The Berkeley City Council unanimously approved a measure on Tuesday night to fund a program providing loans to property owners for the installation of rooftop solar-power systems. The program is the first of its kind in the nation, which creates a new sustainable energy tax district (pdf) within the city.
The Berkeley City Council unanimously approved a measure on Tuesday night to fund a program providing loans to property owners for the installation of rooftop solar-power systems. The program is the first of its kind in the nation, which creates a new sustainable energy tax district (pdf) within the city.
Property owners who opt into the program will be given loans for solar systems and pay no up front costs. At an average cost $22,000 apiece (after a $6,108 rebate from the state-run California Solar Initiative), the systems will be paid for over a 20-year term. Homeowners pay off the loan as part of the property tax bill. The cost of the loan will run around $180 per month at an annual rate of 6.75%.
The innovative idea behind this city-run financial mechanism is that homeowners would pay for solar energy via an opt-in property tax increase that would be offset by annual savings on their electric bills.
Some residents have questioned whether the program is worth the cost since they currently pay less than $180 a month for electricity. Berkeley mayor Tom Bates concedes that homeowners planning on selling their properties in less than ten years won't cover the full annual cost with energy savings. Longer-term, Bates says, it makes good financial sense:
We know for a fact that electricity is going to go up. PG&E has already indicated they're going to raise rates 15 percent over the next three years, but you've got a flat situation.
Since the loan payback holds steady over the 20-year term, the solar program is a good hedge against rising energy costs, as well as helping transition to renewable energy.
Initially, the city will raise about $1.5 million dollars for the program, starting with about 50 homes. If all goes well, the program will expand to an $80 million lending cap. The cap is based on a study by The University of California's Renewable and Appropriate Energy Laboratory estimating that about 4000 homes will opt for the program.
Wildfire
Mayor Bates thinks the program will "catch on like wildfire" as other cities get on board. So far about two dozen cities across the country have expressed interest in the program and are looking closely to see how well it works for Berkeley.
The city plans on conducting workshops to assist people with the application program. Installation of the first solar systems in the program should begin by Thanksgiving.
Bates summed up his enthusiasm before the vote on Tuesday:
I think this is probably the most important contribution Berkeley can make toward taking on global warming.
Private funding remains secure
The advisory firm Northcross, Hill, and Ach, is assisting the city with financial details and securing funding from private lenders. According to G. Craig Hill, a representative with the firm,negotiations with two private parties continue to move forward despite the continued collapse of large institutions on Wall Street.
Berkeley deputy city manager Christine Daniel feels the city-backed bonds are a safe investment despite the turmoil on "the street" since they are backed by property tax revenues in a city collecting 98% of the money it is every year:
"I would argue that this is very, very secure debt"
If the program meets the high expectation of its backers, the city will likely expand the kind of projects it will fund, including efficiency measures such as installing double-glazed windows or adding insulation. As professor of energy at Cal Berkeley Daniel M. Kammen states, the intention is to entice homeowners afraid of the high initial cost into retrofitting homes for renewable energy and efficiency by offering a fully amortized, long-term loan with no upfront costs.
This article was originally posted on SolveClimate.com.