October 11, 2011

Solar@Work Offers Huge Discounts To Commercial Building Owners And Lease Holders

Posted by Steve Sacks under Building Operations, Energy, Finance, Free, Government, Green Economy, Incentives and Rebates, Make Money, Marketing Ideas, Photovoltaic, Save Money, Solar | Tags: , , , , , , , , , , , , |
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A new program in San Francisco, Solar@Work, offers discounts, and in some cases free installation, on solar arrays for commercial building owners and lease holders.  Almost any size business can qualify for the program that will lower energy costs for participants.  For businesses proactively addressing San Francisco’s required energy audits, this program requires a closer look. (For full analysis of San Francisco’s commercial building energy audit program, click here)

Solar@Work groups commercial building owners and/or lease holders together to reduce costs through economies of scale.  Participants generate the greatest savings on energy costs through the purchase of a solar array.  The cost of purchasing and installing a system can be prohibitive, so Solar@Work creates a discount on installation and financing through volume pricing.  A “traditional” solar lease is also available with no up front cost, but the savings on energy bills are markedly less significant.

The Collaborative Solar Procurement model created by the World Resources Institute allows the Solar@Work program to offer four financing options.  Owners can purchase systems at a discount, secure a solar lease, secure a capital loan, or finance through other options including power purchase agreements.

The goal is to collect enough businesses in the program to collectively generate 2 megawatts of power or more.  Applications are being accepted until October 31, 2011, and an informational conference call is scheduled for October 21, 2011.

The ideal applicants are owner/occupiers or long-term leasers whose available space on a roof or parking area is 5,000 square feet or more.

Solar City is the exclusive vendor for the program created by the World Resources Institute, the City and County of San Francisco’s Department of the Environment (SF Environment), in collaboration with the National Renewable Energy Laboratory (NREL), and Optony.

Solar City was selected through a competitive process to provide the installation services for the program.  The company anticipates hiring 400 new workers in the second half of 2011 including 100 in the Bay Area, partly due to Solar@Work.

Congratulations to WRI, San Francisco, and the other contributors to this program.  Solar@Work promises to be another great example of how sustainable development will lead a growth in the economy through reducing energy costs and increasing employment.

 

July 9, 2011

PACE Lawsuit Update

Posted by Steve Sacks under Energy, Finance, Finance / Mortgages, Government, Green Economy, Incentives and Rebates, Law, Legislation, and Policy, Solar | Tags: , , , , , , , , , , , , , , |
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As you will recall, the Property Assessed Clean Energy program allows residents to pay for solar installations through a tax assessment on their property.  Last year, the Federal Housing Finance Agency (FHFA) essentially stopped the program with a letter advising mortgage lenders that Fannie Mae and Freddie Mac would not purchase mortgages on homes that also have PACE financing.  California and eight other parties sued the FHFA to rescind its letter and change its policy.

The PACE lawsuit (Case Nos. 10-cv-03084 CW, 10-cv-03270, CW, 10-cv-03317 CW, 10-cv-04482 CW) continues with a possible end some time in the summer of 2012.  A trial date is set for April 30, 2012.  (click here for the Case Management Order).  Some of my previous coverage of the lawsuit can be found by clicking here. In the beginning of this year, the court asked the Attorney General of the United States to submit a Statement Of Interest offering its position regarding the PACE lawsuit.

Although the executive branch previously endorsed the PACE program, and the creative financing mechanism that is the cornerstone, the Statement of Interest evades the issue at hand (the subrogation of primary mortgages).  Instead, the DOJ argues simply that the the FHFA has authority to bring and defend its own lawsuits and the DOJ does not see a need or mandate to interfere with FHFA’s handling of the matter.  The DOJ then states its only area of concern is that the plaintiffs lack standing to bring the suit.  While plaintiffs may lack standing (I doubt it), the DOJ could have also offered analysis of the legitimacy of the program’s structure.

The parties are now heading to the discovery stage of litigation, but frankly there is nothing to discover.  As far as I can tell, there are really no material facts in dispute.  Either the FHFA is going to allow for PACE programs to move forward, follow the Department of Energy guidelines (Full Guidelines Here), and acknowledge the minimal risks involved.  Or, the FHFA will undermine one of the best modern approaches to nurturing mainstream adoption of sustainable development.

Unless Congress passes a law supporting PACE financing, the lawsuit will move forward, and frankly the prospects don’t look good for plaintiffs.  That means PACE programs will essentially become a great idea undermined by the inflexibility of bureaucracy.

 

December 14, 2010

FTW! Largest Municipal Solar Project In California Comes Online

Posted by Steve Sacks under Energy, Finance, Government, Green Economy, Law, Legislation, and Policy, Make Money, Photovoltaic, Risk Transfer, Save Money, Solar | Tags: , , , , , , , , , |
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Last week Mayor Gavin Newsom  and Recurrent Energy announced the completion of the Sunset Reservoir Solar Project.  We mentioned the story back when it started, and we’re glad to see it finished quickly! A year and a half is pretty good to install 24,000 solar panels (imagine 12 football fields) generating 5 megawatts of power (with some sources stating as high as 7 megawatts).  The energy generated can power 1,500 homes, but will be used instead by the city to power public transportation and city buildings.

The project is the result of a public-private partnership (P3) with Recurrent.  As a result, San Francisco owns the property, but leases the rights to operate the plant and sell the energy.  Under the current contract, Recurrent will sell energy to the city at $0.235 /kWh.  That price will allegedly save roughly $1 million per year in energy costs.  Through the P3 procurement method, San Francisco saves the up-front costs of implementing the system, and reaps the rewards of low cost sustainable energy.

And, let’s not forget.  The money paid to Recurrent stays right here in California.  The corporation was founded in California, pays taxes in California, and employs people in California.  71 general labor jobs – in a decimated construction industry – were created from this project.  30 percent of those jobs were for individuals from disadvantaged communities (Though they had to fight to keep those jobs).

This project looks like a win for proponents of sustainable energy, public-private partnerships, and green job promotion (The CGBB fits into that category).  It also looks to be a win for San Franciscans who will instantly see savings in energy costs to public services.

In the meantime, congratulations to Recurrent Energy and San Francisco.  The Sunset Reservoir Solar Project is currently the largest municipal solar installation in the state.  We hope more of these projects are built immediately all around California and the nation!

San Francisco Press Release Here

(For those of you wondering, “FTW” stands for “For The Win”)

 

July 19, 2010

California Sues Federal Government! BerkeleyFirst and GreenFinanceSF In Jeopardy

Posted by Steve Sacks under Energy, Finance, Finance / Mortgages, Government, Green Economy, Incentives and Rebates, Just Plain Wrong, Law, Legislation, and Policy, Mortgages, Risk Transfer | Tags: , , , , , , , , , , , , , , , |
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The local California programs that allow homeowners to pay for green renovations through an added assessment on their property taxes is in jeopardy.  The BerkeleyFirst program – the first Property Assessed Clean Energy (PACE) program in the nation, is still up and running, but San Francisco suspended the GreenFinanceSF program, and Sonoma County now sends warning letters out with every application.  Mind you, 22 states now have PACE programs (enabled in California by AB 811), and President Obama wants to allocate $150 million in federal funds for these programs.  Someone in his office better call the Federal Housing Finance Agency (FHFA), because they don’t like the programs one bit.

The issues started when Fannie Mae and Freddie Mac sent out a letter in the beginning of May that scared some investors and homeowners because it stated, “an energy-related lien [i.e. PACE loan] may not be senior to any mortgage delivered to Freddie Mac.”  Then, at the beginning of this month, the FHFA (who oversee Fannie and Freddy) stated that the PACE loans pose a risk to lenders, and called for the programs to be stopped.  Last week, California shot back and sued the Federal Government to have the FHFA back PACE programs.

FHFA’s concern is that if a property goes into foreclosure, property taxes are the first debts paid off.  Since the PACE loans are an assessment included in property taxes, the PACE loans would be paid off first in a foreclosure.  Almost universally, a primary mortgage is paid off before any subsequent loans taken on a property.  The PACE loans throw that fundamental rule out the window.  This allegedly adds risk to the primary mortgage, and since Fannie and Freddie are the largest purchasers of mortgages in the nation, they object.

To make matters worse, a New York Times article reports that Fannie and Freddy might not accept mortgages with PACE loans.  Fannie and Freddy turning down mortgages is huge.  The two entities own nearly 50% of the mortgages in the nation, and banks rely on the ability to sell mortgages in bulk to Fannie and Freddie.  If PACE loans make mortgages less valuable in the mortgage market (the banking market that bundles groups of mortgages and sells them wholesale between banks and investors . . .e.g. “mortgage-backed securities”), that will essentially end the programs.

I understand the FHFA point of view, but I think their concerns are overblown. The improvements to the property add value, and the PACE payments are generally very small. A $25,000 loan at 6.5% over 20 years comes to about $185 / month.  If you consider the savings to the owner’s energy bill, are we really talking about a debt obligation that will jeopardize someone’s mortgage payment?  Indeed, what if the local government just increased taxes outright?

The PACE programs are gaining tremendous momentum, creating jobs, and leading us toward energy independence.  Throwing a wrench in the system over something quite small is not only counter-productive, its subversion.  We’ll track this issue closely, and let you know of further developments.

More on the lawsuit from Sustainable Business here

More on the lawsuit from the San Francisco Chronicle here

The CGBB first post on BerkeleyFirst is here

 

July 14, 2010

California Suspends Solar Incentive Program!

Posted by Steve Sacks under Energy, Finance, Government, Green Economy, Incentives and Rebates, Law, Legislation, and Policy, Photovoltaic, Solar | Tags: , , , , , , , , , , |
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The California Public Utilities Commission instituted a three month suspension of rebates under the California Solar Initiative.  This Solar Initiative is the vehicle whereby the state government provides tax-funded incentives to install solar arrays.   To read the ruling, click here.

What is so unfortunate about this ruling is that the suspension is directed at non-profits and schools – the very entities that can not make up for lost incentives through tax breaks.  (The Federal government offers tax breaks for solar installations, and California offers tax incentives for solar installations under Section 73 of the California Revenue and Taxation Code, amended by AB 1451 in 2008.)  The suspension is also directed to projects that are 30kw or greater, an obvious attempt to control the cost of the program by pausing incentives to the biggest beneficiaries.

The PUC suspension also appears counter-intuitive from an ROI perspective.  Tax-funded rebates to schools are far more likely to pay for themselves because school utility bills  are also paid with tax dollars.  The school utility bills will decrease after solar arrays are operational – a direct return on tax-payer investment!

The California Solar Initiative is wildly successful, and it has always been the intention of the program to gradually reduce the allocations as the cost of installing solar systems decreases.  (Environment California has a great report and chart (albiet two years old) that shows how the projected reduction in incentives is tied to the projected reduction in the cost of installations).  This is smart tax policy, but to suspend the Solar Initiative for the entities that provide the tax-payer with the greatest ROI, just does not make sense. 

The PUC is receiving comments on the California Solar Initiative over the next three months while the suspension is in effect.  

The California PUC recently issued its Annual Program Assessment to the Legislature regarding the California Solar Initiative.  Click here for a summary and access to the full report.

The Oakland Tribune has a great article on the suspension: Click here to read that article.

 

 

March 4, 2010

AB 510 Signed By Governor Schwarzenegger! (Part 2)

Posted by Steve Sacks under Building and Design, Building Operations, Energy, Finance, Government, Green Economy, Incentives and Rebates, Law, Legislation, and Policy, Make Money, Marketing Ideas, Photovoltaic, Solar, Wind | Tags: , , , , , , , , , , , , , , , |
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Governor Schwarzenegger signed AB 510 on February 26, 2010 (Click here for full text of AB 510) (Click here for press release and video). We covered the basic elements of the new law in Part 1 of our coverage last week (click here for that post). Now, we turn to some other elements of the law… some of the fine print, if you will…

The law balances the interests of utilities, customer-generators, and non-participating customers. (This balance, and the fact that there is no discernable impact to the General Fund, are likely the reasons the bill passed the Senate by a nearly unanimous vote.)    In addition to lowering the proposed cap from 10% to 5%, an example of concessions to utilities is found in Section (3)(l).  That section requires that customer-generators pay the Department of Water Resources for all charges that would otherwise be imposed on the customer had they not entered the net-metering arrangement.

Another significant concession is found in Section (5)(B).  Under that section, the utilities can use the energy provided through net-metering arrangements toward the Renewable Portfolio Requirements (outlined in Public Utilities Code Section 399.15 and 387).  Under previous net-metering law, utilities were not permitted to count net-metering toward these obligations.  Now, utilities have a chance to meet the aggressive target of generating 33% of their energy from renewables by 2020.  (The utilities are far from reaching the Renewable Portfolio Requirements of 20% of energy from renewables by 2010).  If California residents and businesses continue to install solar and wind power generation, the utilities have a chance to meet the portfolio requirements, but the current 5% cap will have to rise again.

On the consumer side, there are very reasonable concerns that net-metering raises the energy bill for non-metering customers.  To assuage those concerns, the bill establishes a rate-setting commission that will set net-metering compensation rates and provide a report detailing 1) the market effects of net-metering and co-energy metering, and 2) how the authority’s rate schedule ensures consumers who don’t enter net metering arrangements pay the same for power that customer-generators pay.

AB 510 reflects a state leading the way in establishing energy independence.  It is great legislation now because it doesn’t tap into the General Fund, and it encourages private businesses (e.g. Solar City or Renewable Funding, LLC).  The law is another step forward that keeps California as a leader in United States renewable energy generation.

 

February 23, 2010

AB 510 On The Way To Governor’s Signature! (Part 1)

Posted by Steve Sacks under Building and Design, Building Operations, Energy, Finance, Government, Green Economy, Incentives and Rebates, Law, Legislation, and Policy, Make Money, Marketing Ideas, Photovoltaic, Solar, Wind | Tags: , , , , , , , , , , , , |
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AB 510 (full text here) passed both the Senate and Assembly, and Governor Schwarzenegger says he will sign the bill into law.  The bill raises the cap set on the number of homes and businesses that can take advantage of net energy metering.  Yes, there’s a cap!  The utilities don’t want “customer-generators” producing power without limit, and the government appears concerned the customers will somehow tip the “balance of power” between customer-generators and utilities (yes, that’s an energy pun).

At its core, the bill states utilities are not required to issue permits and enter agreements with “customer-generators” (residential and commercial solar and wind power producers) beyond 5% of the utilities’ aggregate customer peak power demand.  The previous cap was 2.5%.

The legislation also addresses co-energy metering.  Co-energy metering is an arrangement between publicly owned utilities and customer-generators who produce between 10kw (50kw for wind) and 1MW.  These generators are compensated based on the time of energy use and generation.

On the other hand, standard net-metering arrangements are for customer-generators who produce 3 -10kw.  The rate at which net-metering customers are compensated is either a “time of use” model such as that with the co-energy metering producers, or a “baseline” model.

A ratemaking authority (also described in the bill) sets the rates for compensating customer-generators who have an energy surplus at the end of the year and follow the baseline model. The primary goal for the rate-making authority is to set a price that ensures non-participating customers pay the same for energy they would have otherwise paid had no net-metering been used.

To its credit, the bill allows the ratemaking authority to compensate net energy producers for the value of the electricity itself, AND the value of the renewable attributes of the electricity.  This little nod allows net energy producers to receive a bonus if the renewable attributes of the energy production add indefinite or unforeseen benefits (Cap and Trade anyone?)

Congratulations (I hope not premature) to AB 510 sponsor, Assembly Member Nancy Skinner (14th District).  The bill was proposed last year as AB 560 (click here for more of that story), but it died in committee.  We’re glad to see it is on its way to the finish line this time!

Editor’s Note: Stay tuned for Part 2 of this post that will discuss other requirements and considerations in the bill. UPDATE: Click Here For Part 2

 

October 20, 2009

Congratulations AB 920!

Posted by Steve Sacks under Energy, Government, Incentives and Rebates, Law, Legislation, and Policy, Photovoltaic, Wind | Tags: , , , , , , , , , , |
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AB 920 was signed into law last week.  The law requires that utilities pay for energy they receive through net metering.  We have followed AB 920 (previously AB 1920) here at the CGBB since we posted our first articles nearly a year ago.  AB 920 is the common-sense approach to net metering.  

Net metering is an arrangement whereby utilities purchase power from consumers who generate power from solar arrays or small wind turbines.   Previously, utilities would provide credits against a utility bill.  Starting in 2011, utilities will be forced to pay power-producers wholesale rates for the power (if a credit remains at the end of the calendar year).   Cash compensation to the original power producer makes sense because the utility makes money by selling that same power to end users.  

AB 920 is a great step, but California needs to travel light years before we realize the “million solar roofs” idea.  At the very least, California needs to abandon the limits on the sizes of residential power production.  Currently, to be eligible for net metering, residences must limit the size of their solar array or wind turbine.  PG&E and other utilities argue that larger arrays and turbines will result in higher electricity rates for those not participating in net metering.  This argument can not be summarily dismissed.  There are legitimate concerns about reliability from residential power producers.  However, utility concerns can be addressed in future legislation (such as infrastructure service fees or production guarantees for net meter users over a certain size).   I appreciate that ideas such as this were left out of AB 920 in order to get it passed, but by no means does this mean the work is done.

Also, the net metering program has an overall cap, and after the cap is met residential power producers are not compensated for their power produced.  AB 560, proposed by Assemblymember Nancy Skinner, representing the 14th District, would have raised the cap for net metering power available for purchase from 2.5% of peak power to 5% of peak power.  PG&E supported that bill, but it died in committee .  For an article on some of the issue with the bill, click here.

AB 920 represents a positive step for residential solar and wind power in California, but we have miles to go before we sleep.

 

July 9, 2009

Residential Solar Leases

Posted by kevinjeong under Building and Design, Energy, Finance, Green Economy, Lease | Tags: , , , |
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Solar power is on everyone’s mind these days.  We still remember the exorbitant oil prices of the summer of 2008, when oil reached it’s peak of over $150 a barrel.  However, for many, solar energy, much like hybrid cars, are a cost-prohibitive luxury.

SolarCity, a California solar provider, hopes to change all of that.

Instead of having consumers front the cost of the equipment and installation of solar systems, which can range anywhere from $50 – $75,000,  SolarCity , with financing from U.S. Bancorp,  will front the cost, and the consumer pays a set monthly lease.  In a way, this is similar to a power purchase agreement used by energy companies and local governments.

On average, a consumer is estimated to save about 10 – 15% of their current monthly energy bill.

Read the complete article here.

 

May 25, 2009

Public-Private Partnership Installs Photovoltaics With No Up-Front Cost To Homeowners*

Posted by Steve Sacks under Energy, Finance, Government, Green Economy, Incentives and Rebates, Law, Legislation, and Policy, Save Money | Tags: , , , , , , , , , |
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Every now and then there is one of those moments when you ask “why didn’t they do this before?”  Well, the launch of the Berkeley FIRST program is exactly one of those moments.  With the help of Renewable Funding, LLC, Berkeley, CA now offers a program where residential homeowners can install a photovoltaic solar array on their home with no money down.

Renewable Funding, LLC, a private company, created this “win-win” financial services product for municipalities and homeowners, and Berkeley, CA is the first taker.  For Berkeley, Renewable Funding underwrites (AKA bankrolls) revenue bonds that pay for the installation of solar arrays.  Then, through a separate line item on a property owner’s property tax bill, the bonds are paid down over a 20 year term.  If the property owner sells the home, the debt obligation for the solar array (just like the array itself) stays with the property.

Boulder County, CO took  a different approach. Berkeley hired Renewable Funding, LLC to finance and administer the bonds, but Boulder hired Renewable Funding to only administer the bonds.  Whether Renewable Funding bankrolls the program or not, the model seems to work, and solar arrays get installed faster.

Look for this type of program in your California community!  AB 811 (amending Streets and Highways Code 5898.12 et seq.) passed last year authorizes just such an initiative.  Under S&H Code 5898, Renewable Funding is working with the California Statewide Communities Development Authority to implement California FIRST this summer.

Read more about Renewable Funding, LLC by clicking here.

Read more about the Berkeley FIRST program by clicking here.

Read more about the California FIRST program by clicking here. 

 * A Public-Private Partnership is a partnership between a government entity and a private entity that results in the private entity delivering services traditionally offered by government. (e.g. a toll road).

 

 

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