Arizona looks to be on the road to a greener future, with nearly $200 million in federal stimulus money paving the way.

The money aims to help the state, local governments and individual homeowners find new ways to conserve energy, generate electricity and promote alternate fuels. It is part of a $3.2 billion package to pay for energy efficiency and conservation projects with money from the American Recovery and Reinvestment Act (ARRA), the $787 billion stimulus package approved by Congress and President Obama in February.

On March 26, the U.S. Department of Energy announced that Arizona would receive $63.8 million for the Energy Efficiency and Conservation Block Grant program, which provides grant money to the state, local governments and tribal communities. DOE said the money would build on $57 million for the Weatherization Assistance Program and another $55.4 million for the State Energy Program that had been announced several weeks earlier. Those programs provide money and rebates to assist homeowners who want to make their houses more energy efficient.

According to DOE, most of the specifics on how the money will be put to use will be left up to the states, with the federal government providing broader guidelines. In Arizona, the money will be administered through the state Department of Commerce, and Gov. Jan Brewer will set specific guidelines and priorities for its use.

Significant portions of the money could be used to provide financial assistance for solar energy projects across Arizona. That has some advocates here hopeful that the stimulus money, as well as tax credits from the 2008 bank bailout, will help jump-start the solar energy industry in a state that many people hope will become the solar capital of the world.

The block grant program provides grants for energy efficiency programs, and the reduction of total energy use and fossil fuel emissions. According to DOE, a wide variety of projects are eligible for grant money, including retrofits of residential and commercial buildings, renewable energy installations on government buildings and energy efficient transportation. Even efforts to capture greenhouse-gas emissions from landfills and install energy efficient traffic signals are among a plethora of projects and programs for which the stimulus money can be used.

The grant money will be divided among dozens of jurisdictions. Phoenix alone will receive $15.2 million, with $9.5 million going to the state, $5.1 million to Tucson, $4.2 million to Mesa, $3.9 million to Pima County and $3.5 million to Maricopa County. Those government entities, which must apply to DOE to receive the money, will make many of the decisions on how to use it.

Under the Weatherization Assistance Program, Arizona families who earn up to 200 percent of the federal poverty level, about $44,000 a year for a family of four, will be eligible for up to $6,500 per home for energy-efficiency upgrades. According to DOE, the program can help homeowners reduce heating bills by an average of 32 percent.

The State Energy Program also will provide rebates to homeowners for audits that will help them determine how to make their homes more energy efficient, and install the improvements to put those efficiencies into practice. Upgrades for government buildings and the development of alternate fuels and renewable energy programs will be funded by the ARRA programs as well.

Solar energy advocates are optimistic about the money that will go toward solar projects, but it's not clear how much it will be and how it will be spent.

"It's actually virtually impossible, because what's going to end up happening is each of these programs will determine how to allocate the funds," said Monique Hanis, a spokeswoman for the Solar Energy Industries Association in Washington, D.C.

The bank bailout bill approved by Congress in 2008 included tax credits for homeowners who wanted to install solar panels on their homes for electricity generation. Those photovoltaic systems can cost upward of $40,000, but previous tax credits capped the available federal tax credits at $2,000. The ARRA removes a similar $2,000 cap on tax credits for the less-expensive water-heating solar systems, and replaces it with a 30-percent credit.

Michael Neary, of the Arizona Solar Energy Association, said lifting the $2,000 cap on tax credits for water-heating solar systems will not have much of an impact on homeowners, who can install such systems for about $6,000. What he does expect to have an impact, however, are federal tax credits for solar technology manufacturing. According to the SEIA, the stimulus package includes a 30 percent tax credit for manufacturing assets.

Hopefully, Neary said, the tax credits will help drive the market until the cost of photovoltaic technology comes down to the point where the industry is more self-sustainable.

"One of the things that we've been trying to do here in Arizona is to build the market, a sustainable market, something that's going to ultimately drive itself, rather than being driven with just tax credits," he said. "Yeah, the tax credits are something that are kind of going to jump-start it, and by the time the federal tax credit expires in eight years, theoretically the costs of the products will come down."

Hanis said the industry will benefit from a loan-guarantee program that receives funding from the ARRA. The program actually began in 2005, she said, but only recently guaranteed its first loan, $535 million to California-based Solyndra Inc., which will use the money to help build a solar panel manufacturing plant.

Solar supporters such as Neary and Hanis are hoping the ARRA will spur further expansion of the industry, which they say has seen substantial growth in the past year. Hanis said the solar industry in the U.S. grew by 17 percent in 2008.

In Arizona, Neary said the ASEA grew from 40 members at the beginning of the year to about 60 by the start of 2009. About half of those new members, he said, joined after the bank bailout, with its photovoltaic tax credits, was approved in September.