system cost) under a performance-based incentive (PBI) structure on a 10- to 20-year payment agreement. Smaller systems (up to 70 kW) receive one-time up-front incentives of $0.20/Watt DC (maximum 50% of system cost) under a 20-year renewable energy credit (REC) agreement. In exchange for the incentives, customers agree to assign RECs to the utility for the length of the agreement.

  • Trico Electric Cooperative's SunWatts Renewable Energy Program offers rebates for solar electric and solar water heating ($0.40/kWh saved in the first year). PV systems between 10 kW and 1 MW receive performance-based incentives ($0.64 to $0.72/kWh depending on size), and systems up to 10 kW are eligible for an up-front incentive of $0.20/Watt DC. Projects 1 MW and larger are negotiated on a per-project basis. The program is accepting applications for a rebate reservation waiting list. As funding becomes available rebates will be paid according to position on the list and completion of project inspection.

Are there energy efficiency programs sponsored by the state government?

No state energy efficiency programs are currently available to federal customers. For information on future opportunities, contact the Arizona Commerce Authority.

What additional opportunities are available to me?

Federal customers whose utilities have area-wide supply contracts through GSA (e.g., Arizona Public Service and Tucson Electric Power), may be able to take advantage of 3rd-party financed energy efficiency projects called utility energy services contracts (UESCs). Information is available on GSA's Energy Center of Expertise Library Page. Federal facilities should contact their account executive to determine the level of each utility's participation.

NOTE: Energy efficiency funds and demand response programs are updated at least annually. Please contact the FEMP webmaster if changes are needed between updates.