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Press
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FOR
IMMEDIATE RELEASE
Berkeley
Breakthrough on Financing Solar Energy and Energy Efficiency
Berkeley,
CA – Berkeley is set to become the first city in the nation to allow
property owners to pay for energy efficiency improvements and solar system
installation as a long-term assessment on their individual property tax
bill. Mayor Tom Bates will
ask the City Council to approve the framework for a “Sustainable Energy
Financing District” at their November 6th Council meeting.
The program could begin operating next year. Installations
of solar electric and solar thermal systems are cost effective for many
residential and commercial property owners with the existing state and
federal subsidies. The
Berkeley Plan eliminates the two major financial hurdles to solar electric
and solar water systems – the high upfront cost and the possibility that
those costs will not be recovered when the property is sold.
“Nearly every expert we have worked with on this financing
initiative believes it can fundamentally change the market for solar,”
said Berkeley Mayor Tom Bates.
“There are more than 400 solar installations in Berkeley today.
With this program, I think we can install thousands of solar
systems over the next decade and go a long way to meeting our greenhouse
gas emission reduction targets.
“Berkeley’s proposal is brilliant because it removes the number
one roadblock to solar, the high up front costs.
It also allows property owners to take advantage of the City’s
ability to find the best rates,” said UC Berkeley Professor Dan
Kammen, who directs the University’s Renewable and Appropriate
Energy Laboratory and will be assisting the City in developing the
program. “If Berkeley makes
this work, I have no doubt it will be replicated all over the state and
the nation.”
“Nearly every day we meet potential customers who think they
can’t afford a solar energy system.
With Berkeley’s financing plan in place, just about any home or
business owner who can afford to pay their utility bill every month should
be able to go solar.” said Gary Gerber, President of Sun Light &
Power, a solar installation company in Berkeley. The
Sustainable Energy Financing District is being developed as part of the
City’s implementation of Measure G – last year’s ballot measure
setting greenhouse gas reduction targets for Berkeley and directing the
Mayor to lead the development of a plan to meet those targets. The first
complete draft of the Climate Action Plan will to be released for public
comment in mid-November.
The financing mechanism is loosely based on existing “underground
utility districts” where the City serves as the financing agent for a
neighborhood when they move utility poles and wires underground.
In this case, individual property owners would contract directly
with qualified private solar installers and contractors for energy
efficiency and solar projects on their building.
The City provides the funding for the project from a bond or loan
fund that it repays through assessments on participating property
owners’ tax bills for 20 years. No
property owner would pay an assessment unless they had work done on their
property as part of the program. Those
who choose to pay for solar and energy efficiency work through this
program would pay only for the cost of their project, interest, and a
small administrative fee. The
Financing District solves many of the financial hurdles facing property
owners. First, there would be little upfront cost to the property
owner. Second, the total cost
of the solar system and energy improvements may be less when compared to
financing through a traditional equity line or mortgage refinancing
because the well-secured bond will provide lower interest rates than is
commercially available. Third,
the tax assessment is transferable between owners.
Therefore, if you sell your property prior to the end of the
20-year repayment period, the next owner takes over the assessment as part
of their property tax bill. Property
owners and their contractors would be required to agree to certain terms
and conditions mandating energy efficiency steps, appropriate warranties,
and other performance measures to take advantage of the financing. #
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