Solar incentive opens energy window
Workers install solar panels on a house
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Bob Moon: Even before the new administration's economic stimulus plan is finalized, some environmental advocates are complaining it doesn't go far enough to create a "green energy economy." It could be argued the costs are simply too high. But cities and states across the country are dreaming up creative ways of financing green projects without exhausting their supply of spending green. From the Marketplace Sustainability Desk, Sam Eaton reports.
Sam Eaton: Berkeley professor Dan Kammen likes to open his energy policy lectures with this question.
Dan Kammen: How many of you in the audience have cell phones? And of course all the hands go up. And then the next question is how many of you would have a cell phone if you had to buy 20 years of minutes up front? And no hands go up.
Kammen says the reason cell phone technology took off so fast was because consumers didn't have to pay for everything up front.
Kammen: Energy is the classic case of something where we don't do that.
Take residential solar panels. The technology eventually pays for itself but that doesn't make the initial costs any more palatable. Even with the best incentive programs it can still set back homeowners nearly $20,000. And that's why cities like Berkeley, Calif., are rethinking the economic model for renewable energy.
Solar Contractor: I'll just tell you I was just up in the attic and everything looks great so we're all good to go there.
Retired widow Jeanne Pimentel is meeting with a solar contractor.
Solar Contractor: The actual installation's only going to take a couple of days.
Jeanne Pimentel: That's amazing!
Next week the company will begin installing 11 panels on her Berkeley home -- enough to reduce her energy bill 85 percent.
Pimentel: I was always interested in solar power and I actually got a quote about a year ago just to see if it would be practical but when I heard the price I said no way. I just couldn't afford it at that time.
The only reason Pimentel can now is because she's not paying for it. The city of Berkeley is. She's part of pilot project that uses city bonds to cover the up-front costs of residential solar. Pimentel pays the city back, with interest, over 20 years through a surcharge on her property taxes. The added surcharge is roughly equal to the savings on her energy bill and it stays with the house even if it's sold.
Kammen: This really opens up a whole new window.
Again, Dan Kammen:
Kammen: This is just about the most fundamental change I've seen in how we think about clean energy because every project that has an up-front cost can essentially be amortized away in this process.
Making solar panels much more like cell phones, a technology that's suddenly affordable to the masses. Kammen says several states, including Colorado and New York, are considering similar models. Portland, Ore. is using a clean energy investment fund to weatherize entire neighborhoods, and eventually the entire city.
Kammen says the bigger these programs get, the easier it is to raise capital through bond sales and private investors. And even the federal government. He says by channeling some of the economic stimulus funds into these programs, Congress and the Obama administration could spawn a wave of clean energy spending that would last for decades.
Kammen: Everyone's biggest investment is in their home. And if you can leverage that investment to get you to a clean energy home, that suddenly takes the federal money that might be on the scale of millions or perhaps billions and suddenly opens up a door to trillions.
All by unlocking the power of the consumer. Jeanne Pimentel being a prime example.
Pimentel: I think people want this kind of thing. They want to be part of the bigger picture and the greater good.
As a rule Pimentel lives simply, buying only what she needs and walking and biking most places even at 74. But she admits she'll feel a thrill when she flips the switch, knowing the electricity she does use now comes from the sun.
In Berkeley, I'm Sam Eaton for Marketplace.