The Arizona Republic reports on Arizona's recent decline in rooftop solar installations over the past year, attributed to a combination of regulatory hurdles and financial barriers. United's Michael Barrio spoke to Arizona's potential as a leader in solar energy adoption, emphasizing the need for stable policies that support the solar industry's growth across the state.
As their homes bake under blistering heat, many Arizonans have turned to rooftop solar panels to convert the state’s characteristic sunshine into sellable energy. But in the past year, homeowners increasingly chose to leave their rooftops bare.
Monthly permitting for rooftop solar in Arizona has dropped by one-third since 2023, according to data compiled by the firm Ohm Analytics. Meanwhile, Arizona Public Service, the state’s largest power utility, has reported a roughly 50% drop in rooftop solar installations in 2024.
Permitting is now slower than it was before the 2022 Inflation Reduction Act, a windfall of federal cash that was expected to usher in a heyday for clean energy, particularly in sunny Arizona.
“We’re used to seeing these big headlines about Arizona and solar,” said Michael Barrio, an advocate with the clean energy group Advanced Energy United. “But then you dig into the data, and the story’s a little bit different.”
The rooftop solar industry has long been a flashpoint in the fight over the future of the country’s energy grid. Utilities have fought rooftop solar as expensive and anarchic. Advocates tout it as an underutilized way to phase out Arizona’s planet-warming carbon emissions and a means to put energy production in the hands of consumers.
In interviews with The Arizona Republic, industry analysts said a number of economic factors were responsible for the cool-down. Among them is a “tug of war” between Democratic-led federal clean energy initiatives and majority-Republican state officials, who have sided with utilities to chill rooftop solar.
In effect, different levels of government are actively working against each other, Barrio said.
“State policy is trying to hold things back, and the federal government is trying to push things forward, in the opposite direction,” he said.
The drop in permits comes just ahead of a new presidential administration that has pledged to reduce federal support for clean energy. President-elect Donald Trump has embraced America’s fossil fuel sector as part of his plans to “Make America Wealthy Again,” and he campaigned on rolling back the Inflation Reduction Act, outgoing President Joe Biden’s signature climate policy.
The law, which Biden touted as the nation’s largest-ever climate investment, included massive tax breaks and new spending to encourage a shift towards clean energy.
Among other reforms, the law dangled a carrot in front of consumers who are considering rooftop solar. The law raised a tax credit for rooftop solar projects from 26% to 30% starting in 2022 and extended the credit’s expiration date. The credit is now scheduled to phase down in 2033 and 2034 and then expire in 2035 without further congressional action.
The new incentives are a “game-changer” for the industry, Barrio said. Rooftop solar installations were already trending upward in Arizona in the years leading up to the IRA. But after the climate bill was passed into law, they soared. More than 40,000 customers installed rooftop solar in Arizona during 2022 — a significant increase from the previous year and roughly double the 2018 levels. That year, Arizona had the second-highest rooftop solar capacity per capita of any state, according to the advocacy network Environment America.
“At the federal level, there’s this push to make solar more appealing and more attainable," Barrio said. "And they’re putting their money where their mouth is. That helps make that initial investment more doable, even with (other) economic headwinds.”
Joy Seitz, president and CEO of the installer American Roofing & Solar, said the law brought stability for her customers.
“Now that the 30% tax credit is stable … there’s no urgency, and they can make an educated decision in a timely manner for their home and their lifestyle,” Seitz said.
But Arizona’s interest in rooftop solar began to fade about a year after the law was signed. As climate-minded politicians sketched visions of a “solar state,” Arizona’s stock in the industry modestly declined relative to the rest of the country. The state ranked fifth in the nation for overall solar power generation in 2023, and it has fallen to seventh place so far this year, according to a December 2024 report by the energy analytics firm Wood Mackenzie.
As the wave of rooftop solar crested and fell, long-standing issues in the solar industry have intensified, advocates say. Autumn Johnson, president of Arizona’s solar industry association, noted the sector wasn’t at its healthiest even before the IRA. The state was already roiled by churn in the rooftop solar industry, she said, ranging from big national players like SunRun, which pulled out of Arizona last year, or smaller companies like Arizona-based Sunny Energy which declared bankruptcy altogether.
The problem was widespread enough that Seitz made a page on her website for so-called “solar orphans,” anticipating frantic Google searches: “What do I do if my solar company went out of business???”
It’s enough for Seitz to declare that the industry is “dying” in the short term.
“I’m bullish on the industry in 2026. I am not bullish on the industry in the remainder of 2024 or ‘25,” she said.
A tough national economy, unfriendly state regulations and dodgy business practices created the decline in Arizona’s rooftop solar growth, according to industry professionals.
High interest rates and housing costs dragged on Arizona’s rooftop solar numbers this year, according to experts. The high rates made it harder for residential solar to finance the installation of their systems through loans. The Federal Reserve only just started bringing down short-term interest rates in recent months after pumping them up in the last two years to address inflation.
“Put yourself in the shoes of a homeowner, and you're thinking about solar panels, but interest rates are high and loans are a lot more expensive these days,” said Barrio. “Suddenly, that investment’s not as clear cut as it used to be.”
On top of national trends, experts said unfriendly state regulations are squeezing the residential solar industry. Since 2013, the Arizona Corporation Commission, an elected body that regulates power utilities, has approved rules making it less appealing for utility customers to use rooftop solar panels. The ACC has gradually reduced the money homeowners get for selling their solar power to the grid and allowed utilities to charge those homeowners special fees.
From 2006 to 2010, utilities had aggressively subsidized rooftop solar to meet state renewable energy goals, easing off the subsidies and imposing fees once rooftop solar became popular.
Solar installers and power utilities have clashed publicly over these changes. Thousands of homeowners have protested the squeeze on rooftop solar during public meetings over the decade. Solar industry advocates, Arizona’s Democratic Attorney General Kris Mayes, and other organizations have filed formal complaints against APS’s fee on solar customers, which the ACC voted to reinstate in February after temporarily removing it. Roughly 200,000 APS customers have solar systems.
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