California’s electricity prices are on the rise, a recent study by the Manhattan Institute found. The study blames the price increases on the state’s renewable energy mandates and carbon cap-and-trade program. The research found that the price increases are having a greater impact on California’s inland and Central Valley regions. Both are hot, dry places where summer air-conditioning use is higher but household incomes tend to be lower.
SolarCity is offering a solution for these higher energy costs, and that is increasing access to solar energy. The company recently introduced a new solar energy service that enables small- and medium-sized businesses (SMBs) to pay less for solar than they pay for power from their local utility. Initially, SolarCity will offer its SMB service to owner-occupied businesses in California, but plans to expand it to the East Coast and other areas in early 2016.
SolarCity expects to make it possible for many SMBs to pay between 5 and 25 percent less for solar energy than they pay for utility power. And there will be no upfront cost. The service will include fixed, flat solar payments for 20 years, so if utility rates increase in the future, SMBs will still pay less. The company has built a new business unit devoted to the SMB market. Solar energy systems will be designed to produce between 30 and 500 kilowatts of generation capacity for businesses that own buildings with 5,000 to 50,000 square feet of available flat-roof space.
SolarCity’s model is one that, if expanded across the U.S., could enable the 28 million SMBs in the nation to have access to solar power. More than 99 percent of American businesses are SMBs, and most haven’t been able to use solar power affordably.
How does SolarCity manage to provide lower-cost solar energy to SMBs? Three innovations enable it to do so:
- Installation: SolarCity uses its large network of local installation crews to install projects for SMBs at a lower cost than other providers. The company expects to reduce installation costs for small commercial solar projects by over 30 percent by using its own technology and crews.
- Technology: SMBs are able to fit 20 to 50 percent more solar panels on a roof by using SolarCity’s lightweight solar panel mounting system, ZS Peak, which also allows workers to install panels faster.
- Financing: SolarCity partners with Renew Financial to create a unique financing option for SMBs, combining low-cost SolarCity structured financing with Property Assessed Clean Energy (PACE). Through this financing model, an SMB signs a standard commercial solar lease with SolarCity, which finances the upfront cost as much as it would under a traditional solar lease or power purchase agreement. The PACE program allows the SMB to pay the solar payment on its property tax bill.
What would be great is if SolarCity or some other solar energy provider expanded this new model to homeowners. Providing low-cost solar energy is the solution to the rising energy costs in California. It’s a far better plan than the Manhattan Institute’s recommendation to conduct a cost-benefit review of the state’s “proposed greenhouse gas reductions.” The implication is that climate change is not a big problem that will disproportionately affect poorer households.
The opposite is true as a 2009 study found that climate change impacts will amplify socio-economic differences in California. In other words: Poorer communities are the ones who will be the least likely to be able to cope.
Image credit: Flickr/U.S. Department of Agriculture