Arizona utility looks at commercial solar

Arizona utilities are getting competition from out-of-state players providing solar power to schools and governments, and some are looking to get into the game.

Arizona Public Service Co. has submitted its plan to the Arizona Corporation Commission to become the first regulated utility in the state to venture into commercial solar — a market that's drawing interest from private equity firms and energy companies.

The ACC recently opened the door to third-party solar service agreements for governments and schools. That allowed NRG Energy Inc., a power provider and utility owner, to enter Arizona and operate as an unregulated utility, supplying solar power to schools.

Schools, government agencies and other nonprofit entities are not eligible for the federal 30 percent tax credit on solar system purchases. Those credits, however, can be obtained by third-party providers, which in turn sell the power back to those groups at a lower rate.

APS' plan would have either third-party providers or the utility itself building solar systems, collecting the tax credit and selling the power to schools, according to APS spokesman Steven Gotfried.

Last week, NRG announced its NRG Solar subsidiary was preparing to invest hundreds of millions of dollars into systems being developed through Phoenix-based Kennedy Partners for schools, nonprofits and governments. Princeton, N.J.- based NRG has several subsidiaries in the U.S. developing wind, solar and nuclear power. Its retail component, Reliant Energy, is a major utility in Texas. NRG spokesman David Knox said it is the company’s first foray into rooftop solar, and Arizona was a natural fit.

Prior to the NRG announcement, groups installing solar in Arizona under third-party agreements were primarily private firms, not energy companies. That could change quickly as more energy companies start looking for local opportunities, and it might benefit state utilities looking to branch out, said ACC Chairwoman Kris Mayes.

"I think utilities are going to have to compete in a solar energy market across the country," she said.

Read the full story in the Phoenix Business Journal.