Arkansas Solar Rebates and Incentives

How Much Can You Save on Solar in Arkansas?

• A 6 KWh PV system in Arikansas generates enough power for an average-sized household
• Federal solar tax credit covers up to 30 % of solar installation costs in Arkansas
• To qualify for net energy metering in Arkansas, users must connect their renewable energy system to the grid and have a capacity lower than 25 kWh (residential) or 20 MW (commercial).
• Customers can receive up to $500 from multiple local rebate programs,

Arkansas Energy Profile

Arkansas is one of the top ten sunniest states. It receives 4,725 kilojoules of sunlight per year, which is higher than the national average of 4,234 kilojoules per annum. In comparison, Arizona receives the most sunlight with over 5,755 kilojoules of sunlight per year.

Arkansas Solar Tax and Incentives at a Glance

Arkansas has an active and rapidly growing solar industry. According to the SEIA Report, as of 2023, the Natural State had installed 632 megawatts of solar energy-producing facilities. These facilities include industrial-scale solar plants and small-scale residential or commercial solar panels. The notable solar plants in Arkansas include:

• SR Camden (generates 16.6 MW of solar energy)
• Chicot Solar (which generates 140 MW of solar energy and can power 16,288 homes)

Arkansas also plans to add an additional 3,004 MW by 2030.

How Much Can You Save on Solar in Arkansas?

As of 2021, the retail cost of grid electricity was $0.9 per kilowatt-hour. On the other hand, it costs $3.07 per watt to install a solar panel. Keep in mind that the cost does not include the deductions in the form of solar energy incentives.

For example, the Arkansas tax credit for solar panels will reduce the cost per watt by 30 percent. After factoring in these incentives, a solar panel should cost less than $2 per watt.

The cost of solar installations has also decreased by 53 percent within the last decade. This means more residential and commercial facilities can set up solar panels as a cheaper alternative to fossil-based electricity.

For a state with high sunlight hours, a 6 KWh PV system can generate enough power for an average-sized household. As of 2023, it costs about $18,420 to install a 6 KWh solar system in Arkansas. However, solar users can drive down the costs via various solar incentives.

The federal solar tax credit covers 30 percent of the cost of solar installation. So, you'll receive $5,526 as tax credits for installing a 6 kWh PV system.

Note: You will only receive a 30 percent discount for PV systems installed between 2022 and 2032. For PV systems installed in 2021, solar users will get a 22 percent discount.

According to the US Department of Energy, Arkansas consumed 46.9 terawatts per hour of energy in 2021. On the other hand, the state generated 65 TWh of energy in the same year. Its energy production accounts for two percent of the total energy generated in the US.

Arkansas generates energy from non-renewable and renewable energy sources. About 75 percent of its energy production comes from non-renewable energy sources. Natural gas and coal power nine out of the 10 largest power plants in the state. In addition to this, nuclear energy powers the remaining power plant. It generates 22 percent of the state's energy output.

What are the major renewable resources in Arkansas?

Hydroelectric power, biomass, and solar are the major renewable sources. More so, these energy sources generate 10 percent of Arkansas' energy output.

As of 2023, the state has 19 industrial-scale hydroelectric power plants. It also has a storage plant for storing excess hydroelectric energy. Each power plant has a capacity to generate more than 1 MW.

Biomass generates 16 to 17 percent of the state's renewable energy output. Methane and crop residues from livestock manure are the fuel sources for biomass power plants. There's also a wood pellet manufacturing plant that provides fuel for these facilities.

Industrial solar farms and small-scale solar installations generate 10% of renewable energy. The Chicot Solar Farm and Searcy Solar Farm are the two major solar installations in the state. Each facility has the capacity to produce 100 megawatts of energy.

Arkansas Household Profile

Arkansas consumed a total of 343.5 million BTUs per capita in 2021. Each sector—transportation, residential, commercial, and industrial—contributed to this total energy consumption. Here's a breakdown of their impacts:

• Residential sector: 71.8 million BTUs per capita.
• Transportation sector: 90 million BTU per capita.
• Commercial sector: 56.4 million BTUs per capita.
• Industrial sector: 125.3 million BTUs per capita.

Federal Solar Tax Credit in Arkansas

The solar tax credit is a federal initiative that aims to encourage the use of solar energy. It refunds a portion of the expenses incurred while installing a solar system. Furthermore, solar users will receive the refund in the form of tax credits. To get the federal solar tax credit, solar users must include the costs on their annual tax return.

The solar tax credit has different phases, and each phase offers a specific discount. For example, you'll get a 22 percent discount if the system was installed in 2021.

Here are the rates for other phases of this program:

• 2022–2032: solar users will get 30 percent discount in tax credit for PV systems installed within this timeframe
• The rate will fall to 26 percent for PV systems installed in 2033.
• The federal solar tax credit will fall to 22 percent in 2034.
• As of 2023, there are no federal tax credits for PV systems installed after 2034.

So, what expenses will the solar tax credit cover?

In most cases, the solar tax credit will cover all expenses required for solar installation. Specifically, the solar tax credit will cover these expenses:

• Solar cells and panels
• The labor cost for onsite preparation, assembly of solar panel parts, and installation
• The cost of getting a permit and hiring an inspector for the solar project
• All additional equipment needed for solar installation, such as wiring, inverters, solar batteries, and mounts
• Solar batteries with a storage capacity higher than 3 kWh
• Sales taxes on solar equipment.

Eligibility

Arkansas residents are eligible for the solar tax credit if they fulfill these criteria:

1. They installed the PV system between 2017 and 2034.
2. The solar system was installed at their residence in the US.
3. They either own the solar system or have purchased an interest in a community-owned solar project.
4. The solar system is new and was never previously installed.

How do I claim the Federal Solar Tax Credit in Arkansas?

Follow these steps to claim the Arkansas solar panel tax credit:

Check the previous section to see if you qualify for this incentive.

Step 1. Visit the IRS website and download the Form 1040 and Form 5695. The latter is specifically for claiming tax credits for using non-renewable energy sources. You can also download the instructional guides for these forms.

Step 2. Fill out the different sections in the Form 5695. For instance, line 1 section is where you calculate the cost of all eligible solar equipment. You can also include all additional expenses, including labor costs in line 2 to 5.

Step 3. Fill out your annual tax report on the Form 1040. Move to page 4 to view how much credit you can claim.

Step 4. Subtract the tax credit from your annual tax payment. Your tax credit must be lower than your annual tax. If it exceeds the tax liability, you can roll over the remaining amount to the next tax year.

Step 5. Write down the remaining tax credit in line 16 of Form 5695.

Step 6. Deduct the tax credit from your tax liability. If the credit is greater than the tax liability, write down the remaining figure in line 16 of Form 5695.

Step 7. Add the renewable energy tax credit to line 5 of the Schedule 3 form.

Step 8. Send the completed tax forms and other necessary documents via mail to:

Department of the Treasury
Internal Revenue Service
Kansas City, MO 64999-0002
Internal Revenue Service
P.O. Box 931000
Louisville, KY 40293-1000.

Net Energy Metering in Arkansas

Net metering is a financial contract between a renewable energy user and an investor-owned electric utility company. The company pays the user for generating excess electricity from renewable energy sources like solar, wind, biomass, and hydroelectric.

In a net metering program, you get paid in energy credits, which are stored on the net meter. You may convert the credits to power when you exceed your renewable energy output. In most cases, solar users accumulate credits during the summer when solar energy production is high. And they use the credits in months with a low number of sunlight hours.

Here's a case study on how net metering works in Arkansas

Carlton installed a 6 kWh solar system and connected it to Entergy Arkansas, LLC. The system generated 8,000 kWh in August. However, he only used 4,500 kWh of power in that same month.

Since he's on a net metering plan with Entergy, the company will pay him for the excess solar power. This payment is stored as credits on the net meter. Arkansas' net metering policy enables users to exchange the credits for cash amounts after a 24-month period.

Note: The eclectic company will pay you based on the current wholesale cost of grid electricity. Also, you can order more than one net meter for different properties and split the earned credits among the different meters.

How to qualify for net metering in Arkansas

Nevertheless, not all renewable energy users can qualify for this incentive. You need to fulfill these criteria to qualify for net metering in Arkansas:

1. You must be a paying customer of an electric utility
2. Users must connect the renewable energy system to the grid.
3. For solar users, the residential solar system must have a capacity lower than 25 kWh. On the other hand, commercial solar facilities must have a generating capacity of up to 20 MW.
4. You're not eligible for net metering if you already partake in an alternative program.

How to Enroll for Net Energy metering in Arkansas

Each electric utility company in Arkansas has a set of guidelines for net metering enrollment. In this section, we'll explore how to enroll for net metering with Entergy Arkansas LLC and Ozarks Cooperative.

Follow these steps to enroll with Entergy Arkansas, LLC:

1. Gather and fill out these documents:

• Preliminary Interconnection Site Review Request
• Standard Interconnection Agreement (send this form at least 30 days before the interconnection stage).
• Standard Interconnection Agreement for Net-Metering Facilities Disclaimer
• A one-line diagram describing the renewable energy system.
• Affidavit form for Meter Aggregation and Common Ownership (for those using meter aggregation)
• Affidavit form for lease or service agreements (for those who leased the renewable energy system.

1. Next, fill out and sign the documents.
2. Send the completed documents to this email address: CIR-Arkansas@entergy.com.

Before you sign up for net metering, the renewable energy system must meet these safety and performance standards:

• The Distributed Energy Resource Standards for Distribution Interconnection
• National safety codes such as the National Electric Safety Code and the National Electric Code.
• Local and state building codes and laws.

How to enroll for net metering with Ozark Electric Cooperative, Arkansas

1. Read the rules for net metering in the Arkansas Public Service Commission's documents.

2. Fill out and sign these documents:

   1. Preliminary Interconnection Site Review Request (for systems above 1,000 kW in capacity)
   2. Preliminary Interconnection Application (for renewable energy systems below 1,000 kW in capacity)
   3. A 8760 report (this is a document showing the estimated solar output per hour for the first year)
   4. The renewable energy specification guide.
   5. A full permit pack.

3. Send the completed documents via email to: netmetering@ozarksecc.com

4. On the other hand, you may send the documents via mail to the contact address below:
   Attn: Manager of Energy Services
   P.O. Box 848
   Fayetteville, AR 72702_

5. Ensure you submit a Standard Interconnection Agreement for Net Metering Facilities at least 30 days before the system is connected to the grid. Also, send the application to the address provided above.

6. After installing the renewable energy system, reach out to Ozarks Electric for an on-site inspection. You can contact them at (800) 521-6144 or netmetering@ozarksecc.com.

7. Once approved, the company will set up the net metering connection.

Arkansas Property Tax Exemption

As of March 2023, there was no state-level property tax exemption for solar users in Arkansas. However, some municipalities or counties may offer local property tax exemptions. So, always check with the local tax assessor's office for any available exemptions.

In the absence of a tax exemption, your property tax will increase after solar installations. Nevertheless, you can take advantage of other Arkansas renewable energy rebates to reduce the burden.

Arkansas Local Energy Rebates

Arkansas Oklahoma Gas (AOG) Residential Rebate Program

The AOG residential rebate program offers a financial incentive to users who install energy-efficient equipment. To access this incentive, you must qualify for one of these sub-programs:

• Heating equipment rebate program
• Water heating equipment rebate program
• Smart thermostat rebate program
• AOG weatherization program.

The heating equipment rebate program offers a $300–$500 cash amount to customers that install a highly-efficient gas furnace. This incentive is accessible to both residential and small-scale commercial system users.

On the other hand, the water heating equipment rebate program offers a $500 incentive.

To access this rebate, complete an online form for the specific sub-program. Next, you may submit the form online or send it via mail to the:
Summit Utilities Rebates
6350 Felton Rd.
Lansing, MI 48906

Entergy Arkansas Residential Energy Efficiency Programs

Entergy Arkansas offers cash amounts and rebates to help its customers manage energy more efficiently. The residential efficiency program covers customers living in personal residences, apartments, and manufactured homes. Furthermore, it provides a set of energy efficiency programs for each type of residence. Customers can receive incentives like the Summer Advantage and Appliance Recycling. The Summer Advantage pays users for regulating their air conditioners during the summer.

First Electric Cooperative Home Improvement Loans

This is a financial incentive for those who want to upgrade the energy efficiency of their living spaces. Here's what to expect with this loan offer:

• You must own and occupy the property before applying for the loan.
• You can borrow between $500 and $15,000 under this program. For loans less than $2,500, you must use equipment as collateral. On the other hand, your property mortgage will stand as a collateral for loans higher than $2,500.
• The home improvement loan has a lifespan between one to five years.
• The loan covers heat pumps, portable home generators, and First Electric products.

North Arkansas Electric Cooperative, Inc (NAECI) Residential Energy Efficiency Loan Program

The NAECI loan program offers low-rate loans to customers who want to increase the energy efficiency of their homes. As of 2022, the interest rate was set at 1 percent. To access these loans, you must fill out an online application form on the NAECI website. That said, you can apply for one or more of these loan types:

• Air source heat pumps loan
• Geothermal heat pump loans
• Weatherization loans
• Energy-efficient lighting loans.

For most loan types, you can get a minimum amount of $500. Furthermore, you'll need board approval before you can obtain loans higher than $20,000.

Southwestern Electric Power Company of Arkansas (SWEPCO Arkansas) Residential Energy Efficiency Rebate Programs

This Arkansas renewable energy rebate program offers incentives to customers who invest in energy-efficient products. You are eligible for the program if you have at least one of these products:

• Connected EV level 2 chargers
• Windows and LED lighting
• Pool pumps
• Heat pump water heaters
• Programmable thermostats
• Clothes washers
• Advanced power strips
• Air purifiers/dehumidifiers.

Customers can get between $6 and $500 for possessing this equipment. You'll obtain a $500 rebate for using a heat pump water heater. On the other hand, you'll receive $6 for every LED bulb installed on your property.

State Sales Tax Exemptions in Arkansas

Although Arkansas offers sales tax exemptions for certain products, it doesn't offer a state-level sales tax exemption for residential solar purchases as of 2023. Residents must pay a 6.5 percent sales tax when they purchase a PV system.

However, there are solar energy incentives to help reduce the financial burden. The Arkansas tax credit for solar panels is one of the popular options.