When we're having a conversation about the goal of solar power ubiquity, the conversation HAS to be about innovations. It's a conversation that must include ideas previously considered outside-the-box. I have a dear friend who is always reminding me, "to get to a place we've never been before, we have to go a way we've never gone before." The city of Berkeley is pioneering a new approach to municipal financing that has become known as "Berkeley FIRST." It's such a simple idea. It makes me wonder two things: "why did it take so long for someone to think of it?" and "why aren't more municipalities grabbing the idea and making it their own?"
With this program in place, homeowners in Berkeley are able to go solar without paying high upfront costs. No barrier to entry! They pay for the solar panel system through their property taxes. The money to purchase and install the solar panel system comes from bonds, not the city's operating funds. It's as clean as a whistle. Viola, a solar powered community!
The long name for this program is the "Berkeley Financing Initiative for Renewable and Solar Technology" (if you look closely, you'll see how they came to "Berkeley FIRST"). Under the terms of the program, property owners can roll the price of a residential solar system installation into a twenty-year increased property tax assessment. Berkeley authorizes bonds to cover the costs of the installations. Both bond holders and property owners participate voluntarily, while the community as a whole has the potential of dramatically increasing the penetration of residential solar systems, thereby removing both the culture and financing barriers discussed in earlier blogs.
This financing innovation is totally outside-the-box. Wide-scale adoption of this model would significantly accelerate our advance toward solar power ubiquity. "Not so fast, Daniel-San" you say? OK, let's all quickly agree that Berkeley is not your normal, run-of-the-mill community. A few years before, Berkeley voters had adopted a climate change goal and was not progressing at a pace that was fast enough to achieve it. City officials were smart enough to see the same thing that we see everywhere when it comes to solar power, namely, that high up-front costs represented a significant barrier for even the most willing property owner to overcome. As is the case more and more across America, the willingness and awareness was there, but the financial ability was not. So the City officials came up with the idea of issuing taxable municipal bonds which will be reimbursed as the opt-in property owners pay their property tax bills bi-annually over the next twenty years.
Once the City officials had figured out the concept, the politicking (er, "public policy") began. Suffice to say, there are a lot of details: creation of special improvement districts, new ordinances (for example, to transfer of property tax assessment obligation to new home buyer when property is sold), city council, city staff, bond counsel and financial advisors, to name a few. How exactly they did it is available publicly to any community that wishes to follow there footsteps. And I understand that many are looking at it.
Most important is that it works. The pilot project has been successful, the interest rates work for both home owner and bond holder and the budget has now been expanded. Berkeley has authorized up to $80 million in total bond financing. Here's the good news: With a few changes to state law, the FIRST model can be adopted by any city. This is where we come in: we need to keep supporting any and all efforts along these lines. There are several other municipal projects in the works that I'll cover in my next blog. It makes so much sense that this is one of major routes to solar power ubiquity.
The Berkeley FIRST program also shows that there is money available to finance solar power, if the deal is well thought out and properly structured. There are more examples of this point that I'll be discussing in future blogs.
With this program in place, homeowners in Berkeley are able to go solar without paying high upfront costs. No barrier to entry! They pay for the solar panel system through their property taxes. The money to purchase and install the solar panel system comes from bonds, not the city's operating funds. It's as clean as a whistle. Viola, a solar powered community!
The long name for this program is the "Berkeley Financing Initiative for Renewable and Solar Technology" (if you look closely, you'll see how they came to "Berkeley FIRST"). Under the terms of the program, property owners can roll the price of a residential solar system installation into a twenty-year increased property tax assessment. Berkeley authorizes bonds to cover the costs of the installations. Both bond holders and property owners participate voluntarily, while the community as a whole has the potential of dramatically increasing the penetration of residential solar systems, thereby removing both the culture and financing barriers discussed in earlier blogs.
This financing innovation is totally outside-the-box. Wide-scale adoption of this model would significantly accelerate our advance toward solar power ubiquity. "Not so fast, Daniel-San" you say? OK, let's all quickly agree that Berkeley is not your normal, run-of-the-mill community. A few years before, Berkeley voters had adopted a climate change goal and was not progressing at a pace that was fast enough to achieve it. City officials were smart enough to see the same thing that we see everywhere when it comes to solar power, namely, that high up-front costs represented a significant barrier for even the most willing property owner to overcome. As is the case more and more across America, the willingness and awareness was there, but the financial ability was not. So the City officials came up with the idea of issuing taxable municipal bonds which will be reimbursed as the opt-in property owners pay their property tax bills bi-annually over the next twenty years.
Once the City officials had figured out the concept, the politicking (er, "public policy") began. Suffice to say, there are a lot of details: creation of special improvement districts, new ordinances (for example, to transfer of property tax assessment obligation to new home buyer when property is sold), city council, city staff, bond counsel and financial advisors, to name a few. How exactly they did it is available publicly to any community that wishes to follow there footsteps. And I understand that many are looking at it.
Most important is that it works. The pilot project has been successful, the interest rates work for both home owner and bond holder and the budget has now been expanded. Berkeley has authorized up to $80 million in total bond financing. Here's the good news: With a few changes to state law, the FIRST model can be adopted by any city. This is where we come in: we need to keep supporting any and all efforts along these lines. There are several other municipal projects in the works that I'll cover in my next blog. It makes so much sense that this is one of major routes to solar power ubiquity.
The Berkeley FIRST program also shows that there is money available to finance solar power, if the deal is well thought out and properly structured. There are more examples of this point that I'll be discussing in future blogs.
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