Renewable Energy Incentives: Part Two

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Photo courtesy Winona LaDuke
Verma Nequatewa, a jeweler who lives on the Hopi Reservation, uses solar panels to power her home and studio.

If you live in Arizona, Idaho, Oregon, California, Montana or Washington, you can save big bucks on a solar- or wind-power system. Here’s how:

Installing a renewable energy system is increasingly affordable thanks to rebates and tax breaks from federal and state governments, as well as local utilities. Depending on where you live, renewable energy subsidies could reduce the cost of a wind- or solar-electric system by more than half the total expense.

In Oregon, for example, a new state energy trust is doling out millions of dollars to utility customers who want to install new solar systems. A tax credit and a 15-year, low-interest loan are available from the state to cover the remaining expenses. In other states, rebates of up to 70 percent of systems’ costs are available.

Here is the first in a three-part series summarizing some of the best subsidy offers for wind, solar water-heating and photovoltaic (PV) systems in 17 states. Part I covers Arizona, Idaho, Oregon, California, Montana and Washington. Part II, in the December/January 2005 issue, covers Texas, Minnesota, Wisconsin and Illinois. Part III, in the February/March 2005 issue, covers Florida, Delaware, New Jersey, Rhode Island, Massachusetts, New York and Vermont. Incentives are available in other states, but the programs covered here stand out in the growing crowd.

As oil prices rise and electric grid failures mount, an increasing number of cities and states are setting ambitious targets for boosting renewable energy production. For the most current information for your area, go to, an essential source for subsidy listings and contact information that can help you light up your life with renewable energy. Other good sources of information are your local utility company and state energy office.


A variety of incentives drive the state government’s goal for 1.1 percent of Arizona’s energy to come from renewable sources by 2007. Residents can deduct 25 percent, or up to $1,000, of the cost of solar and wind systems from state taxes, and the equipment cost is tax exempt, too.

Arizona Public Service offers customers a rebate of $4 a watt for grid-tied PV systems of 5 kilowatts (kW) or less. A $700 credit is offered to those who install a solar water-heating system.

The SunShare program from Tucson Electric Power (TEP) reimburses customers $2,000 per kW for a PV system of up to 10 kW — and you can buy a system directly from the utility. (For program revisions just announced, including one purchase option offering $3,000 kW-DC, go to or


Loans of up to $10,000 at 4 percent interest rate for residential renewable energy projects are available from the Idaho Department of Water Resources’ energy division. Borrowers have five years to repay the loans.

A 100-percent deduction for the cost of solar and wind projects — 40 percent the first year and 20 percent the following three years with a deduction cap of $5,000 a year and an overall limit of $20,000 — is offered to state taxpayers.

Idaho does not have statewide net metering, but the state’s public utilities — Avista Utilities, Idaho Power Company and Utah Power & Light Company — offer net metering programs. Extensive rules exist, including enrollment caps and extra charges for additional metering costs.


Funded by a special charge to customers of Oregon’s two largest power companies, Pacific Power and Portland General Electric, the Energy Trust of Oregon has an annual budget of $10 million dedicated to renewable energy. The Energy Trust offers PV system rebates to utility customers — $3 a watt for Pacific Power and $3.25 a watt for Portland General Electric. They also offer rebates for solar water-heating and solar pool-heating systems.

The Eugene Water & Electric Board offers 5-year, $4,000 loans at zero percent and rebates of up to $600 for residential solar water systems, and $1,100 for solar pool-heating systems.

Other programs include: a zero-interest loan or cash rebate from Ashland’s Electric Utility for an approved solar water-heating system that replaces an existing electric water heater, as well as a PV system rebate of $3.50 per watt up to $10,500; Emerald People’s Utility District solar water-heating subsidies that range from $400 to $600 and a zero percent loan, up to $2,500, and a rebate of $600 per kW from the Oregon Trail Electric Cooperative.

Oregon residents qualify for a state tax credit on renewable energy systems of up to $1,500. The Oregon Department of Energy offers loans for small-scale solar projects, and net metering is mandated statewide.


Two years ago, the California Legislature pledged to tap renewable energy sources for 20 percent of the state’s energy needs by 2017. A plethora of incentives is helping Golden State residents achieve that goal.

California extends a 7.5 percent tax credit for the cost of a solar or wind system of up to 200 kW. PV systems are exempt from property tax, and the interest on loans used to buy systems is tax-deductible. Also, state law extends net metering to most residents.

Customers of Pacific Gas and Electric, San Diego Gas and Electric and Southern California Edison are eligible for a state rebate (system size 30 kW or less) of $3 a watt for PV; $3.40 a watt for solar water heating and fuel cells, and $.90 to $1.90 for wind systems.

For residential PV systems, Anaheim Public Utilities offers an incentive of $4 a watt up to $7,000.

The Los Angeles Department of Water and Power provides a subsidy of $6 a watt for a PV system manufactured in the city, $4.50 for those manufactured outside the city.

Rebuild a Greener San Diego has a $4 a watt (0.5 kW to 5 kW) cash incentive for PV systems in homes rebuilt because of the 2003 wildfires.

Burbank Water & Power offers rebates of $3 a watt, up to $6,000, for PV systems.

The City of Palo Alto Utilities provides $4 a watt, up to $12,000, for a 3 kW PV system.

Redding Electric Utility offers rebates to cover up to half the cost of a PV system, up to $10,000. Solar thermal projects qualify for 50 percent rebates with a $1,000 rebate on the first panel, $500 for the second and $250 for the third. Solar attic fans qualify for $100 rebates.

Roseville Electric customers can qualify for $4 a watt, up to $20,000, for a 5 kW grid-connected PV system.

The Sacramento Municipal Utility District offers a $400 rebate for solar water-heating systems, as well as a 10-year, low-interest loan.


The Montana Department of Environmental Quality offers loans of up to $10,000 to cover all or part of the cost of a wind and/or solar system. The loans have a fixed interest rate — 5.5 percent this year — and must be paid back within five years. Also, wind and solar systems are exempt from property taxes for five years, and a state tax credit of up to $500 to cover the cost of installation is available.

State officials say that program may change dramatically next year, but NorthWestern Energy has been funding rebates totaling about a million dollars a year.


Orcas Power and Light on the San Juan Islands provides an incentive of $1.50 a watt, up to $4,500, for wind and PV systems.

The public utility districts (PUD) offer the following incentives: Chelan County PUD pays up to $1.50 for every kW hour produced by renewable energy systems; Pacific County PUD offers a $500 rebate on solar water-heating systems; Clallam County offers a $450 rebate for a 1 kW PV system and a $750 rebate for a solar water collector; Franklin County offers loans with interest rates as low as zero percent to pay for PV panels and solar hot-water systems; Grays Harbor County offers 3.5 percent loans of up to $4,000 and rebates of $600 for solar collectors.

Puget Sound Energy offers a PV system rebate that varies according to level of capacity and the county in which the system is installed. Sales tax exemptions on equipment and net metering are in effect statewide.

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