TEXT OF INTERVIEW
Tess Vigeland: This week President Obama traveled to Savannah, Ga., to make the case for his “Home Star” initiative. Homeowners would get up to $3,000 worth of rebates for improvements like insulation and windows.
That could make a serious dent in the bill for home efficiency projects. But they still can be expensive. So, what to do?
Well, this week San Francisco joined a growing list of cities with something called a PACE program: Property Assessed Clean Energy. And it’s supposed to make green upgrades available to anyone who wants them.
Ted Flanigan is with the energy consulting firm EcoMotion. Welcome to the program.
Ted Flanigan: Thank you. It’s good to be here.
Vigeland: Describe for us how the PACE program works. Give us a rundown of the basics.
Flanigan: Sure, it’s really quite a revolutionary program for the world of energy efficiency and renewable energy. They’re technically a lien on the property. And that’s quite interesting, because unlike borrowing money from a bank, now you’re borrowing it from your city or your county and your payments are on your property tax.
A big advantage of this is that if you’re thinking about putting a solar system on your house, but you’re sort of scratching your head thinking, “Well, I may be moving in three or four years,” this assessment, or this lien on your property, is actually transferred onto the next owner.
Vigeland: It stays with the property.
Flanigan: It stays with the property. And that’s a really key distinction. So the individual’s credit is not important. Most of these programs are being set up so that even your amount of equity on your house is not important. It’s just that you have clear title to the property, and you’re current on your property tax payments.
Vigeland: And obviously, the reason this is attractive for folks is, because, if you’re like me and you would love to put solar panels on your house, but you look at the cost and say, “No way!” this is a way that maybe you can do it.
Flanigan: It’s really true. The first cost has been the big barrier to efficiency upgrades, and certainly, solar systems. Our house — we live in Glendale — and we were looking at solar systems — we wanted to off-set about 90 percent of your consumption. About a $25,000 solar system. Net cost, after generous rebates from the local utility and tax credits, net cost was about $11,000. But still, where do you come up with that cash?
Flanigan: You do have a range of options. If you happen to have money in the bank, that’s one option. Most of us don’t.
Vigeland: Which, of course, we encourage here at Marketplace Money.
Flanigan: Save your money. And you could also use your credit card, but that has a very high interest rate. So this new form of financing is sort of in the middle. It might not be as good as if you’re refinancing your home right now, which you could roll your solar system into. Might not be as good as a home equity line, if you have good credit, but it does afford many people a reasonably priced means of getting into the game.
Vigeland: Now, what is eligible for the PACE program? We’ve been talking a lot about solar panels, but what about things like energy efficient refrigerators and dishwashers or, I don’t know, trees, to block the sun from your house. Are those kinds of things eligible as well?
Flanigan: Yeah, good question. The law here in California is written that eligible technologies include energy efficiency fixtures and renewable energy systems. By the term “fixture” that means that it’s got to be affixed to the property. Things like insulation are affixed; they’re not coming out when you move. Things that are really hardwired in a solar system. Not eligible are things like light bulbs or refrigerators and dishwashers that you mentioned.
Vigeland: Now, what about the energy efficiency tax breaks that are out there right now, both at the federal level and a lot of states have these, even local municipalities. Can you combine those tax breaks with using a PACE program to spread out those payments?
Flanigan: Absolutely. Here’s this mountain of cost that’s your solar system on your house, what are you going to do, oh my gosh. I heard that my utility gives me a slice of that cost back in the form of a rebate, I know I get a tax credit… All those are ways to reducing this mountain of cost and the way these PACE programs, you can, in some jurisdictions, you can finance 100 percent of that mountain and in other cases, you can just finance the net cost, after local incentives and tax credits.
Vigeland: Ted Flanigan is president of EcoMotion, a consultancy firm that offers services to help cities develop their solar strategies. Thanks so much for coming in.
Flanigan: Thank you very much. It was great to be here.
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