Green Wombat

The Berkeley, California, city council Tuesday night greenlighted a proposal
to pay for the installation of solar panels and solar hot water systems
for any homeowner or commercial building owner in a move to
dramatically boost local use of renewable energy. Property owners would
retain ownership of the solar systems, paying back the cost over 20
years through an assessment on their annual property tax bill.

“We’re off and rolling,” said Berkeley Mayor Tom Bates after the
city council unanimously gave initial approval for the Sustainable
Energy Financing District.

Cisco DeVries, Bates’ chief of staff who devised the municipal solar
financing proposal, said the city hopes to start signing up homeowners
by June 2008. But first it must hammer out the legal and financial
details. The city will likely float a bond to obtain millions in bank
financing to pay for homeowners’ solar arrays.

“The banks and others have been very interested in this,” said
Bates. “The banks that Cisco and I have had conversations with have
been very encouraging.”

City manager Phil Kamlarz said Berkeley should be able to obtain a
lower interest rate than commercial home equity loans as the property
tax assessment will act as a lien, putting banks first in line to
collect in the event a property owner defaults.

“We’re looking at what’s the benchmark to make this thing work and
right now its less than 7.5% so we’re going to try to make this less
than 7.5%,” he told council members.

A property owner would choose a solar installer from a city-approved
list. It appears to be a win-win situation solution to the high cost of
going solar. The homeowner immediately begins saving money on
electricity bills without incurring the $15,000 to $30,000 upfront cost
of installing a solar system. They also usually get a boost in their
property value from the solar array and the property tax that pays for
the system is deductible on their federal income tax return. When the
house is sold the solar array and the tax assessment remain with the
property, passing to the new owner and thus further diluting the cost
of the system.

Bates said other cities have approached him about replicating the
Berkeley initiative. The city has won the backing of utility PG&E
(PCG) and the solar industry has, not surprisingly, been enthusiastic
about a program that promises to expand the market for solar panels
made by companies like SunPower (SPWR) and Sharp as well give
installers more work.

“This is going to create green collar jobs,” said Bates.

Berkeley’s left-wing politics often puts it on the fringe of the
U.S. mainstream but when it comes to environmental policies, the Bay
Area city has led the way. Berkeley, after all, was the first city to
adopt curbside recycling decades ago, now common even in some of the
reddest of red states.

“The power of this is really expanding it beyond Berkeley,” noted one council member.