Making the Daily Kos recommended list, right now, is Shplik’s discussion Small and scalable renewable power: A New Deal Solution. Shplik is absolutely right: we need a smart financing path to enable explosive growth in distributed (preferably renewable) energy production as part of the path toward an Energy Smart future.
What is exciting is that an American city might be pursuing a key path toward innovative and actionable financing for small scale renewable energy programs that could open the door to millions who cannot currently afford to put solar on their roofs.
As discussed in Energize America: Cities Leading the Way (also here), Berkeley has adopted an approach for funding homeowner and small business solar installations via city bonds. This approach could provide an explosive path toward 10s of millions of solar installations in the coming years.
Making Solar an Easy Choice … Berkeley’s Path
Energizing America into an Energy Smart future will require engagement from us all, at all levels, individuals, businesses, communities, government (at all levels). One of EA2020’s Core Principles is to Make the Right Choice, The Easy Choice (and the preferred choice) when it comes to energy issues. Berkeley, California, has decided on a major initiative to make one significant ‘right choice the easy choice’ for its citizens.
A critical challenge for deploying energy efficiency and renewable energy options are the upfront costs. It might be less expensive over 10 or 20 years, but how many people have the pocket money to reinsulate their homes or, more prominently, tile their roof with solar panels. Berkeley plans to help change this equation.
Berkeley’s City Council has a plan for the city to finance solar panels for its residents to then have the homeowners pay for their panels through a 20-year additional assessment on their homes that is guaranteed not to exceed what their electricity would cost from the utility.
There are a number of genius elements to this path. One is that the city government will be able to achieve lower cost financing that, by definition, will lower the long-term cost of each installation. And, the City’s commitment will foster educated inspectors (a real issue), a concentration of installers, knowledge in the community, etc, capacity for executing installations. The increasing number of installations (along with lower hassles for installers, like inspectors who know what they’re doing) will also drive down costs as quantity of installations mount.
This is a path that could open up solar pv (and, we could hope, hot water) installations to (tens of) millions of Americans as Berkeley might just be a starting point.
“If this works, we’d want to look at this for other cities statewide,” said Ken Alex, California deputy attorney general. “We think it’s a very creative way to eliminate the barriers to getting solar panels, and it’s fantastic that Berkeley’s going ahead with this.”
And, this model does not have to stop with solar electricity. Why not geothermal installations? Insulation backfits? Green Roofing? Berkeley might be creating a roadmap for Energy Smart financing for an Energy Smart America.
Contemplating Berkeley’s Choice
Berkeley’s path using local government bonds to help homeowners and businesses pay for renewable energy installations is a truly innovative and, well, likely worth copying innovation. Paying back the ‘loan’ to the homeowner/business in the house assessment, with the loan (including interest) to be paid by over a 20 year period via the house’s real estate tax/assessment, totally solves the upfront financing challenge
This is a very innovative and potentially explosive program approach for a number of reasons:
* Gov’t, with tax-free bonds, can raise money on scale at far lower cost than homeowner can get from a bank * Gov’t will be certifying installers/companies. Much easier to “choose” who to go to have work done. * Scale should lower prices. Installers can, we’d hope, spend more time installing and less time advertising/publicizing. * Gov’t inspectors/such should become better at dealing with solar/such installations, becoming a help rather than hindrance. * By putting the payback via tax assessments, it is associating the solar with increasing the home’s value (which it does). * And, the kicker, by being in the house’s tax assessment, all of the repayment is tax free, creating another path for federal gov’t assistance for the solar system.Now, where I live (NVA), this would not work financially because of VERY low electricity rates and a lack of meaningful Commonwealth assistance for renewable energy. California, Massachusetts, New Jersey, New York, and some other states … wow … this could be explosive. Combine high electricity prices (peak), with good state assistance to start with, a town could skyrocket the local installments.
Add in another element
An additional challenge for making sense of distributed power, small generation is that, even where net metering exists, the best that a homeowner/small business can do is to zero out their electricity costs from the grid but not ‘earn’ money. This discourages anyone putting in a distributed power system from putting in 1/100th of a kilowatt more in capacity than they expect to need for their own requirements. Thus, there is a very limited path toward relieving burden on the grid (though, the reduced peak power demand through solar power is a real benefit).
Thanks to ChapterOne, the Micro-Power Producers Act (pdf)is a thoughtful approach to developing a national base standard for Net Metering — the hooking up of home energy production (solar panels, wind, combined-heat/power (CHP), etc) to the electricial grid. By setting national standards, this would foster ever-growing numbers of Americans to make the decision to produce their own power. This increased distributed generation will increase the resiliency of America’s electrical system in the face of natural or man-made disasters while reducing America’s GHG footprint. Among other things, one of the key initiatives here is to allow a (limited) profit making if
The Berkeley financing path, opening up solar power (hot water and pv) and, well, hopefully other renewable energy (such as wind) and large energy efficiency investements to millions of homeowners by taking care of the upfront investment cost challenge is a potentially huge leap forward that should be studied (and copies) by municipalities and local governments across the country. And, combined with a sensible approach to providing profit potential to Micro-Power Producers, this could have a real impact on American’s electricity generation system, fostering a move to an Energy Smart Future.