The right-wing policy/lobbying group, ALEC (American Legislative Exchange Council), bleeding supporters since its advocacy for “stand your ground laws” exploded in its face after the Trayvon Martin shooting in Florida, has decided to tackle a new demon - solar power. We’re “freeloaders", didn’t you know?
Of course, being attacked from the Right is nothing new, as this fascinating and depressing video montage demonstrates:
But now our friends over at the Guardian are reporting that “ALEC calls for penalties on ‘freerider’ homeowners in assault on clean energy,” during the group’s three-day meeting this week in Washington, D.C. As we have described in the past, ALEC mostly acts behind the scenes to generate legislative proposals for state legislators across the country. While ALEC membership in the California legislature is very low - only 11 of 120 members belong - in some states - particularly Iowa and South Dakota - the percentage of ALEC membership is as high as 100%.
Not content with its “Electricity Freedom Act” (which would repeal a state’s renewable energy portfolio standard), ALEC is now setting its sites on individual homeowners. From the Guardian story:
Further details of Alec’s strategy were provided by John Eick, the legislative analyst for Alec’s energy, environment and agriculture program.
Eick told the Guardian the group would be looking closely in the coming year at how individual homeowners with solar panels are compensated for feeding surplus electricity back into the grid.
“This is an issue we are going to be exploring,” Eick said. He said Alec wanted to lower the rate electricity companies pay homeowners for direct power generation – and maybe even charge homeowners for feeding power into the grid.
“As it stands now, those direct generation customers are essentially freeriders on the system. They are not paying for the infrastructure they are using. In effect, all the other non direct generation customers are being penalised,” he said.
Eick dismissed the suggestion that individuals who buy and install home-based solar panels had made such investments. “How are they going to get that electricity from their solar panel to somebody else’s house?” he said. “They should be paying to distribute the surplus electricity.”
This is the same battle against net metering that we have been writing about since PG&E declared war on solar nearly a year ago. No doubt ALEC is hoping that it can reverse its funding woes by bringing in utilities from around the country with this new, and utterly cynical, campaign.
Rachel Maddow picked up the story last night with a long piece providing decades of context and concluded with an interview of one of the Guardian reporters who broke the story.
While California is largely immune from the nonsense being peddled by ALEC, other states aren’t so lucky. In Arizona, where a bruising battle over net metering was just fought, 49% of the legislature are members of ALEC, according to ALEC internal documents made public by the Guardian (see p. 39). Looks like that fight is just beginning.
Cyber Monday captures the imagination of shoppers everywhere - so why not solar shoppers as well? We know this time of year is traditionally slow for solar purchases - folks are more focused on presents for others than they are on cutting their energy bills. That will come with the New Year and all those resolutions - after all, saving more money will be one of your resolutions next year, right?
But this year we thought we would offer you a little incentive to break that mold and get a head start on your New Year now. So, in honor of Cyber Monday, we are offering our first ever Cyber Monday Sale on Solar!
Here’s how it works - when you click on that big, “Go Solar Now” sun on the right, enter the code “Cyber Monday” in the comments box. Or if you call us at 626-793-6025, mention Cyber Monday on the call. Then, if we sign a contract before the end of the year, we will take $500 off the cost of your new solar power system!
What could be better? You save some money (heck, you could spend that extra $500 on some of those presents!) and you get a head start on fulfilling one of your upcoming New Year’s resolutions! That just might make this the best Cyber Monday Sale ever!
Years ago, Archie Bunker - of All in the Family fame - would look over at his daughter and son-in-law locked in an amorous embrace and bemoan, “Aw geez, they’re at it again!” Well, a recent Fox News story attacking solar has us feeling Archie’s pain.
It seems that every story ever aired by those who support the fossil fuel industry will inevitably tie any solar company to Solyndra - regardless of how unrelated the two may be. Case in point is this Fox story about questions being raised about SolarCity and its financial dealings, bearing the circuitous title: Solar firm linked to Obama donors could be ‘next Solyndra,’ top GOP Sen. warns. Wow - how about that for connecting some dots - SolarCity, linked to Obama, linked to Solyndra - a trifecta of irrelevance! (In an interesting tell, it turns out the story is filed under “Politics” which probably tells you all you need to know.)
What is this really about? It turns out that Senator Jeff Sessions (R-AL), ranking Republican on the Senate Banking committee, sent a letter on Monday to Treasury Secretary Lew, asking some pointed questions about how SolarCity determines the value of its systems for the purpose of claiming the 30% federal investment tax credit. Fair enough, as far as that goes, since many in the industry have raised questions about SolarCity’s practices in that regard. (Anyone who follows this blog knows that we have expressed our own concerns going back several years including this piece from 2011 and this one from 2012.) But it is the spurious - and frankly quite tortured - connections to Obama and Solyndra that are most annoying.
First of all, as SolarCity itself was quick to point out, Solyndra failed because it bet that high silicon prices would make solar panels that were dependent on large amounts of silicon ever more expensive. Their design required less silicon to produce comparable power output - a clever idea if the premise were to hold true. But it didn’t - silicon prices plunged and panel prices followed. Suddenly Solyndra’s products found themselves priced out of the market and the company failed. As we have noted before, smart investors with political leanings on both sides of the aisle backed Solyndra. Yet it is that very drop in prices for solar panels that has fueled the growth of the installation industry - and SolarCity with it. Say what you will about Solyndra, but what pushed them out the door has propelled SolarCity to dramatic growth in its stock price since the start of the year, nearly quadrupling from $12 in January to $47 as this is being written.
Second, the assertion that SolarCity has lost millions despite receiving tax credits represents two accurate statements that have nothing to do with each other. They are placed together simply to suggest some sinister linkage in the reader’s mind. SolarCity has lost money, like many other start-ups do, while it expands its business model. Part of that model is installing solar systems and then receiving the investment tax credit - just like everyone else who installs a solar power system does. There’s just nothing sinister there. It is the equivalent to saying that they have lost a lot of money, despite their customers having paid them millions. This is nothing more than the difference between revenue and profit.
Will SolarCity ever turn a profit? Not at all clear, but then, lots of savvy investors think that is a bet worth making.
Finally, the reference to “Obama donors” is just plain silly. For example, the Fox article asserts that Elon Musk - Chairman of the Board at SolarCity - donated $750 to Obama’s first presidential campaign. Really? Seems like awfully small potatoes for a man with Musk’s money. And of course, it isn’t accurate at all. According to the brilliant Open Secrets website operated by the Center for Responsive Politics, Mr. Musk has donated freely to both political parties, with donations of $212,750 to Democrats and $211,500 to Republicans going back to 2003. From what we can see, he actually donated $7,300 to President Obama, but he also gave $2,000 to President George W. Bush and $5,200 to Senator Lindsey Graham. (Perhaps he should have donated something to Senator Sessions!) Far and away his largest contribution total is to the National Republican Congressional Committee - $150,900 since 2003 with $32,400 just this year. Seems unlikely that he made those contributions at President Obama’s behest, but Fox can’t be bothered to tell people that.
No, this is nothing more than Fox News trying to push as many buttons as it can with its base and using Sessions’ letter to attack, yet again, the value of solar energy to this country and the world. The public deserves better.
We have expressed skepticism over the value of solar leases for residential clients in the past and, as a result, we have refused to offer them. Unfortunately, for some perspective clients, something was needed between a straight-up cash purchase and the siren song of the solar lease. Now we have an answer - the solar loan.*
Run on Sun is now able to offer qualified residential clients a $25,000 secured loan with the option to also include up to $15,000 more in an unsecured, 18-months same-as-cash plus loan. Together, these two loan options provide for as much as $40,000 for solar power systems - enough for 95% of all residential solar projects.
The first piece of the financing mechanism is the $25,000 step-down loan. Under this program, which is open to residential clients with FICO scores of 650 or more, the client has the option of re-amortizing the loan once within the first 24 months - after the rebate and tax credit payments have been received. This allows the client to take advantage of those incentives - as opposed to surrendering them to the leasing company - and use some or all of those proceeds to lower your monthly payments. In addition, there are no pre-payment penalties and the interest is most likely tax deductible - unlike lease payments (but please, check with your tax advisor).
The second piece is the $15,000 plus loan for systems larger than 5-6 kW. This loan requires a FICO score of 700 or more, and no payments are required until 18 months from the date of funding. The intent here is that for larger systems, no payment is made on this second loan piece until the rebate and tax incentive have been received, at which time they can be used to pay off this part of the loan. In this way, qualified homeowners can purchase larger systems without increasing their monthly payments.
So why is this better than a lease? For one thing, the loan terms are more flexible than many leases, allowing the homeowner to choose repayment periods from five to twenty years. (Of course, the shorter the term and the better your individual credit, the better the interest rate will be.) Another benefit is that your payments are fixed; there are no escalator clauses in this loan, thereby eliminating the fear that your payment could increase faster than utility rates, possibly destroying the value of your system - no such assurances with leased systems. And because you own the system, if you decide to sell your home there is no qualification issue to worry about with potential buyers.
But here’s the best part - you will save more money with a loan than you will with a lease! Don’t believe me? Take a look - let’s suppose you need a 5 kW system and you want to pay for it over twenty years (the same terms as most leases). Your credit is very good, but not outrageously good (say, somewhere between 725 and 759), and you are presently averaging $0.22/kWh to SCE. We will assume you are in a 30% tax bracket and we will estimate SCE’s rate increases, conservatively, at 4.5%/year. (Note that some leasing companies use 6% or higher - making their numbers look better than they might really be.) That works out to a loan amount of $22,500, give or take.
How do your savings compare over 20 years? Take a look:
Because you are able to apply your rebate and tax credit to the loan - as opposed to simply handing those over to the leasing company, your loan payment steps down in Year 2. By Year 6 the loan has saved you more money than the lease, and that differential continues to grow year after year. By the time the loan is paid off and the lease term ends, you will be $5,600 ahead having chosen a loan over a lease! (Of course, these are estimates only, your mileage may vary!)
If you are looking to go solar but need a financing vehicle, we strongly encourage you to consider the loan option. Give us a call today and let’s help you run some number and get you started on a solar project that will maximize your benefits!
*Solar loan financing provided through Admirals Bank, Equal Housing Lender, Member FDIC.
A key to the growth of solar, particularly commercial solar, is the availability of affordable storage solutions. Two recent developments suggest that we are about to see dramatic growth in this vital market sector.
One week ago the California Public Utilities Commission (CPUC) voted five to nothing approving a plan to require the three investor-owned utilities (SCE, PG&E, and SDG&E) to procure 1,325 MW of energy storage by 2020, with installation completed by no later than the end of 2024. Both SCE and PG&E are required to procure 580 MW each, with the remaining 165 MW allocated to SDG&E. 200 MW of that 1,325 MW total is to be interconnected at the customer’s site. In addition, the decision provides a timeline for this to happen with the first 200 MW to be procured by the end of next year.
Other electric service providers, like the munis, will have to procure energy storage equal to 1 percent of their annual peak load by 2020. Those storage systems can also include customer sited and/or customer-owned storage devices as long as they were installed after January 1, 2010.
Large scale pumped hydro storage (greater than 50 MW) is excluded from the program, but storage obtained from plug-in electric vehicles can be counted.
This is a tremendously significant decision as the mandate will surely drive R&D as well as deployment investment and help provide a ready market for these emerging technologies.
An announcement this week during Solar Power International shows how that investment is already starting to happen.
Stem - the company with the clever technology for using storage to “smooth out” the demand peaks that drive commercial energy costs - just announced a $5 million project finance fund with Clean Feet Investors (CFI). From the parties’ press release:
The new financing model, which Stem developed in collaboration with CFI, is designed to open access to a wider pool of customers by removing barriers to adoption, enabling up to 15 MW of energy storage to be deployed. With this financing capability, Stem hopes to follow the dramatic growth trajectory pioneered by the third party ownership model in the solar industry. Stem and CFI plan other innovative financing offers for customers including performance-based and shared savings financing solutions with the capital from this financing.
“In addition to breakthroughs in technology, Stem is focused on driving business model innovation,” said Prakesh Patel, Stem’s vice president of capital markets and strategy. “By working closely with CFI, I believe we have created a unique offering to help accelerate customer adoption of Stem systems. This transaction paves the way for Stem to become one of the first efficiency technologies to achieve bankability.”
“Deployment capital is essential for Stem to get their technology in the hands of their customers – many of whom prefer a “pay as you save” offering,” added Jigar Shah, a principal at Clean Feet, and founder of the largest solar services company, SunEdison.
Allowing companies to install Stem’s technology with little or nothing down will help those companies save money at the same time it allows Stem to ramp up. This is great news for the solar industry since it is posed to provide the energy that Stem’s system later distributes as needed to offset those costly demand peaks.
Of course, this isn’t exactly great news for the utilities who, if this technology were widely adopted, would see a huge revenue hit as more and more commercial customers were able to lop-off the most expensive energy they now have to procure. Whether it is the continuation of net-metering on the residential side or the ability to eliminate the worst of demand charges on the commercial side, the pressure on the utilities will only continue to grow. But for their customers, things have never looked brighter.
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