Effect of Subsidies on Green Infrastructure: A Case of Solar Energy in Arizona

Abstract

As international attention tilts towards increasingly global warming, the need for alternative and renewable forms of energy become more crucial. There has been an exponential growth in population globally with the state of Arizona being no exception to the trend. With such high population growth, also emerges higher energy demands and consumption leading to sever environmental pollution. This thesis seeks to demonstrate the urgent need for adoption and support towards solar energy in these changing times. Critics of Solar energy have often cited its high cost as a barrier, however overlooking historic support afforded and extended to traditional forms of energy. It is hypothesized in this thesis that an end to solar energy subsidies would cause solar panel system deployment to fail financially for the time being. To test this theory, a Base Case of a commercial office space in Organ Pipe Cactus National Monument is selected as part of a larger NPS grant to HED Laboratory at UA. It is showcased through the means of the base case energy modelling and financial analysis that the stated hypothesis is proven true. To remedy it, passive strategies and techniques are suggested and implemented in a modified case study. Financial results show 27.5 years of payback for the base case in the absence of tax credits while tax credits enable it to be reduced to 16.7 years. Given a traditional panel warranted lifetime of 20 years, the former case proves to be financially a failure. Alternatively, the modified case study outputs a 17.9 years life time, even without the presence of tax credit, thereby enabling financial success.