California adopts innovative solar loan law

Left-leaning Berkeley and right-leaning Palm Desert are unlikely bedfellows, but the two cities were twin forces behind California's innovative solar and energy efficiency financing law enacted Monday.

The law, sponsored by Assemblyman Lloyd Levine (D- Van Nuys), allows cities and counties to make low-interest loans to homeowners and businesses to install solar panels, high-efficiency air conditioners and other improvements to save energy. Participants can pay back the loans as part of their property taxes. If they move, the improvements and loan balance are transferred to the next owner.

The financing scheme, if adopted by cities, is likely to give a statewide boost to the installation of solar panels to generate electricity. Solar power systems can cost between $15,000 and $30,000--more than many homeowners can afford, although state rebates cover much of the cost. But with the loans, and the guarantee that the investment will not be lost when people sell their homes, the risk is dramatically reduced.

The original idea was hatched by Cisco DeVries, chief of staff for Berkeley Mayor Tom Bates. More than a year ago, when it was presented at a meeting of mayors in Seattle, the proposal drew national and international attention, with inquiries from scores of public officials. In November 2007, the Berkeley City Council approved the plan for solar power loans that property owners could repay through a 20-year assessment.

Palm Desert, a city with an aging population and high air-conditioning costs, jumped on the bandwagon and created the Palm Desert Energy Independence Program to offer the loans, setting a goal of reducing energy consumption by 30% over five years.

Berkeley's initiative, called "Berkeley FIRST," is still in the pilot stage. But Palm Desert boasts that its Office of Energy Management has already started a list of interested customers. The city expects to be "the first city in the state to offer this benefit to its residents and businesses," said Palm Desert Management Analyst David Hermann.

So now who's "right"? And what cities will be "left" behind in the race for energy independence?

--Margot Roosevelt

Photo of solar panels on a San Pedro home. Credit: Christine Cotter/Los Angeles Times

Comments

[Viviennedek446]

Oh wait, you need cards to transport your lazy fat asses to the shop a block away from your house/flat/apartment.

Try as much as you want, anti-smokers, smoking will never go away. Same with alcohol. They have too much of an influence over the masses and they have been ecched into the minds and social life of people.

[Jeremy Howard]

Making the utilities pay for excess solar power production at a good price is a tricky deal. If utitlies are required to pay a lot more for solar power from Joe Homeowner than power produced by a traditional power plant or large scale solar plant, it will cause the utilities to have to charge higher rates to the rest of the rate payers. This would be unfair to the other rate payers.

However, if utility rates went up, this would be more of an incentive to invest in a roof top solar system, thus more of them would be installed, etc.

I'm all for having solar on everyone's roof top, I just don't know how we are going to get there without hammering the regular utiliity customer if the utilities are required to buy expensive power.

[Brian in St. Louis]

I don't see how making utilities pay excessive fees for solar makes any sense. Net metering makes sense and low interest government guaranteed loans should be a national program with terms that are in line with payback periods. I can see requiring utilities to achieve benchmark percentages of renewable energy but forcing them to overpay someone who puts solar on thier roof. It doesn't seem rational or fair to me.

[James Gillespie]

Idea in effect in Germany for some time.

[sheila]

Erik! A man after my own heart! You are totally on the right track, from my vantage point, and I am glad you are adding your clear, intelligent views to the discussion, because I think you and I represent millions of well-intentioned people who simply cannot swing the completely gamed financials of the current system.

I have been working on policy issues surrounding this for the past 18 months or so, once i realized we were at a true crossroads, where renewable energy and generation technology were ideally suited for at least quasi-independent point of use generators of renewable energy, BUT the policies were/are still completely skewed 95% in favor of Big Energy, including Big Renewables.

Setting aside for a moment the inherent anti-competitive nature of the subsidies, tax treatment, land grabs and buyback/equity guarantees, which then lead private capital towards Big Energy as well, one of the saddest side effects of this lousy policy is that we are disenfranchising the millions of people who want to do the right thing by trying to force them back into the role of passive, brain-dead consumers of power at whatever prices Big Energy sets. I like to joke that we must all have Stockholm Syndrome to be embracing another Big Energy model in an era of sun and wind power!

I think the answer we are all looking for can be found in the 40 nations which have already adopted a "feed in tariff" for local, point of use renewable power generators. People can size systems however they like, the utility buys 100% of the power at a fixed (good) rate (roughly 60 - 80 cents/watt for PV, 20 cents for wind), over a 20 or 25 year period, and the people continue to buy power from the utility (there are also "net metering" options where only excess is sold, seller's choice).

Those rates may sound high, but they reflect all the important aspects of making a genuine, rather than a greenwashed, effort to get renewable power online - these costs are ALREADY SOCIALIZED by utilities, so it is nothing new, and rates will not increase any more than they will under a Big Power Plant and Powerline buildout.

Think about the offsets - the utility does not have to buy/lease several 10,000 acre plots of land, build out billions of dollars worth of power plants and hundreds of miles of power lines (including massive eminent domain to kick people out of their homes), hire people to maintain and operate the power plants, and go through years and years of delays and permitting. They just cut a monthly check, and the power is online within weeks. Citizen generators also conserve much more (since there is a great payoff), our intact ecosystems are left unharmed, views and houses are preserved, the utility hits its RPS and everyone wins.

Let's keep spreading the word. Unfortunately, Big Energy got ahold of Jared Huffman's AB 1920 and took all the good parts out of it, so it will do very little to move the residential PV ball forward. The caps on system sizing were put back into the bill, and the rates will be set by the CPUC, which has just come out with ridiculously low tariffs under a pilot "feed in tariff" program (mostly around 8 cents, with a few limited spikes). I have voiced my disappointment to Rep. Huffman's office and to Environment California, which authored the bill.

I wish i had something other than policy to encourage, so if anyone has a solid lead on substantive change, please let me know!! in the meantime, let's keep building support for policies which are fair to ratepayers and the environment...

[Erik]

This new bill helps - but it does not address the economics for everyone. There are people like me would be willing to invest in solar but my personal consumption of electricity does not warrant the investment. I would like to over invest and make a return selling excess electricity. Under current rules - I CANNOT DO THIS.

I live along the coast in a location ideally suited for solar PV cells. I have looked into the cost/benefit of solar power. While I am attracted to the technology, I estimate my break-even time period for the investment at my energy efficient home to be about 20 years (even without paying interest.

Based on my assessment, I would need the electric utility to compensate me for excess electricity production based on time of production to offset the cost of the solar system. Under the current solar programs, the utilities will only offset the cost of residential consumption Basically, excess electricity is given to the utility for free. Excess solar electricity is typically produced during high electricity demand periods (high rate periods). Therefore, the utility not only gets the excess, it gets it duing peak rate time periods. How many businesses, by regulation, have to give away a commodity when it is at its greatest demand? I guess I could buy a battery and get off the grid entirely - I do not want that - I want to be compensated for an investment if it produces a worthwile result.

If the state really wants everyone to invest in residential solar, the utilities should be asked to compensate for extra electricity production. Under this scenario, I could over invest (scale up my system) and lower my unit costs for electricity production, and thus reduce my investment period to a shorter term than 20 years.

While it sounds counter intuitive- the bigger the system the lower the installed cost per kilowatt and thus the shorter the break-even period.

I think the public needs to be informed about the limit of utiltiy responsbility to compensate homeowners for excess solar power generation. Further, the State should explain why they do not expect utilites to compensate excess residiential solar generation at rates equivalent to natural gas (NG) electrcity generation costs (peak power is often provided by
NG generators).

Let's really free up the market - let the small residential guy who wants to invest in solar power create a business by selling the excess power to the market AT MARKET RATES.

[sheila]

correction to my previous post - i understand that counties are now included in the bill, in case they choose to come up with the money.

i guess my point is that either global warming is urgent or it's not. it can't be "super urgent" when it comes to Big Energy getting fast-tracked to build out massive, wilderness-killing monopolistic power plants and lines, then "no problem" when it comes to providing funding for us to get solar panels on our roofs...

[sheila]

this is a teeeeeeensy bill because all it does is "allow" cities (not counties, so most of CA, which is unincorporated county land will not benefit) to use the property tax system for repayment of loans that most cities will never give us. not one city is required to provide any financing to anyone, and most of them already could have done this if they wanted to (the 2 cities that tried, Berkeley and SF were allowed).

again, big press, small actual benefit to ratepayers or the planet. if we don't get serious SOON, Big Energy will have built out their entire new infrastructure on our dime and our land, and the opportunity will have been completely missed. it is incredibly frustrating that so little is being done by our legislators, who basically allow Big Energy to re-write legislation to ensure that we don't get any independence.

see AB 1920 for a great example - it USED to allow ratepayers to oversize their rooftop PV systems (they are capped by the stupid CSI rules - another Big Energy "compromise"), to generate lots of excess clean power and feed it into the grid, and to get paid a fair rate. NOW, ratepayers are not allowed to oversize systems, can only generate roughly what they consume, and the CPUC will set the tariff rates. But the CPUC's recent "tariffs" were so abysmally low, that even with no consumption, a PV system in the Mojave could not pay for itself over the 20 year contract. Is this helpful energy policy? it's a disaster, and anti-competitive.

and "rebates" pay roughly 25% of the cost of a rooftop system (and the rebates are declining), which i would not consider "much of the cost."

at this rate, it's no wonder that lousy utilities like LADWP have fewer than 5% of the PV systems places like Germany have, despite the bragging about how "green" they are, and how "aggressive" their PV program is, not to mention how incredible this city is for solar resources. they would rather spend our money killing off Joshua Tree for some bogus powerline project than get panels on roofs.

[Clint Slaughter, M.D.]

This is a brilliant plan - two of the major hurdles in people investing in solar is #1, the upfront costs, and #2, the risk you're taking in the investment if there's a chance that you'll move in the 10-12 years it takes to pay off the cost of the system in energy savings. The next hurdle is to allow those with residential solar to be reimbursed for excess energy by the power companies. This bill will enable anyone with a home and suitable exposure to afford solar, allowing the energy savings to offset the monthly loan payment, increase the value of their home, and negate the risk of losing money if the house is sold.
Nice work, keep up the progressive energy legislation!

[John Wellik]

I think this is a significant advancement for domestic energy efficiency practices. Under the new legislation, lower interest rates--and therefore smaller monthly payments--make the upfront cost and increased property taxes affordable. Prior to this law, minimal incentives and complex economics deterred families from installing new, energy efficient appliances.