By Tom Price
Somebody better call Google and tell them their RE<C project may be already happening, albeit not the way they expected: a new rebate for renewable energy in San Francisco has now made the idea of clean energy cheaper that coal a reality, by making solar power essentially free.
Earlier this summer, the City Board of Supervisors passed a rebate that grants up to $6,000 on top of other incentives. They also inadvertently cracked one of the toughest nuts to growing the urban solar market: giving landlords and tenants a reason to work together to install PV. The kicker? By stacking all the incentives the right way, the net cost to the landlord is zero. That’s right – free solar power.
As first reported in the San Francisco Bay Guardian, the new $3 million a year program offers an escalating incentive depending on the location of the electrical meter, and who does the installation. And it also gives tenants and landlords – often at loggerheads in this rent-controlled city–a strong motivation for working together.
Here’s how it works: a landlord getting a bid to put a 2kW solar system on each of three units in a building can expect to pay $20,000 per system. They can now get a $6,000 rebate from SF for using a local installer, then $3,800 in incentives from utility PG&E. The real magic comes in the tax incentives-since a rental is a “business,” they can qualify for a 30% Investment Tax Credit AND a first year 60% tax deduction, courtesy of a little known provision in the President’s Economic Stimulus package. The cost is now down almost 70%, to around $7,000. Subsequent deductions will take another $3,000 off.
And this is where the tenants come in–if the balance is financed, the entire payment can come from the tenant, who can shift what they were paying from the utility to the landlord, and still end up paying less while also investing in green energy. The plan is flexible: if they use more that the rooftop system creates, they’ll just get a bill from the utility. The net result for the landlord is a free solar power system, which also happens to be exempt from property tax
The San Francisco Department of the Environment has just put out a fact sheet (PDF Link) to landlord groups explaining the details, and local activists are hoping the model spreads to other cities.
So far, it seems to be working; Dave Llorens, the local installer who figured out all these deals, says business is booming. “Solar before was a long term proposition, and sometimes a tough sale,” he says, “but now we can barely keep up” with the prospective customers.
The boom may bust, however: unless the ITC is renewed, two of the biggest incentives will expire December 31st. Until then, however, at least for San Francisco residents the holy grail of free renewable energy is within reach.