“Will Berkeley’s Solar Plan Go Viral?” Eco Watch, 11/19
Ain’t Gonna Happen
After reading your article, Solar Berkeley, I find it interesting
that neither you, the Eco Watcher, nor anyone in the Berkeley
administration, seems to recognize the massive failings inherent in the
Berkeley FIRST solar plan. However well-intentioned the plan was to
begin with, the solar industry has been changing too rapidly for anyone
to have seen the present coming, and B FIRST arrived DOA.
I find it interesting whenever a politician leaves service for
“family reasons” and winds up in the private sector tied to financing
the programs they’ve administered. Not knowing Mr. DeVries personally,
I shouldn’t question his motives, but perhaps he should have left it at
“screw this” before trying to hang his electric costs on the
municipality. Â
Clearly, solar did not pencil out for any user with a bill under $45
dollars a month. Even when switching to Time of Use billing, the
federal tax credit of $2,000 on residential systems kept solar out of
reach for conservative power users. But almost to the day that Berkeley
rolled out the program, the fed signed the new tax credit, and lifted
the residential cap. As of January 1, residential solar installations
will be eligible for a 30 percent tax credit, a difference of up to
$10,000 dollars.
What the B FIRST program officials, Mr. DeVries, and surely anyone
who actually takes the bait don’t seem to be aware of, is that the
federal government will only allow application of the tax credit to
one’s actual cost basis in the system. Specifically, to avoid “double
dipping,” systems purchased with municipal bond funding are ineligible
for the tax credit.
So, when purchasing one kilowatt of solar for $10,000 (with
$1,900 rebated from PG&E), the B FIRST customer will string $8,100
on a 20 loan, at higher than market rates, with no prepayment option,
which hits their tax bill every six months. Anyone else will purchase
the same $10,000 worth for $8,100, then receive 30 percent of that
($2,430) in tax credits. If they’re smart, they’ll pay down their loan
to $5,670. On a 4 kW system, that’s $32,300 vs. $22,680.
With the loan fixed on their property tax bill, B FIRST customers
will NEVER be able to sell their homes, as any intelligent buyer will
run the numbers and see that they’ll be buried in taxes. Those wishing
to simply get the free ride from the city will pay 50 percent more for
it. That is, if they can get it.
The primary problem with the B FIRST program is that the bond
finance doesn’t get processed until after PG&E has signed off on
the system, and can’t be assigned to the contractor. This means that
the monies don’t come through for at least a month after the project is
completed, and the client will have to be trusted to fork them over.
The solar installer, who typically contracts for 70 percent of the
project costs up front just to pay for the panels, will need to hold
the bag on 20-40-60 thousand dollars for two months after the contract
signing.
Ain’t gonna happen babe.
Either the installer pool for Berkeley will be limited to megacorporatesolar.com, who can
afford to wait two months for their dough, or B FIRST clients will need
to finance the system themselves, then pay that finance off with the
more expensive B FIRST program. I think the intellectual curve of
Berkeley citizenry will preclude that.
The great benefit of the B FIRST program is that it kept everyone in
Berkeley waiting all year, so that they can now take advantage of the
increased federal tax credit. Outside of that, it’s Wake up and smell
the Peet’s, Berkeley!
Sheldon Norberg, Sun’s Free Solar, Alameda
Eco Watch Responds
Under Berkeley’s financing plan, homeowners will be able to pay
their solar power installers about one to two weeks after installation
— not one month, according to Cisco DeVries of Renewable Funding
LLC, the Oakland company that is helping the city with financing
issues. The two-week turnaround may dissuade some solar installers from
participating in the program. However, it remains to be seen if that
will significantly affect Berkeley. As for the 30 percent federal tax
credit, the IRS has not yet issued a regulation as to whether
homeowners are entitled to it if they purchase a solar system under
Berkeley’s financing system. So to say that they’re ineligible is
premature. Mr. Norberg provided me with a solar industry interpretation
of the IRS code, concerning tax-exempt bond financing, but it doesn’t
appear to be on point. Berkeley’s program does not involve tax-exempt
bonds. As a precaution, Berkeley officials are recommending that
homeowners contact a tax accountant or tax attorney for advice on the
solar federal tax credit. But even if the Internal Revenue Service
ultimately decides that Berkeley residents are ineligible for the
credit, the city’s twenty-year payoff program still works better for
people who do not have the sufficient upfront cash to pay for a solar
power system entirely at the time of installation.
Corrections
In our Dec. 3 music feature “Mochi on Machines,” we incorrectly
stated that David Wang’s favorite movie, Hands on a Hard Body by
S.R. Bindler, is a porno flick. In fact, it is a documentary by S.R.
Bindler.
In our Dec. 10 music feature “Dropped in the Soul Tub,” we
incorrectly spelled Lech Wierzynski’s name.
