Arkansas’ Key Solar Incentives: A Breakdown

Image source: Canva.com

Arkansas, with its sunny climate and growing interest in renewable energy, is becoming a favorable place for homeowners and businesses to invest in solar power. While Arkansas may not have the same level of incentives as some leading solar states, it still offers valuable programs and policies that can help reduce the cost of going solar. From federal tax credits to statewide net metering policies, there are several opportunities to make solar more affordable and accessible. In this article, we’ll break down Arkansas’ key solar incentives and how they can benefit you.

The Residential Clean Energy Credit

The Residential Clean Energy Credit, previously known as the Federal Investment Tax Credit (ITC), can reduce the cost of your solar panel system by 30%. This incentive covers the entire system, including equipment, labor, permitting, and sales tax.

To claim this incentive, you need to purchase your system with cash or a solar loan, as leasing does not qualify for the ITC. You must have a sufficient federal tax liability to use the credit, though any unused portion can be rolled over year-to-year until the ITC expires at the end of 2034. Direct payment of the ITC is only available to tax-exempt entities, such as nonprofit organizations.

Net Metering

Arkansas is shifting from net metering to net billing this year, significantly reducing the value of earned credits. However, you still have time until September 30, 2024, to install solar panels and secure net metering for the next 20 years.

• Act 278 introduces changes to net metering in Arkansas, affecting solar panel owners starting September 30, 2024. After this date, new solar customers will no longer receive the same credits for excess electricity sent back to the grid.
• Homeowners who install solar panels before September 30, 2024, can secure favorable compensation rates through September 2040, offering substantial long-term savings.
• Under the new rules, residential solar systems will be capped at 25 kW and commercial systems at 300 kW. Additionally, the current one-for-one exchange of electricity with the grid will be phased out after this deadline.

Solar for All

• Led by Groundswell, the Southeast Rural Power: SFA Coalition will implement the Southeast Rural Power SFA Program to provide residential-serving community solar and energy storage solutions, enhancing community resilience, delivering direct solar savings, improving energy efficiency, and reducing greenhouse gas emissions for low-income and disadvantaged households. This coalition includes nonprofit electric cooperatives and municipal utilities serving some of the most impoverished and energy-burdened communities in the Southeast. 
• Hope Enterprise Corporation (HEC) aims to expand affordable and resilient solar energy access for low-income and disadvantaged households in Arkansas. The “Residential Rooftop Solar for Low-Income Households” strategy seeks to develop a residential rooftop solar leasing market in areas served by the state’s investor-owned utilities, ensuring savings for low-income households and bolstering the local solar installer ecosystem. The “Multifamily Behind-the-Meter Solar for Low-Income Tenants” strategy targets multifamily buildings to reduce energy costs for low-income tenants through innovative financial mechanisms and partnerships with local housing developers. Both strategies leverage HEC’s experience in serving disadvantaged communities.
• In collaboration with the Bullard Center for Environmental and Climate Justice at Texas Southern University (BCECJ), the Clean Energy Fund of Texas (TxCEF) aims to deploy technical assistance, private capital, and grants to minority-serving institutions. These organizations will facilitate residential-serving community solar projects in low-income and disadvantaged communities facing energy policy and grid vulnerability challenges. The projects will reduce emissions, lower utility bills, generate shared revenues through community ownership, and mobilize private capital.

Solar Access Act

Passed in 2019, the Solar Access Act (Act 464) is a key piece of legislation that supports the growth of solar energy in Arkansas. One of the most important provisions of this law is that it allows third-party financing through Power Purchase Agreements (PPAs) and solar leasing. Under a PPA, a third party installs and owns the solar system on your property, and you purchase the electricity generated at a lower rate than what you would pay your utility company.

This legislation has been crucial in expanding access to solar for Arkansas residents, as it provides more financing options, especially for those who may not be able to afford the upfront cost of purchasing solar panels outright.

Arkansas’ combination of federal and state-level incentives, including net metering, the Solar Access Act, and utility programs, makes solar energy an attractive and affordable option for residents. While the state may not offer as many solar-specific incentives as some other regions, key policies like net metering and the ability to use third-party financing help reduce costs and encourage solar adoption. For Arkansans interested in reducing their energy bills and embracing renewable energy, taking advantage of these key solar incentives is essential for making the transition to solar power a smart and cost-effective investment.

Disclaimer

The information provided herein is for informational purposes only and is accurate as of the time of publication. Please be aware that the solar energy landscape, including technology, regulations, incentives, and market conditions, changes frequently. Therefore, it is essential to consult with qualified experts and professionals before making any decisions regarding solar energy installations or investments. This will ensure that you receive the most current and applicable advice tailored to your specific circumstances.