Arkansas Solar Energy Incentives: How Much Can You Get?

In 2017, Arkansas approved one of the most aggressive renewable energy standards in the country, mandating that all new electric generation facilities come with zero emissions and maximize power output from solar energy. The new law is designed to reduce the state’s dependence on fossil fuels and create jobs in the renewable energy industry. To reflect the change in times, the law was amended in 2018 to remove language mandating that electricity be generated entirely by solar or wind power.

The new law extends the same incentives to existing electric generation facilities that choose to add solar energy to their portfolios. To ensure that new and existing solar energy suppliers can take advantage of these incentives, the law establishes a Solar Energy Incentive Board, made up of members of the public and officials with the Public Service Commission, to review and approve, approve, or deny solar energy incentive applications. The law establishes a $5 million fiscal 2020 budget for the board, which can make grants and enter into contracts to help promote solar energy use in the state.

What Types of Incentives Do the Law Offer?

The law provides a variety of financial incentives designed to reduce the costs of installing and operating a solar energy system. These incentives range from the cost of material and equipment to paid staff time. In addition, the law establishes a minimum capacity requirement of 1.5 kilowatts that must be met for a project to be eligible for certain incentives. The capacity requirement can be met through a combination of photovoltaic solar cells and solar thermal technology.

To qualify for the rebate, the law requires the solar energy system to generate electricity using at least seven-eighths of an acre of land or less. This is a significant reduction from the one-and-a-half acre minimum originally enacted in the law and is a reflection of how efficient solar technology has become. A larger installation requires more land and therefore potentially more expensive incentives.

How Do The Law’s Funding And Job Creation Measures Work?

The program is designed to spur economic development by offering financial incentives that reduce the cost of installing and operating a solar energy system. Additionally, the law establishes an annual budget of $5 million for the state’s Solar Energy Incentive Board and requires that 1.5% of that amount come from the federal government. The Board reviews and approves or denies applications for the rebate. Upon approval, the Board enters into a contract with the selected applicant for a term of no less than three years.

These contracts require the installation of a solar energy system that complies with all federal, state, and local requirements and includes the payment of a quarterly fee based on the amount of electricity generated by the system. Once the system is rated and approved by the Board, power purchase agreements can be entered into with electricity suppliers that want to sell power to the state’s electric system. To ensure that this incentive remains available for future projects, the law establishes a sunset date of July 1, 2022, at which point all outstanding contracts must be fulfilled.

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How Is This Law Similar To And Different From Other State Programs?

This law is similar to other states’ solar energy rebate programs in that it provides financial incentives to install and operate a solar energy system. The main difference is in how the Board reviews and approves these applications. Other states’ programs usually require approval from their respective public utility commissions. However, in some cases, independent review boards do exist within those states, and they play a more significant role in reviewing and approving applications for the rebates.

This Arkansas law also establishes a new way for electric suppliers to enter into contracts with their customers. Instead of having to enter into individual agreements with every individual customer, which can become burdensome, the law allows for larger contracts with specified generators in the state.

These contracts remove the need for constant monitoring of individual solar installations, which can be a cumbersome and costly process. The law also requires electric suppliers to provide services, such as emergency call handling, to ensure that the rebates created by the law stay in the state.

What Are The Requirements For Electing A Residential Solar Energy System?

To qualify for the residential solar energy system rebate, the law requires that an eligible customer be connected to a utility grid, has a site connected to a grid, and meet all other requirements, including the acreage and capacity requirements listed above.

The customer also must own the land upon which the system is installed and be willing to enter into a lease agreement with the company installing the system. In some cases, a utility connection and land ownership are sufficient; in other cases, an electricity supplier must verify that the customer is connected to a utility grid.

The customer has until October 1 to install the system and connect it to the grid. The customer has six months from the date of installation to begin using the system and qualify for the rebate. If the system generates more electricity than the customer uses, the customer can sell any excess power to a utility provider for cash compensation. If not, the customer can continue to use the power for any purpose.

Customers are responsible for paying for the first year of their utility bill from their electric supplier, plus a $5,000 system registration fee. There is no annual cost after the first year.

What About Taxes?

In most states, there is a property tax assessed on solar equipment; however, this is not the case in Arkansas. The American Institute of Stress points out that although this may not seem like a tax, it is more accurately described as an overhead cost. When a person or company decides to invest in renewable energy sources, they are doing so because they believe that the payoff will more than cover the cost of the equipment in the long run.

Every state is different when it comes to solar legislation, and some states offer more tax incentives than others. The type of incentives available and the qualifying criteria for each program can vary significantly from one state to the next. To find out which solar programs are available in your state, contact your local solar installer or the Better Business Bureau for guidance.

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