Berkeley, California approves city-backed solar loans

Elana Schor in Washington
guardian.co.uk,
Thursday September 18 2008 03:16 BST

The California city of Berkeley has approved a new financing scheme for loans to homeowners who install rooftop solar panels, a landmark programme that could inspire other US cities to follow suit.
The Berkeley scheme would finance city-backed solar loans through a small addition to the property taxes of each participating home, eliminating the need to find up-front cash to install panels that can cost the average American upwards of $30,000.
Using property taxes to repay the solar loan also would ensure that home values rise to reflect the addition of energy-efficient technology. If a home sells before its solar loan is fully repaid, its new owner would take over the loan repayments – as well as the electricity savings.
"It's made renewables and efficiency go from something that's a good idea, but you're paying for it … to you paying over time and getting rewarded with added property value," Daniel Kammen, a professor in the energy and resources group at the University of California in Berkeley, said.
"How many of us would have cell phones if you had to pay for 20 years of minutes up front?"
Kammen has helped the city develop the unique solar financing, which he described as a major boost to California's target of a 25% reduction in greenhouse gas emissions by 2025.
The professor is also a senior environmental aide to Barack Obama, making the Berkeley loan programme a compelling model for future clean energy policy on a nationwide scale.
The city council approved the scheme in a vote late Tuesday. The next step for Berkeley is to line up a source of capital to begin offering the loans, which are expected to have a 20-year life and be repaid by a $180 monthly property tax increase.
Many US cities finance urban improvements by asking homeowners to absorb the cost of new local sewers, roads and schools through their tax bills. Berkeley is the first to harness that method to make clean energy more affordable on a mass scale.
Several US states, including New York and Connecticut, also offer interest rate reductions for solar-panel installation loans through government-sponsored entities. The Berkeley system aims to make that capital easier to tap into and repay.
City officials are expected to begin with 50 homeowners and expand their solar programme over time. Mayor Tom Bates told the New York Times yesterday that more than a dozen other cities have called him to seek advice on implementing the loan programme.
One roadblock to expansion of the solar loans across America may be the shaky financial health of some US cities. Berkeley has a strong enough credit rating to issue municipal bonds to finance the initial cost of the programme, Kammen said.