Corporation Commission decision to drive new solar installations on schools, non-profits

Kris Mayes, chairman of the Arizona Corporation Commission, speaks about solar regulation on PBS Channel 8 Horizon.

A recent Arizona Corporation Commission decision will increase the solar market in Arizona by easing the process for schools, government entities, and nonprofits to buy electricity from solar companies.

The Arizona Corporation Commission unanimously approved SolarCity’s request for solar service agreements that will prevent schools and non-profits from spending upfront costs.

The commission also agreed to not regulate SolarCity as a utility.

“Few states can boast of a regulatory environment that is as favorable for solar energy and as pro-solar as ours is in Arizona,” said Arizona Corporation Commission Chairwoman Kris Mayes during the June 30 hearing.

Since schools, government entities and non-profits do not have tax liability, they are unable to make use of tax credits that make photovoltaic solar systems affordable.

Through the solar service agreements, SolarCity will own the panels and apply the available tax credits. The schools will buy the power from SolarCity.

“It makes a solar option viable for schools when it would not be with a commercial lease,” said Jonathan Bass, SolarCity’s communications director.

Schools will be able to use the savings from their lower utility bills to put more money back into the classroom, Bass said.

The decision is expected to add to Arizona’s growing solar industry.

The Corporation Commission’s decision gives the green light to SolarCity and other companies such as SunPower, SunRun, and SunEdison to do business in Arizona which will create jobs and increase the tax base, Mayes said.

The decision also will better prepare utilities to meet the state’s Renewable Energy Standard, especially the commercial distributed generation carve out, Mayes said.

The state’s Renewable Energy Standard requires that utilities generate 15 percent of their energy from renewable resources by 2025 and also that a growing percentage come from distributed generation – residential or non-utility owned installations.

“We are solidly behind the development of renewable energy – in this case distributed generation – in Arizona,” said Commissioner Gary Pierce during the June 30 hearing.

SolarCity has worked on the issue for about 18 months. A few Arizona schools have already purchased power from SolarCity through special permission prior to the commission’s recent decision.

SolarCity, based in California, has 1,800 customers in Arizona. It opened an office in Phoenix in June 2008 and opened another office in March to accommodate increasing solar installation demand. SolarCity now has about 100 employees in Arizona.