Paying for It
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Some banks have begun to recognize the value of a PV system and
offer home improvement loans to finance them.
to finance them. Other options include traditional financing such as
a home equity line of credit, loan or mortgage refinance. In California’s more mature PV market, a few residential PV installers offer their
own financing plans, typically through bank partnerships.
A few progressive cities and utilities are investigating ways to
reduce investment costs. The city of Berkeley, Calif., recently made
headlines with a program under development that would allow property owners to install solar systems on their buildings and pay for the
cost over 20 years through a voluntary special assessment on their
property tax bills. Participants would pay only for the cost of their projects, including interest, and fees to administer the program. Berkeley
would fund the project from a bond or loan fund that it repays
through assessments on participating property owners’ tax bills. The
breakdown of this financing mechanism translates into an additional annual property tax payment that is less than the electricity savings the homeowner receives from the PV system. Even more innovative, the value of the PV system stays with the building, so if the
building is sold before the 30-year loan is repaid, the payments are
rolled into the next building owner’s property taxes.
Other cities and states are investigating low-cost government-backed loans for solar installations that function much like govern-ment-subsidized Perkins Loans for students. San Francisco, New York
Generating your own solar power greatly
reduces your monthly
electricity bill — that is, it can, if
your state has good net-metering rules.
What About Solar Water
and Space Heating?
Many homeowners today are considering solar thermal sys-
tems that provide hot water and/or space heating. That is
particularly true for homes that use oil or electricity for heating.
The cost of a solar thermal system depends on many factors, such as the size and type of the system, its geographical
location and the retailer/contractor’s system pricing. In most
cases you will also need to factor in the cost of supplemental
natural gas, oil or electricity to back up the system.
Solar water heating is feasible in all climates, and installed
costs range from $3,500 to $7,000 before incentives. Some
home builders are beginning to list solar water heaters as an
option for their homes, and a few include them as a standard
feature. The builder or mortgage company may offer a lower
interest rate when solar water heaters or other energy-efficient
features are built into a new home. Although a solar water-heating system still costs more than a conventional electric or
gas water heater, some states and utilities offer rebates that can
reduce the total cost appreciably. The federal government also
offers individuals a tax credit of 30 percent of the system cost,
up to $2,000 (hurry, it’s set to expire Dec. 31).
To estimate system costs and learn about financial incen-
tives in your area, visit FindSolar.com and the Database of
State Incentives for Renewables and Efficiency at dsireusa.org.
Source: U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy
state and Colorado are considering offering subsidized loan programs
at below bank rates guaranteed with general obligation bonds.
Another trend affecting solar financing is the increasing use of
“power purchase agreements” for large-scale installations. Through
these arrangements, a third party finances, builds and owns a solar
installation; the site owner avoids all or most upfront costs and in turn
buys the solar electricity from the third party through a long-term contract. Recently, San Francisco-based Sun Run began offering a version
of this model for residential PV installations. Sun Run installs and
maintains a system for the homeowner in exchange for a deposit that
can be less than half the purchase price. The homeowner then agrees
to buy the solar electricity at a fixed rate.
In a similar innovation, San Francisco-based SolarCity launched
a lease program for homeowners this spring. The SolarLease program, backed by Morgan Stanley, enables the homeowner to lease a
PV system via monthly payments with no money down, and includes
options to buy.
The solar industry and policy makers are continually rolling out
new financing mechanisms to bring more solar energy online. For
consumers, these efforts mean that generating your own clean solar
electricity may be closer at hand than you dreamed. ●
Claudia Eyzaguirre ( firstname.lastname@example.org) is solar policy advocate at
the Vote Solar Initiative, a nonprofit organization with the mission of stopping global warming and increasing energy independence by bringing solar
energy into the mainstream. Eyzaguirre brings her GreenCorps organizing
training and political experience to removing roadblocks to solar adoption.