Regulatory Maze Creates Green Business Gridlock

Local governments undermine Arizona’s green energy goals 

While the State of Arizona is making it easier and more profitable for people to generate their own renewable energy, some local governments in the state are making it harder and more expensive.

To encourage homeowners and small businesses to invest in small-scale solar and wind generation systems, this year the state wrote new rules to accommodate greater clean energy generation and to ensure that people will receive full credit for the excess energy their systems produce. Meanwhile, disorganization, inconsistent permit requirements and wide variations in fees from town to town are creating barriers to these systems at the local level. For example, while some towns, such as Bisbee, have waived permit fees for small scale solar energy installations, others charge $1,000 or more for a permit for a home energy system. Still other jurisdictions require an engineering stamp, adding hundreds more to the cost.

According to Tom Alston, vice president of Arizona’s Solar Energy Industries Association, permit requirements are a “hodgepodge” in the state. “The Maricopa Association of Governments has created a standard set of permit requirements for solar installations that towns can adopt, but are not required to, which defines what inspectors look for,” Alton explained. “Tucson has taken a progressive approach and eliminated permit fees. It has also hired a full time solar coordinator to streamline the process. Some cities, including Mesa, have no permit requirement at all; anyone can go ahead and install a small-scale renewable energy system as long as they pass a rigorous utility inspection.”

Other contractors cited disorganization on the part of permitting agencies, the lack of clear, established permit requirements as obstacles. While some towns have a simple mail-in form to issue a permit, others require an in-person visit. In addition to vastly different fees, documentation required varies greatly from one place to the next. Many inspectors are unfamiliar with solar energy systems, and in some towns homeowners associations keep people from installing solar systems, despite the fact that Arizona law specifically prohibits them from doing so.

Still, according to Alston, fees, not permit requirements, are the biggest barrier in the state. He points out that Phoenix and Scottsdale, where fees are usually under $150, are where the bulk of renewable systems are installed. By contrast, the City of Glendale charges $800 to $1,000 permit fee for a residential system.

Many cities, such as The City of Gilbert, charge a percentage of the system’s cost, essentially penalizing someone who installs a system that generates more electricity, even if they don’t take significantly more staff time to permit. For Arizona Solar Electric, the company for which Alston works, permit fees this year averaged $45 in Marana and $50 in Peoria, while averaging $781 in Glendale. The single highest fee was in Goodyear, where the permit process for one installation was $1,306. With Arizona’s low electricity rates, Alston believes that high permit fees act as a disincentive to small scale renewable systems, as they add significantly to the time it takes for the systems to pay for themselves.

A new state law, if enforced, should discourage local governments in Arizona from the blanket requirement of engineering stamps, and requires cities and counties to justify their fees. The law also requires that the state establish a study committee to improve the process.

Nor is Arizona alone in having local governments undermining statewide efforts to promote small-scale solar and wind energy systems. With consumers demanding energy independence and widespread concern about climate change, more than 40 states have enacted laws making it easier for homeowners and businesses to produce their own electricity, but a new report by the Network for New Energy Choices (NNEC) shows how towns often thwart the intent of those laws.

Taking the Red Tape Out of Green Power offers a road map with specific recommendations for local governments that want to remove regulatory barriers and fees that complicate what should be simple procedures and inflate costs beyond the point where the systems can be expected to pay for themselves in a reasonable amount of time. You can read the report here.

“Photovoltaic solar and small wind turbine generators are well established technologies, with proven, off-the-shelf systems that come ready to install,” said NNEC’s director Rabin. “While the upfront costs of these systems are high, in today’s energy marketplace they also pay for themselves more rapidly than ever before, making them an increasingly attractive way to confront rising energy costs, but people who want to install these clean, efficient solar and wind systems can find themselves drowning in a sea of red tape.”

NNEC’s report has been endorsed by the American Planning Association’s Environment, Natural Resources and Energy Division, the Natural Resources Defense Council, Sierra Club, Vote Solar Initiative, American Wind Energy Association, Solar Energy Industries Association, The American Institute of Architects, ICLEI-Local Governments for Sustainability USA and other national, regional and local groups.

“This report will help local government officials to facilitate the use of renewable energy in their communities at a time when hundreds of cities and counties across the country are looking for ways to reduce their energy use and greenhouse gas emissions in the effort to fight global climate change,” said Damian Pitt, a certified planner who is the principal author of the report.