A request: If you a) have anything to do with city or county government, and b) have any interest in, or authority over, property taxes, finance, or energy efficiency, please drop whatever you're doing for two minutes, and skim this article.
Oh, all right, I bet you didn't actually hit the link. So to make your job easier, I'll pull a quote or two.
California [just] enacted a law that allows cities and counties to make low-interest loans to homeowners and businesses to install solar panels, high-efficiency air conditioners and other energy-saving improvements.
Participants can pay back the loans over decades through property taxes. And if a property owner sells his home or business, the loan balance is transferred to the next owner, along with the improvements. [Emphasis added.]
I don't think that I emphasize this enough: This is truly groundbreaking. In fact, it may well be among the top three climate policies ever adopted by the state. I hope that other states follow suit soon -- even if it means fixing the state constitution (Cough*Washington*cough).
Why am I getting all exercised about this? Because energy efficiency is a truly awesome investment opportunity. There are hundreds of energy saving measures -- new appliances, new insulation, new heating systems, you name it -- that cost a little bit of money up front, but recoup their costs within three years or less. After that, the cost savings from efficiency are gravy -- they keep adding up, helping out home or business budgets for years or even decades. Investments in efficiency are a great way to boost finances, goose the economy, and save the climate -- all in one easy step.
But even though it's a great investment, most of us vastly underspend on energy efficiency. It's actually pretty astonishing: We think that 3 percent is a pretty good rate for a savings account, but we often turn up our noses at efficiency opportunities that yield returns of 60 percent or more.
Some of this is just plain consumer irrationality: Many of us are leaving money on the table for no good reason. But there are plenty of perfectly rational reasons we don't invest as much as we should in efficiency:
- The up-front costs can be daunting. A super-efficient furnace, for example, may cost $1,000 more than a less-efficient model. A thousand bucks seems like a lot to spend to save a few bucks a month. If you don't have that kind of money to throw around, you'll have to take out a loan -- which is an expensive and time consuming nuisance, and could affect your credit-worthiness for other loans.
- Homeowners aren't sure they can recoup the costs. A furnace upgrade might start paying for itself within 10 years. But by that time, the original homeowner who made the purchase could be long gone. And since experience suggests that home buyers aren't willing to pay much for a new furnace, there's often no way for a homeowner to recoup their money on efficiency investments.
- Uncertainty is scary. It's hard to know in advance how much you'll save on utility bills with any particular efficiency upgrade. Will the extra efficiency pay for itself within five years, or 10, or never? That sort of uncertainty is intimidating for someone considering a major purchase.
So the reason why I'm so excited by California's new law is that it absolutely shatters these legitimate financial barriers. The loan from the city eliminates up-front costs. Financing the loan with property taxes means that homeowners don't have to worry about their own credit, or whether a new homeowner will pick up the costs. And a well-designed program, with low government-backed loan rates, will eliminate much of the uncertainty -- homeowners will save starting on day one, without having to wonder when their investment will pay for itself. The only financial uncertainty: will they save a lot on utility bills, or only a little?
As I discovered with my own home, financing efficiency investments can make good sense -- but the conditions have to be just right. But with this sort of program, many families will find that there's simply no reason not to opt for an efficiency upgrade. Well, there's always inertia and procrastination, but I know of no government program that'll fix that.
Making buildings more efficient: rationalizing retrofit markets
Making buildings more efficient: looking beyond price
Comments
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stopgreenpath Posted 3:36 am
07 Aug 2008
Finally, a finance mechanism for this very expensive item we ALL should have on our property! Big Energy gets to amortize all its costs across our grid, gets huge 30% + federal tax credits and guaranteed buybacks, while we have to use our 25% interest credit cards to install at full-retail-price (with teensy $2,000 tax credit), and hand over excess power we generate/save to our utilities FOR FREE!
What a scam! Time for an aggressive Feed In Tariff NOW!!!! 65 cents for PV, 25 for wind, AB 811 incentives for any sized system, un-cap the CSI rebates for oversized systems, and we got ourselves an RPS WITHOUT KILLING OUR WILDERNESS!!!
I am so sick of Big Energy owning us, hijacking us and bleeding us dry. Generous Feed in Tariffs now!
the greenest energy is that which you needn't ever produce.
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kyotousa Posted 5:29 am
07 Aug 2008
It could have a remarkable effect if we would all stop wringing our hands over "payback" periods to determine if switching to renewables or more efficient technology is affordable. Ask yourself this: when you go into a car dealership (if that's still a place you're likely to visit), how often do you ask the salesperson to calculate the "payback" on the car? You don't - because a car is generally considered to be necessity. And that's the attitude we have to adopt with existing technologies like solar panels. The implementation of solutions that will help to stave off irreversible changes in the planet's finely tuned climate shouldn't be calculated on a typical cost-benefit analysis.
If you live in Berkeley, CA you can sign up its financing program which is set to kick-off this fall. Making this program work in Berkeley will give other California cities the confidence to launch their own programs. See, http://www.ci.berkeley.ca.us/ContentDisplay.aspx?id=22620 ...
Tom Kelly
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Pangolin Posted 5:51 am
07 Aug 2008
We need to require these kinds of changes before rental property owners can move in new tenants. Despite the inevitable wails of protest many of these property owners have had rentals for ten to twenty years or more and are coasting on low property taxes and inflated rents.
If the government is funding solar power it needs to fund it for the rich and poor alike.
Put the Carbon Back
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kyotousa Posted 9:15 am
07 Aug 2008
Some cities get it. San Francisco has an excellent rebate for low income homeowners that does a pretty good job of making solar affordable. Recent changes in the California Solar Inititiative also provide enhanced rebates for low income homeowners. It's not enough, but it does point out that some are doing more. Those are the type of examples we, as advocates, should be using to demonstrate that it is possible for everyone to participate.
Tom Kelly
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Lisa P Posted 6:19 pm
10 Dec 2008
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