Arizona regulators last week approved a demand management plan that includes up to $2,500 in incentives for homeowners who install battery storage with their rooftop solar system.

The incentive is part of the Arizona Public Service Company’s 2021 demand side management plan. The Arizona Corporation Commission approved the plan Tuesday on a 4-1 vote.

The commission’s two-day meeting, which ran from Tuesday to Wednesday, was interrupted when the ACC’s buildings were hit by a power outage on Tuesday.

Under the demand management plan, APS customers who install battery storage systems coupled with rooftop solar and enroll in a time-of-use rate plan, will receive a one-time incentive of $500 per kW, capped at $2,500 per home. Customers receiving the incentive must connect to an APS operating platform to share battery performance data.

In addition, customers may receive a one-time $1,250 upfront incentive, if they agree to use their battery storage to serve the grid. The incentive requires customers to share up to 80% of their storage-system capacity for up to 100 events per year, for three years.

Managing Demand

A demand side management plan (DSM) outlines strategies for saving energy and managing loads. Since 2016, in response to an ACC order, APS has placed more emphasis in its DSM plan on reducing peak energy use and demand.

APS serves more than 1.3 million homes and businesses in 11 of Arizona’s 15 counties. The company has set a target of providing 100% clean power by 2050.

Among the plan’s other initiatives is a program for existing homes, in which APS offers incentives for the replacement of old or broken HVAC equipment with more energy-efficient models.

Also on the residential side, APS said it is focusing on assistance for limited-income customers, including doubling its budget compared to 2019 levels for a weatherization program.

For non-residential customers, APS will introduce incentives for facilities without HVAC ducts to install ductless HVAC systems. Another incentive will be available to hotels for room occupancy sensors that will minimize energy use in unoccupied rooms.

APS plans to pay for the $64 million DSM plan with $20 million of DSM funding in base rates, $5.6 million in collected but unspent funds and $38 million from an increased demand-side management adjustor charge.

Ratepayer Impacts

In a proposed amendment, Commissioner Justin Olson called for scrapping the DSM plan and requiring APS to file a revised plan that reports findings of a ratepayer impact analysis for each of the proposed demand-side management measures.

The amendment failed on a 4-1 vote. Olson then was the lone vote against the demand-side management plan.

Commissioner Jim O’Connor proposed an amendment, which the commission approved, to add an advanced rooftop control pilot program to APS’ plan. The rooftop systems are intended to reduce energy use and improve ventilation in buildings.

The program will be for public, private and charter K-12 schools, as well as non-profit facilities serving the needy and homeless. It will be funded with $2 million a year and offer rebates of $50,000 per installation on average.

In a news release last week, the Southwest Energy Efficiency Project (SWEEP), commended commissioners who voted for the APS plan.

The plan will help customers “fix broken air conditioners, replace inefficient water heaters, install smart thermostats, and otherwise cut energy waste,” SWEEP said.