TEP net metering is a big deal for Arizona homeowners looking to save on energy bills with solar. The state is now ranked 6th nationally for electricity costs according to SmartAsset Advisors so it’s no surprise that more Arizona residents are looking at solar as a way to cut costs and boost sustainability.
But as Tucson Electric Power (TEP) shifts away from traditional net metering to a new system called net billing, it’s vital to understand how this affects your potential savings. Under net metering, solar customers earned credits at the full retail rate for excess energy sent to the grid. However, TEP’s net billing program compensates you at a lower rate, potentially impacting your overall savings.
This guide breaks down what TEP’s net billing means for you, how you can still make the most of your solar setup, and which incentives can help boost your savings.
What Is Net Metering?
Net metering is a system that allows solar homeowners to receive credits for the extra energy their panels generate. For instance, if your solar setup produces more electricity than you need during peak hours, that energy gets sent to the grid.
Through traditional net metering, you’d get a credit at the full retail rate for every kilowatt-hour (kWh) sent back to help offset future electric bills.
This setup had some clear advantages. Homeowners could see immediate energy savings since their monthly bills often showed only the “net” amount of energy used from the grid, subtracting the amount sent back.
The Shift from TEP Net Metering to Net Billing
TEP (Tucson Electric Power) recently switched from net metering to a net billing system. This change affects how solar customers in Arizona get credited for the extra energy they send to the grid.
TEP net metering programs initially gave full retail-rate credits, but now, with net billing, TEP compensates excess energy at a lower rate. So why did TEP make this shift?
The utility company states that the move was to balance costs and ensure fairness among customers, both solar and non-solar. With net billing, TEP uses something called the Resource Comparison Proxy (RCP) rate instead of the full retail price.
The RCP rate for TEP currently stands at about $0.0570 per kWh.
Some benefits of net metering, such as a direct retail rate match, have been replaced with this net billing approach. It’s still a form of compensation, yet it can’t match the savings that full-rate net metering once provided.
At the end of the day, this new setup means that homeowners need to adjust their expectations about how much they can save by going solar with TEP.
TEP’s Resource Comparison Proxy (RCP) Rate
The RCP rate is the rate TEP pays solar customers for the energy they send back to the grid under the new net billing system. As mentioned, it’s set at $0.05701 per kWh, which is significantly lower than TEP’s full retail rate. This reduction plays a large role in limiting solar energy savings for homeowners on TEP’s grid.
For the first ten years, customers receive the same RCP rate for their solar energy credits, which provides some consistency. However, after this period, TEP will adjust the RCP rate, potentially lowering the compensation further.
This system isn’t as straightforward as net metering, where you’d typically get the same rate as what you pay to the utility for electricity. Because of this change, customers now need to plan carefully to maximize their savings.
At this rate, TEP renewable energy plans are still beneficial, but they don’t provide the full advantage of retail-rate credits. Homeowners can still save, though it may take more planning and a closer eye on energy usage.
4. Maximizing Solar Savings Under Net Billing
While the net billing system reduces the savings potential, there are ways to make it work to your advantage. The trick is to focus on energy efficiency and smart usage.
Consider these strategies to maximize your savings:
- Use energy storage systems like solar batteries to store excess power and use it when grid rates are higher
- Shift heavy power use to daytime hours when solar generation is at its peak
- Install energy-efficient appliances to reduce overall consumption
High-efficiency solar panels can also help make a big impact. They generate more electricity with less space, which could help homeowners offset the lower credits from TEP’s net billing structure.
In other words, maximizing production with high-quality equipment and smart energy habits will help balance out the impact of the lower RCP rate on your utility savings.
Additional Incentives and Financing Options for Arizona Homeowners
Arizona has a variety of solar incentives that can offset the impact of TEP’s new net billing structure. These incentives and financing options make solar energy an affordable option, even with the changes.
Here are some available options:
- The Federal Tax Credit lets homeowners deduct 30% of their solar installation costs from federal taxes
- Arizona State Tax Credit offers a state tax credit of up to $1,000 for residential solar installations
- Property tax exemptions exempt solar installations from increased property tax, so you can add value without raising your taxes
For those looking to finance their solar setup, several companies provide loans that spread the installation cost over time. Some loans have zero down payments or low interest rates to make it easier for homeowners to go solar without a hefty upfront cost.
TEP solar incentives can play a role here, as they keep solar a financially viable choice even if the utility’s net billing program doesn’t offer the same level of savings as before.
Get the Most Out of Your Solar Investment
TEP net metering may be a thing of the past, but there are still ways to enjoy substantial solar energy savings with TEP’s current programs. While net billing might initially seem like a drawback, this article has shown how thoughtful planning, incentives, and efficient solar systems can make a difference.
With Sun Club USA, you’re gaining access to 25-year guaranteed performance, speedy installations, and the highest-grade panels available. As leaders in Arizona solar, we don’t just install panels; we provide lasting energy independence and financial relief.
Ready to start saving? Contact Sun Club USA today to schedule your free quote and make the most of Arizona’s sun.
