Ryan Randazzo

The Republic | azcentral.com

APS wants to put free solar panels on 3%2C000 homes in Arizona.

The proposal is part of the utility's plan to meet state renewable-energy requirements.

The program would allow customers who can't afford solar or who are reluctant to sign leases to benefit from solar.

Arizona Public Service Co. wants to put free solar panels on 3,000 homes to help meet state targets for alternative-energy use and to satisfy customer demand from people who can't afford to buy or lease the power systems.

If the plan is approved by regulators, the customers would get a monthly $30 credit on their electricity bills for 20 years in exchange for allowing APS to put solar panels on their roofs.

"This is an effort to reassure our customers that this is not the staid, old, stodgy utility company," said Daniel Froetscher, senior vice president of transmission, distribution and customers. "Instead, we like to think of ourselves as somewhat creative, entrepreneurial and forward thinking."

The deal would give participating customers $7,200 each, but APS officials said the program would benefit all customers by strategically bolstering the grid. The power generated by the panels will flow to the grid, rather than providing power to the homes they are installed on.

The deal would be open to renters with consent of the property owner and not require any money down or credit check.

APS will evaluate homes of interested customers to ensure roofs are sturdy enough for panels (no clay tiles) and that the home is aligned to capture enough sunlight.

The amount of power APS would add through the program, 20 megawatts, would generate more solar output than the total production of a majority of states, including Utah, according to the Solar Energy Industries Association. One megawatt is enough capacity to power about 250 homes at once, when the sun is shining on a solar plant.

State regulators require APS and other regulated utilities to get increasing amounts of power from renewable sources until 2025, when 15 percent of their electricity must be from renewable power.

Previously, the regulators at the Arizona Corporation Commission gave APS permission to build 200 megawatts of capacity through its own solar-power plants in a program called AZ Sun.

But APS has been exceeding the incremental goals for renewable energy, so in December, regulators ordered APS to hold off on building the last 30 megawatts approved in the program.

Now, instead of a power plant, whose costs and benefits would be shared by all customers, APS has asked regulators' permission to try a new business model that involves putting solar on customers' roofs instead, a strategy that could create some financial benefits for the utility.

The company now needs only 20 megawatts of capacity to meet the state goals.

AZ Sun is an attractive program for APS because the company invests in the solar plants, and as a regulated monopoly, earns a return on the capital investment.

Under the latest proposal to install solar panels on homes,APS will still earn a return on the capital investment. APS does not earn anything when customers pay for their own solar arrays or choose to lease them, and it loses out on the electricity sales to those customers, which won't happen under the new proposal.

Rooftop solar is more expensive to install than large power plants because of economies of scale, but rooftop panels come with different benefits. For one, they don't require land. They also avoid new transmission lines to get power to customers.

The $57 million to $70 million APS will spend on the solar program is comparable to the power plant originally proposed, but the rooftop solar will generate less electricity because it won't use a tilting axis to track the sun across the sky, said Marc Romito, APS renewable-energy program manager.

APS has been running a pilot project in Flagstaff where it also owns solar panels installed on 125 homes.

That program is far smaller, as well as more complex in the discount those customers get on their bills compared with the $30 credit proposal.

"This hasn't been done before," Romito said. "The scale and scope of this, and a utility partnering with the solar industry, hasn't been replicated."

The $30 monthly savings also is more than most solar customers who lease their panels achieve. Officials with SolarCity Corp., a California company that leases rooftop solar systems, have said that when customers lease panels from them, their new, lower power bills combined with the lease payments bring about $5 to $10 a month in savings for customers.

APS officials are hopeful the regulators will make a decision by September.

If people participating in the program sell their homes before the 20-year term of the deal expires, the proposal is for the new owner to choose whether to continue receiving the $30 monthly credit or to have the panels removed for no cost.

APS and its contractors will be responsible for all repairs and maintenance, according to the proposal.

APS plans to use Arizona-only installers, who were pleased to collaborate with APS on the plan.

"We think this really sets a leadership bar for utilities across the nation," said Sean Seitz, the president of the non-profit Arizona Solar Deployment Alliance and co-owner of American Solar in Scottsdale.

He said the program represents a new business model in addition to traditional rooftop-solar purchases and leases, and thinks the program will spark further interest in solar in the state. "This will lift all segments," he said.

APS has been embroiled in disputes with California companies that lease solar panels since the utility company tried to increase the rates solar customers pay and endorsed a state tax on leased panels.

APS even faces a protest at its company headquarters today coordinated by some of those leasing companies.

"We hope this helps further the state's reputations and the company's reputation — not withstanding some with a contrary view — as being pro-solar and pro-rooftop solar," APS's Froetscher said.

Free solar

Arizona Public Service Co. is proposing to put free solar panels on 3,000 homes. The company first must get approval for the program from state regulators, and can't take applications for the program until that happens.

In the meantime, the company said it will allow customers to sign up for updates on the program online at www.aps.com/azsun.