This past week, the city of San Francisco adopted a new program called GoSolarSF to encourage homeowners and businesses to purchase and install solar panels. Through the program, the city provides financial incentives that, when combined with state and federal tax incentives, can reduce the cost of a typical residential installation from $25,000 to $15,000. While one member of the board of supervisors objected on the grounds that the incentives are just a way to funnel money to solar panel installers (which are presumably local small businesses), it bears repeating that the costs that consumers and industry pay for energy generated by burning fossil fuels does not reflect their full costs. (I previously noted this in the case of oil.)

The kind of incentives that San Francisco is introducing are likely to be applied by a growing number of cities, and will surely accelerate the adoption of solar power among homeowners and small businesses. However, there are also other ways to promote the same goal. I would like to highlight two more approaches beyond the direct rebate model.

Last year, the city council of Berkeley voted to create a new way for its residents as well as local businesses to purchase solar power systems without the up-front expense that holds back many potential buyers. Berkeley created a solar financing district to enable the city to borrow the money needed to enable residents to purchase solar panels and have them installed on their roofs. Creating the financing district results in a lower interest rate than individual homeowners could ordinarily obtain on their own. Residents who choose to participate agree to pay a tax over 20 years that will cover the cost of the panels. The tax is expected to cost the same or less than what residents will typically save in energy costs, making the decision to go solar an easier choice for Berkeley homeowners.

A third approach to removing the financial barrier to residential solar usage comes from the private sector. This week, a company called Helio Micro Utility announced a plan that will enable homeowners to have solar panels installed on their rooftops and pay the company for the power, rather than the panels themselves. The plan is a type of solar power purchase agreement, which was previously limited to larger commercial clients. Through this arrangement, homeowners can avoid the need to take out a loan to pay for the cost of installing solar panels, which, the article notes, is becoming more difficult in many areas due to falling home values. Helio Micro Utility’s website notes that homeowners are also given opportunities to purchase the solar electric system in the future, but are not obligated to do so. The plan offered by Helio Micro Utility should allow many homeowners to obtain power from photovoltaic cells at a lower cost than they had been paying their local utility, without paying a large initial cost to purchase and install the system.

These are by no means the only ways to help communities adopt solar power more quickly. In addition, rebates or other financial incentives can complement other efforts. Whatever the means, most methods to speed up the transition to solar power will also create opportunities for those who design and install the systems, something nearly everyone can agree is a good thing.

Evan

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