Arizona Public Service has received a $3.3 million federal grant as part of its $14.7 million project in Doney Park to turn neighborhoods into power producers.

APS will use the grant to study the impact of running large amounts of photovoltaic electricity through the local electric grid.

Once it is determined how the existing neighborhood grid must be improved, APS will install solar panels on about 200 houses and up to eight businesses in and near east Flagstaff.

The utility would buy, own and maintain the solar panels on private homes and businesses and receive the electricity — typically equating to about half of the electricity used in a local home.

Homeowners would receive a locked-in 20-year rate on portions of their electric bills for offering to host the 2, 3, or 4-kilowatt solar systems, and allowing easements to access them.

In all, the utility would generate 1.5 megawatts of renewable electricity. That's enough to supply about 230 homes from Sheep Hill to nearly Sugarloaf Peak, at typical energy use rates for homes in that area.

APS will work with Architectural and Environmental Associates of Flagstaff and has said it hopes to begin installation next year.

U.S. Rep. Ann Kirkpatrick, D-Flagstaff, announced the Department of Energy grants Thursday. The grant is part of $87 million being allocated nationwide, of which $50 million comes from the American Recovery and Reinvestment Act, also known as the Stimulus Fund.