Solar power is cool, but still expensive for most of us, even with the various incentives. Fortunately, there are companies that will install with little or no money down. Instead of buying the solar panels and paying for the installation, the buyer now simply leases the equipment which is installed and maintained by the company. The buyer instead pays a set price for the solar energy produced.
On Wednesday, March 18, the San Francisco Budget & Finance Committee voted to table discussions in regards to entering into a recurrent solar power purchase agreement with a private entity until April 22. Much of the debate seems to stem from the costs associated with the proposed agreement. On one hand, by purchasing the solar power from a private entity, the city would avoid the upfront (and expensive) costs of purchasing, installing, and maintaining the solar array. Instead, the city would lease the property to the private entity and the city would then purchase the power at a set price. On the other hand, should the city decide to purchase the solar arraydown the line, it would end up paying a premium over the initial startup costs (much like the premium paid for a lease-to-own vehicle).
A solar power purchase agreement, similar to a conventional power purchase agreement, is a contract whereby a buyer (i.e. utility company) purchases power from an energy source (i.e. power producer).
In addition to municipal uses, solar power purchase agreements have commercial and residential applications as well. Small companies and individuals, who find the startup costs for solar panels too steep even with the federal and state incentives, can opt to lease a portion of their property to a private entity that builds and maintains the solar panels. In exchange, the consumer pays a set price for power. The price is determined by various factors such as power generated and tax credits/incentives. For example, a commercial warehouse occupying a lot of space but using little power can generate a large amount of surplus power. Of course, the tax incentives are limited to the energy needed to run the warehouse since the incentives are given to offset the consumer’s own (not surplus) energy use. See Public Resources Code 25782.
