Berkeley Mayor Proposes Innovative Approach for Financing Solar

Mayor Tom Bates of Berkeley has just proposed a very interesting idea: city financing of solar and energy efficiency investments paid for over 20 years through a tax assessment on the property being improved. See this press release for more details.

Say you want to buy a $20,000 solar PV system. The city pays the contractor and places a tax assessment on your property for 20 years at a rate of $1,500 per year (or something like that). The $30,000 that you will pay includes $20,000 of principal and $10,000 of interest. (This example assumes that the interest rate is 4.5%.)

If I understand the proposal correctly, the homeowner's tax payments are tax deductible (if he itemizes), unlike an ordinary loan in which only the interest paid is deductible (and there are limitations on the deductibility of interest). [Update: according an e-mail from Cisco de Vries in the mayor's office, the tax payments are deductible from your California tax return but not Federal. He didn't explain why the deductibility varies.]

If homeowners can get low interest (because the loan is secured by the taxing power of the city) and better deductibility of interest, it would revolutionize solar financing and potentially many other capital-intensive (but sensible) investments in renewable energy and conservation.

Kudos to Mayor Bates and his Chief of Staff Cisco de Vries!

You CAN Afford to Go Solar

I got a note from Eve Carlson who had a suggestion about what the really good news is about going solar -- you can do it with no money down! Read what Eve has to say...

"Try to get the media who cover this (and SolarCity) to "lead" with the really good news that many people can make this change WITHOUT any change in their current costs. I was hoping for that, but found it very hard to find any information that spoke to that when I searched around the Solar City web site or read your blog or articles in the papers. I think many people think they cannot afford a solar system or don't want to "pay up front" for it. I know there are a lot of variables that determine cost, but a simple way to show people what is possible is to give an "example" such as our house.

How you can keep your electricity costs the same and eliminate your electric bill in nine years!

One 2000 square foot house in MV with good sun exposure and a monthly electric bill of $150-$200 (900-1000 Kwh) got an estimate of $17,000 for a system that would eliminate all but $22 of our electricity costs. With monthly payments about the same as the usual electric bill ($212), a home equity loan for $17,000 with a rate of 7% would take 9 years to payoff."

OK, thanks Eve for sharing your numbers with the rest of us. My guess is that as a result of going solar you will find ways to eliminate the last 200 KWH per month and by 2008 your electric bill will be essentially zero!