The Arizona Commerce Authority (ACA) will refund up to 10% of capital investments in renewables in the form of income tax credits, the state agency announced on Tuesday.

The incentive will be one of six the state will begin to offer as part of a larger attempt to encourage renewables development, particularly solar, in its sun-soaked desert land. The other incentives for the renewables industry will include up to $9,000 in income tax credits for new jobs created, reimbursable grants up to $1.5 million for employees training, up to 34% R&D tax credit, various funding through the “Deal Closing Fund” and significant business tax reductions.

“The US solar industry has the opportunity to double in the coming year. Arizona and the ACA are committed to being a part of that growth, said Don Cardon, president and CEO of the ACA. “Arizona is armed with business opportunities and tax incentives which make us the leading contender in the renewable energy.”

The incentives come as a further boost to the Arizona solar industry, which has already been nurtured by the Arizona Competitiveness Package, passed last March. Arizona’s desert has been an attractive location for solar developers in particular, and has lured national solar-giants such as First Solar and Suntech.

“Arizona’s aggressive new focus on solar and renewable energy following the passage of the Arizona Competitiveness Package will significantly enhance economic development opportunities and encourage business relocation for companies that are leading the way in this fast-paced, innovative industry,” said Arizona State Governor Jan Brewer.

While the incentives may attract solar companies to Arizona, it remains to be seen how state involvement will impact private sector investment in solar development. Only last week, the Department of Energy announced that it would be offering nearly $4.5 billion in conditional loan guarantee commitments for three solar photovoltaic (PV) power plants in California.

The ACA plans to feature new incentives at the upcoming Intersolar North America exhibition and conference on July 12-14 in San Francisco.

Photo: The sun sets behind the hills of the Sonora desert near the border between the US and Mexico at the Tohono O’odham Indian Reservation, Arizona.