America and Americans tend to fixate on the cost to buy (Wal-Mart’s price focus) rather than the cost to own (buying quality products that last). Sadly, this focus runs from buying light bulbs to decisions on constructing buildings and more. When it comes to renewable power, this has been a serious challenge. Solar power, pv especially, is nearly 100 percent up front cost with close to zero operating cost. And, with the current relatively low demand and other reasons, even at “operating cost” for a decade plus, the cost competitiveness just isn’t there in most situations.
Berkeley, California, decided to seek an alternative path to this challenge, to create bonds that would fund solar power on people’s rooftops. The cost of the panels would be paid back over an extended period through tax-deductible additional real-estate taxes on that specific property. This moves the up-front cost to buy into a long-term, clearly defined “cost to own” one’s own electrical generating capacity. This truly is a path to make the right choice, the easy choice when it comes to putting renewable power on the rooftop.
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.
Last week, the Berkeley proposal took a big step forward as the City Council approved, unanimously, the first step of the program, an initial $1.5 million bond that home owners can apply to have access to with a 20 year repayment schedule.
Berkeley’s actions are being watched by other cities, with the potential for a fast spread as confidence grows that this works.
The city’s mayor, Tom Bates, said in an interview shortly before the vote, “I think this is probably the most important contribution Berkeley can make toward taking on global warming” and reducing greenhouse gases.
He added, “I think the idea is going to go like wildfire” through other city governments. He said nearly two dozen cities, from San Francisco to Annapolis, Md., and Seattle to Cambridge, Mass., had called, indicating they wanted to follow suit.
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1 Solar Power: Making the right choice, the easy choice … (revisted) // Dec 15, 2008 at 9:07 am
[…] the obstacles to getting greater solar penetration. One of the most interesting, right now, is the financing path pioneered by Berkeley to have government based financing, with repayment to come out of additional real-estate tax […]