New Legislation Creates $25-Per-Month Residential Solar Power Lease

Now they just need to figure out where to put the solar panels and windmills.

How much would it cost to string an extension cord to Oregon? Due to recent changes in the application of Oregon's residential energy tax credit, residential customers can now lease solar power for "as little as $20 per month, with no upfront cost," claims SolarCity, a national solar provider. Their news release explains:

The affordable new financing option was made possible by new rules published by the Oregon Department of Energy that went into effect on Jan. 1. The new rules allow customers who choose to lease their solar systems to receive the residential tax credit (RETC) that was previously only available to customers that purchased solar systems. 

Oregon's RETC returns up to $6,000 total to residents who install solar power, a maximum of $1,500 per year over four years. SolarCity's lease plan allows customers to pay for their system installation when they receive their annual credit, rather than having to pay the full bill up front. SolarCity retains ownership of the solar panels for the 15-year lease, and receives a federal tax credit as well as a depreciating-asset write-off, says OregonLive. The panels are said to have a 30-year lifespan. 

A 3.2-kilowatt system would cost about $18,000 to install on your own. With rebates and incentives, depending on where you live, you might recoup $12,000. That would still leave you with $6,000 out of your pocket. (Here's a cost breakdown on a 5kW system in Washington.) The lease program removes that hurdle; if it's not a hurdle, by the way, SolarCity will happily take cash. 

The net result is something of a wash in terms of money saved; if you pay your utility $70 per month, SolarCity estimates, you might pay $30 less thanks to solar. Your lease payment would be around $25, so you save $5. (The lease is transferable to the new owner if you sell your home.) There are other benefits: You've locked in a portion of your electricity costs against rate increases, your carbon footprint is lessened, and you have a conversation-starter at the co-op. 

The more important accomplishment is achieved in scale. Presently solar power adoption has a significant barrier to entry--that upfront installation cost. As RvO reported earlier:

Solar energy systems are not cheap up front. The "average" price for the installation of a 5-kW solar electric system is between $20,000 and $40,000. Seattle City Light says a 2-kW system can run $12,000 to $20,000. To make that money back through electricity bill savings and incentives might take 10 to 12 years, though that recoupment time, remarkably, is down by almost half from what it used to be.

That's kept the installation of solar by ratepayers--even in green Oregon--below one percent. So it's a classic problem: Solar power manufacture would be cheaper if it could achieve economies of scale, but its present installation cost keeps it out of reach of a substantial segement of the home-energy marketplace. I haven't run the numbers, but even in the long run it may make more sense to use SolarCity's model; $5 a month may not make much of a difference to an individual, but [$5 x (utility customers who want to save $5 per month x 50 states)] starts to look like a good business for a national energy supplier. 

In comparison to our neighbor to the south, Washington state's renewable energy industry has received anemic legislative support. For solar energy, the primary incentive remains a renewable energy production incentive: For every kilowatt-hour that you produce via solar power, rather than purchasing from your utility, you can make between $0.15 and $0.54, depending on how much of your set-up was manufactured in Washington. The recent "Solarize Seattle" program is a community-purchasing model that tries to leverage buying in bulk to lower upfront costs (also, incentives are higher under the community model), but to date, nothing comes close to this no-pain lease offering in Oregon.

That's a missed opportunity because you while expect government to take the longer view--and wide-scale residential solar power would create a decentralized energy production network, with benefits we haven't fully explored--in this case the short view (thousands of new jobs for installation technicians and in-state manufacturers) is very appealing, too. 

UPDATE: I was just on the phone with SolarCity's Jonathan Bass, who was able to clarify a few questions for me, while backing up my jobs theory: "You can't outsource these jobs," Bass said, referring to installations. 

SolarCity is about four-and-a-half years old, and operating in five states: California, Colorado, Arizona, Texas, and Oregon. Bass says there are three factors that determine their entry into a state: solar production, existing energy rates, and incentives, the holy grail being a sunny state with high energy costs and big incentives. Washington, sadly, has a mediocre amount of sunshine, fairly low energy rates (but give the City Council time), and mediocre incentives. 

Still, to give you context, Bass says that the money spent cleaning up the Gulf oil spill exceeds all the money spent by the U.S. on solar power incentives, ever. Our more "traditional" energy sources have all benefited from decades of subsidies, so it's far from special pleading to look for for help building a solar infrastructure. 

In addition to solar power, SolarCity also works on conservation techniques. "Of every $100 spent on energy for the home," says Bass, "about $40 worth is wasted." The company has also received an $800,000 grant from the California Public Utility Commission partner with Tesla Motors and the University of California, Berkeley, to research storage for solar power (right now, it's mostly a use-it-or-lose-it proposition).