Financing: also changing the game

Last month I wrote on how thin-film solar is changing the game.

There's another force - financing. Cited by Scientific American as one of its top "world changing ideas", innovative financing models for solar are gaining momentum - and increasingly looked at as mechanisms for other efficiency improvements as well.

CleanEdge's recent report on new financing models explores 5 different models, here describing the leading work by the city of Berkeley:

Berkeley took the lead with its Finance Initiative for Renewable and Solar Technology (CityFIRST) program, launched in November 2008. Its first phase of $1.5 million in available loans was completely reserved by applicants in nine minutes, and is funding solar installations on 38 homes. The city council has authorized up to $80 million in bonding authority for future phases.

Since these models essentially use municipal funds to finance improvements to private property, the key to approval is convincing local lawmakers that efficiency improvements and renewable power generation each qualify as a public benefit. A city raises funds with a municipal bond issue, say for $5 million, then uses the money for moderate-sized loans – roughly $5,000 to $25,000 – to fund homeowners’ energy improvements. Bondholders’ risk is low as the loans are collateralized with the
borrower’s home.

The model looks to expand via federal stimulus funds. The Contra Costa Times provides an update on Berkeley's efforts and how other counties are looking to participate.

Last month, the city of Berkeley wrapped up a one-year experiment in which 13 residents were able to install solar panels with little out-of-pocket expense. The effort was part of a city plan to combat global warming.

The pilot hit a few snags but was promising enough that a coalition of as many as 14 counties is now seeking a grant of federal stimulus funds to dramatically expand it. In October, the Obama administration announced plans to foster similar programs across the country as part of its "Recovery Through Retrofit" initiative.
...

The Berkeley solar program was launched in November 2008 with the idea that the first 40 residents to apply would be accepted if they met certain criteria.

It took only nine minutes for the program to sell out.

But with a new program, no track record and the financial markets in turmoil, borrowing rates were relatively high, Berkeley city officials said.

The average installation of about $26,000 cost about $200 a month in increased property taxes, said Dan Lambert, Berkeley's sustainable energy programs manager.

Of the 40 applicants, only 13 used the program to install solar panels. Several found it cheaper to use a home equity line of credit to finance the installation, Lambert said.

But Lambert and others said the program could end up garnering a cost savings to participants because they think a bigger program will be cheaper to run and the increase in property taxes will be more than offset by the decrease in energy bills.

Berkeley is also exploring how to expand the program to finance home energy-efficiency improvements and "solar thermal," or hot-water systems that warm water on the roof before sending it into water heaters.

Although there are plans to make municipal financing available for any local government in California that wants to participate in the solar program, the Bay Area counties involved in the initial grant application include Alameda, Santa Clara, San Mateo and Solano.

Also notable in the article, this tidbit:

In Sonoma County, officials may ask to be regulated, in one respect, like a refinery, said Mike Schmitz, California director for ICLEI-Local Governments for Sustainability, an association of 600 local governments working on climate and energy sustainability.

Under a cap-and-trade emissions trading plan taking shape in California, Sonoma might asked to be "capped." That would force it to cut emissions but also give it the opportunity to sell credits to businesses who are not meeting their reduction targets if it can cut its emissions more than required. The county could generate revenues by greening up.

Rafael @www.climateatbay.net