By Daniel S. Hafetz, Esq.
Solar power, a long promoted antidote to the looming perfect storm of energy, environmental and economic crises, has been getting a drubbing in the press recently. Since Solyndra shuttered its doors in early September, many critics have asked whether the government should be “picking winners” through programs like low-interest loans to manufacturers of solar panels like Solyndra, and whether solar energy will (ever) be a source of green jobs.
Whether they are manufactured by companies in the US, Europe or China, solar panels will be a part of America’s future energy diet. That is because the technology is a cost-effective and renewable energy source, capable of delivering direct savings to every household.
If every home in the US had a medium sized solar photovoltaic (solar pv) system on its roof, Americans could save over $140 billion annually in electricity costs. And for each home powered by solar energy, the annual reduction in carbon emissions would be equal to taking 1.5 cars off the road per home. Bringing solar to millions of homes would mean a jobs boost too, especially to the companies distributing and installing solar equipment.
These panels are a viable and convenient option for homeowners around the country because they are capable of generating enough electricity to cover a home’s entire electricity needs. They are also dependable; through a program called Net Metering, available in most states, a home’s pv system hooks into the electricity grid and the owner gets a credit on his/her utility bill for the amount of electricity the system generates.
So the real question is how we can make solar power a reality for millions of Americans. Community purchasing of solar, an innovative approach that mobilizes whole neighborhoods to go solar and cuts homeowner’s costs in the process, could bring the needed spark.
Government has been offering incentives to purchase solar panels for years, but several barriers remain: high upfront costs, consumer inertia and the sophistication required to navigate convoluted incentive programs.
In New York City, for example, interested homeowners who brave the tangle of regulations can cobble together a patchwork of incentives that reduce the cost of a solar pv system by 67 percent for an average size home. But that still leaves them facing nearly $11,000 in upfront costs, and some savings, like tax credits or property tax abatements, don’t kick in for a number of years. Although a homeowner could save $1,200 a year in electricity costs, it would take almost a decade before the initial investment is recouped through savings.
$11,000 in capital costs may sound like too much for middle class homeowners making it perhaps an insurmountable obstacle for lower income homeowners. Of low- and moderate-income households nationally, about 51 percent are homeowners. Many come from communities like those I serve. As a lawyer for Brooklyn Legal Services Corporation A, I represent non-profit organizations—community developers, builders and operators of affordable housing, schools, and day care centers—all of whom can attest to the fact that the people most in need of savings on their electricity bills are those who can least afford to pay for a money saver like solar power.
Many homeowners also lack the financial savvy to know how to combine these incentives: there is no streamlined process that coordinates the federal and state tax credits, state rebates, and city property tax abatement and exemptions. Most people don’t even know of these incentives or see the value they offer in the first place.
But there is a local, neighborhood way to overcome both these obstacles. Community purchasing of solar or “community solar” functions a lot like the social media company Groupon. An intermediary or “aggregating” organization does community outreach, marketing and education to attract interested homeowners. The aggregator then negotiates with companies that sell and install the panels on behalf of the homeowners, using the power of collective bargaining to drive down the price. With a group discounted price, homeowners then buy directly from the solar provider, who, in turn, pays the aggregator a fee for its services.
One Block Off the Grid (1BOG), a for-profit pioneer of community solar, boasts 15 percent additional savings through their group discount. These savings translate approximately to an extra $5,000 in savings in upfront costs, which means it takes only half as long to recoup the initial system cost as it does without a group discount.
Although community solar doesn’t wipe out all of the upfront costs, it can be combined with other programs that do, such as power purchase agreements (PPAs), where solar providers install and own the solar system on your home, and then sell you electricity at a lower rate. Another innovative program is Property Assessed Clean Energy (PACE), a no-interest loan program paid back as an add-on to property taxes. (PACE, however, is on hold in the residential market due to opposition from Fannie Mae and Freddie Mac.) PACE and PPAs are good tools for reducing upfront costs, but without community solar’s marketing, education and assistance, they don’t help homeowners overcome the technical barriers or inertia.
Government support of community solar can also be a catalyst in a national movement to solar. In Portland, Oregon, for example, with the help of city government and a federal grant, a non-profit community solar initiative called Solarize Portland installed solar on 120 homes in its first 6 months, which is more than three times the number installations in the whole city the previous year. With similar partnerships around the country, there could be a tidal increase in solar installations.
By using non-profits aggregators like those in Portland—organizations with extensive outreach and education experience—community solar can also help capture additional community benefits, especially in the area of jobs. Northeast Coalition of Neighbors, a Solarize Portland campaign, made training local workers a part of the bargain with the solar installer it used. In the neighborhood of East New York, Brooklyn, where I work and where unemployment was 19% in 2009—almost double that of the New York City average—local workers are starved for these kind of training and job opportunities.
Unlocking the potential of solar power can deliver on the promise of addressing the overlapping problems of jobs, energy costs and environmental impact. Community solar companies can help lead the way, one neighborhood at a time.
Hafetz is currently a staff attorney and Skadden Fellow at the Community and Economic Development Unit at Brooklyn Legal Services Corporation A, where he provides transactional legal representation to community-based organizations in the areas of green jobs, green buildings and sustainable development. He formerly taught middle and high school in Brooklyn as a New York City Teaching Fellow and served as a policy aide to Eliot Spitzer’s 2006 campaign for governor. He has published on eminent domain after the Kelo decision and green and sustainable lawyering.