While the use of solar energy is growing in popularity and use across the U.S., it is still a complicated matter to understand.
Here are five things to know about the legislation and what solar could mean for you.
Arkansas solar power stats
Arkansas ranks 30th in solar usage so far in 2021, according to the Solar Energy Industries Association. The state ranked 23rd in 2020.
There are currently 28 solar companies in Arkansas, according to the SEIA.
Six of those companies are manufacturers, 13 are installers or developers, and there are nine others in the solar-related business.
Arkansas receives an average amount of sunlight that is equivalent to 4.5-5.0 peak sun-hours per day throughout the year, according to Solar Nation. This means that for every kilowatt of solar panels installed, people can expect to get up to 5 kWh of electricity per day.
An average household can be supported using a 5 kW solar photovoltaic (PV) system, according to Solar Panels Network. The price of a 5 kW system in Arkansas is $21,000 upfront, according to their estimates.
The Arkansas Solar Access Act
Legislation passed in 2019 unlocked the solar market in Arkansas, said John Coleman, regional director for Entegrity Partners, a Little Rocked-based solar firm.
The Arkansas Solar Access Act of 2019 was designed to remove Arkansas’ ban on solar leasing and power purchase arrangements.
It allows businesses like Entegrity to go in and do all the investments needed, Coleman said. The company works with a mix of private and public institutions including the Booneville School District and the University of Arkansas system.
“We build the array,” Coleman said. “We bring all of the funds to do that, we can buy the land if we need to. And then we simply sell that service back to our clients.”
Clients are charged a kilowatt-hour rate, similar to their electricity bill, except the rate is lower, Coleman said.
“They don’t have to incur any debt,” Coleman said. “They don’t have to come up with any money to do the project.
For those at the home level, the process is different.
Understanding solar in your home or business
“I think there’s still a big learning curve,” said David Stitt, chief executive officer of Stitt Solar in Rogers. “I think people are still trying to figure out what does it cost and how does it benefit them.”
Stitt said the company’s approach to solar and homeowners or businesses owners is, “knowledge is power.”
When customers are connected to a traditional power company, they do not necessarily have to understand the ins and outs of their bills and what they are paying for, Stitt said. With solar, understanding their systems and what they need to compensate for their electric bill is important.
Once potential customers understand the process, the next step is models and figuring out costs.
Customers can submit a past electricity bill to the company and they will create a virtual system for their business or home that models what their power needs would be, Stitt said. Once the company has that, they can tell customers how much it would cost and offer up payment options.
Most people choose to buy solar monthly, Stitt said.
The cost of solar in your home
Solar panel systems are expected to have a payback period of 18 years once tax cuts and rebates are factored in, according to Solar Panels Network.
The payback period is calculated by dividing the initial cost of the solar PV and the savings generated after cutting spending on utility bills. Solar Panels Network estimates that homeowners will save $600 a year on electricity costs.
Stitt said that number is on the lower end of potential savings.
The average system size is around 7,000-8,000 kW and the average install cost is around $25,000-$35,000 before incentives, Stitt said.
Solar loans and financing options are a big thing, Stitt said. Most people who are financing a system are paying it off in seven years, Stitt said.
There are no state-level incentives, tax breaks or rebates for solar power available to Arkansans. The Investment Tax Credit is currently a 26% federal tax credit available to residential, commercial and utility investors in solar energy property.
Introduced in 2005, the credit was originally a 30% tax credit that is now in the process of phasing out. Projects starting construction in 2021 and 2022 will receive a 26% credit and those starting 2023 will receive a 22% credit. The residential credit expires after 2023, while the commercial credit drops to a permanent 10%, according to the SEIA.
A rise in solar
Both Stitt and Coleman expect to see a continued interest in solar in the coming years.
“I think there are a higher number of people interested in not only saving money and energy but truly concerned about the environmental impact and they want to contribute,” Stitt said. “They want to do something and solar is an exciting thing right now.”
Solar accounted for 58% of all new electricity-generating capacity added in the U.S. in Quarter 1 2021, according to the SEIA.
“We certainly expect solar to continue to grow in the state,” Coleman said.
There are a lot of people waiting and watching others do it first before they jump in, Coleman said.