1. Published on California Progress Report (http://www.californiaprogressreport.com/site)
PG&E Drops Another $9 Million into Prop 16; Asks for a $4
BILLION Rate Hike
Created 05/25/2010 - 12:43pm
By Paul Hogarth
“They just don’t shock me anymore,” said Supervisor Ross Mirkarimi at a rally last night against PG&E. The company has
already spent $35 million to pass Proposition 16 which would cement their monopoly, and has dumped another $9.5 million in
the past five days. Meanwhile, PG&E (who paid its C.E.O. $9.4 million last year) is requesting the California Public Utilities
Commission to grant them a 30% rate hike – which would generate $4 billion in profits.
The CPUC is holding public hearings on the rate hike across the state, with the first one last night in San Francisco. Because Prop 16
requires a two-thirds majority of voters to pass a public alternative to PG&E, consumers will be trapped paying these ever-escalating rate
hikes in the future. And with “No on 16” raising less than one-tenth of one percent of PG&E’s money, activists must get creative to push their
message.
“What do Meg Whitman and PG&E have in common,” asked John Rizzo, Chair of the Sierra Club’s San Francisco Chapter at the rally.
“They’re both spending tens of millions of dollars to buy an election. But the difference? Meg Whitman is using her own money. PG&E is
using our money to pass Prop 16.” While PG&E has sent leaflets saying we are “powerless” that elected politicians spend taxpayer money,
there is nothing ratepayers can do to stop PG&E from spending its money on Prop 16 – unless the legislature passes SB 1441.
With the Supreme Court’s decision in Citizens United, we can expect even more corporations from freely spending their treasuries to hi-jack
our electoral process. PG&E is doing it with Prop 16, but the June ballot also has Proposition 17 – which is funded by Mercury Insurance to
maximize its profits. “If Prop 16 passes,” said Mirkarimi, “every state with an initiative process will be vulnerable to this corporate predatory
interest.”
Last night’s rally – which included a march from City Hall to the CPUC at 505 Van Ness – was timed for a public hearing at the CPUC to
consider PG&E’s request for a rate hike. If the hike gets approved, PG&E customers will see their bills go up 30% – a windfall of $4 billion
for the utility company. And if Prop 16 passes, local municipal efforts to give customers a competing alternative would require the daunting
task of a two-thirds vote of the electorate. In other words, PG&E could get away with more rate hikes in the future.
Yesterday, Capitol Weekly reported that PG&E put another $9.5 million into the Prop 16 campaign, upping its warchest to $44.2 million –
entirely funded by the utility company. TURN, which is leading the campaign against Prop 16, has raised $35,000.
But Mark Toney, Executive Director of TURN, pointed out that PG&E’s “coalition” to pass Prop 16 is starting to fragment. The California
Chamber of Commerce may have endorsed “Yes on 16” – but its affiliates in Fresno, Riverside, Stockton, Fremont and other places (sadly,
not San Francisco) have dissented. The Republican Party in San Joaquin County actually flipped from “yes” to “no” (despite the State Party
taking a “yes” position), and yesterday the Los Angeles County GOP came out against Prop 16. Even the San Diego Taxpayers’ Association
has broken from its statewide organization and is “no” on Prop 16. When presented with facts, even conservatives are against it.
But with PG&E throwing so many millions, some opponents have taken a more creative route – using new media tactics to get their
message out. Ben Zolno of Sebastopol has run a YouTube campaign that prides on spending only “one-millionth” of what PG&E is spending
to pass Prop 16. When news broke that PG&E has dumpted another $9 million, he announced on his blog that he will now spend an extra
nine dollars – and asked readers how he should spend that money.
At last night’s protest, activists even tried invoking pop culture in a similar way that Pride at Work pulled off recently. By taking Gloria
Gaynor’s “I Will Survive,” they re-wrote the song with these lyrics (complete with back-up dancers and some brass instruments as backup):
First I was afraid, I was petrified
When I saw my PG&E bill had gone sky high,
I spent so many nights thinking how they did me wrong,
Then I grew strong, I learned how to carry on
‘Cause we’ve got a choice, of who we pay
I wanna dump PG&E and get clean energy
I can change who sends me juice, we can break monopoly
16 takes away my choice, and that really bothers me
So just vote NO ... on Prop 16
Let’s turn it around now, ‘cause PG&E’s just playing mean
They’re dropping 35 mill, just to trick me with their lies
And all the while, they’re planning a 30% rate hike
2. Oh no, not I … I will survive
I’m fighting these PG&E bills that are burying me alive
So vote No on Prop 16, to make our power clean
I will survive … I will survive.
Maybe this will be the next YouTube sensation …
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Paul Hogarth has a J.D. from Golden Gate University. He is an attorney licensed to practice law in California, but this piece is not intended
as legal advice. He was a summer intern for Equality California in 2005, organized volunteers in 2009 for the “No on 1” campaign in Maine,
and has helped live-blog the Prop 8 trial for the Courage Campaign. This article was originally published on Beyond Chron.
2010 Ballot Initiatives 2010 Elections Elections Hogarth, Paul Proposition 16
Privacy Policy
Source URL: http://www.californiaprogressreport.com/site/?q=node/7792
3. 7/13/2010 Solar power done cheap - Jun. 28, 2010
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Solar power done cheap
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SolarCity employees putting panels on a roof in Los Angeles.
By Steve Hargreaves, Senior w riter June 28, 2010: 4:28 PM ET
Hot List
LOS ANGELES (CNNMoney.com ) -- In a construction van winding through Best Places to earn big bucks
Los Angeles' crowded streets one hot spring morning, 25-year old Tim Residents living in Palo Alto, Calif., pull in more than
Morris laid bare his contribution to changing America's dirty, fossil fuel- $150,000 a year. See detailed profiles, job openings
based economy. and more for all 25.
More
"I'd like to see America and the world become sustainable," said Morris, a
Building the Ochocinco brand
transplant from Flint, Mich., who's been in L.A. just a little over four months.
NFL player Chad Ochocinco turns to Twitter to
"Solar is the biggest difference I can make with what's on the market."
amplify his brand and take back control of his image
from mainstream media.
Morris is an installer for California- Play
334 2 based SolarCity, one of a handful of
diggs
companies pioneering an all- Buy a Corvette, build your engine
inclusive approach to solar, making it GM will let some Corvette buyers hand-assemble
as easy and cheap for the consumer their own engines -- for an extra $6,000.
as possible. More
Email Print Comment
Under the company's model,
customers agree to a monthly lease
and sign the rights to claim subsidies
Job Search See 195,217 new jobs added today
over to SolarCity.
job title or company location
In return, homeowners get a solar
Accounting jobs Engineering jobs Finance jobs
array installed on their roof,
Management jobs Marketing jobs Sales jobs
maintained for the life of the lease. jobs by
They're hooked up to the electric See all jobs
grid, so when they need more power
than the panels provide, there's no
disruption. And SolarCity guarantees Original Shows
the panels will produce a set amount
Andrea Kreuzhage is proud of the way
of power, which the company says Street Life
her panels look atop her Los Angles should offset the electric bill and Playboy's private play Fortune's Andy Serwer talks
home. more than compensate for the about why Playboy founder Hugh Hefner wants to take
monthly fee. the struggling publishing company private.
Play
"Our goal is to get millions of homes
CNNMoney Reports
to go solar, but the biggest barrier is the experience," said Lyndon Rive,
Building the Ochocinco brand NFL player Chad
the company's 33-year old CEO with major entrepreneurial connections.
Ochocinco turns to Twitter to amplify his brand and take
money.cnn.com/2010/06/…/index.htm 1/5
4. 7/13/2010 Solar power done cheap - Jun. 28, 2010
The challenge now facing SolarCity, and competitors like Akeena and Help Desk
Sunpower: Can these residential-mounted solar systems compete with the How to save during hard times Even if you don't have
massive utility-scale solar arrays being built in the desert or the vast a lot of extra cash, there are still ways to put aside
commercial solar systems being put atop big box stores nationwide? And money and invest.
Play
can they do it competitively when the generous government subsidies
expire? All CNNMoney.com Original Shows
The obstacles are no doubt huge, but Rive may just be the man for the job.
He's a serial entrepreneur, having started his own cosmetics business in
South Africa at the age of 17. He sold it five years later, moved to the U.S., Markets
and along with his brother started a multi-million dollar tech company.
The brothers are now in SolarCity together, along with their more famous US Indexes Market Movers
entrepreneur cousin - PayPal co-founder and Tesla Motors CEO Elon
Markets Last Change % Change
Musk.
Dow 10,363.02 146.75 1.44%
Green jobs Nasdaq 2,242.03 43.67 1.99%
SolarCity is the type of company President Obama and other supporters of S&P 500 1,095.34 16.59 1.54%
the new "green economy" love to highlight.
Treasurys 3.11 0.07 2.23%
U.S. Dollar 1.26 0.00 0.00%
It's creating good jobs for construction workers hard-hit by the real estate
Data as of 7:30pm ET
bust. Solar City pays its installers $15 to $30 and hour, plus full benefits.
symbol Sponsored by
It's growing. Last year the company had 300 employees. Now it's up to 560,
and plans to have 800 by the end of 2010. It operates in five states, and is
eyeing expansion plans in at least three others.
In a working class suburb just south of Los Angeles, Wayne Holder is not Sponsors
the typical person one often conjures up when thinking of solar power.
Holder, 44-years old and an electrical engineer with the Los Angeles
sanitation department, uses a lot of power.
Between him, his wife and their two kids Holder says the washer and dryer
get a constant workout. Plus, the family has a salt water pool the requires
the filter to run nearly non-stop.
The result was an electric bill that reached nearly $600 a month last year,
said Holder.
That's when he decided to call SolarCity. Now, he says he pays about $300
a month to the utility, and another $180 to SolarCity, with no change in
electricity use.
"It was a no-brainier," he said. "and the only thing I have to do is hose off
Full Nam e
the panels every once in a while."
Addre ss
City
St/Pr Zip/Po
E-m ail
C ontinue
P rivac y P olic y
O uts ide the U .S. and
C anada, c lic k here.
Other customers do it more for the environment.
On a hillside overlooking nearly all of Los Angeles, Andrea Kreuzhage
recently put down $1,000 to install a SolarCity system on her roof.
Kreuzhage, a 47-year old documentary film maker, is not a big user of
power. Before her solar system, her monthly electric bill was about $50 a
month. Her lease with SolarCity is $55, although her solar panels now
actually produce more power than she uses. (Local law doesn't yet allow
her to sell that power back to the utility, although people are working to
change that.)
But for her the extra $5 a month is well worth it
money.cnn.com/2010/06/…/index.htm 2/5
6. Twelve Reasons Why the Green Home Market
Is Ready to Surge
Green Building
Jerry Yudelson, Green Building Activity, 2000-2005 dramatically as the rise
PG, MEA, chairs
the U.S. Green 400 of Levittown and the
Building Council’s 350 suburban lifestyle did
JERRY YUDELSON
Greenbuild after World War II.
300
International Cum. LEED Today, that pattern has
conference and 250 Reg. x 10%
Number
begun to reverse itself.
expo, the world’s 200 Cum. LEED People want connect-
largest green Cert’s
150 edness, they want the
building gathering. He is the author of The
Insider’s Guide to Marketing Green Buildings 100 Cum. LEED amenities of urban liv-
(available at www.yudelson.net).
Area, MMSF* ing, and they don’t
50
want to commute for
0 2
*million ft hours each day for the
’00 ’01 ’02 ’03 ’04 ’05
privilege of mowing a
f you need convincing about the patch of grass on Sat-
I
Year ’00 ’01 ’02 ’03 ’04 ’05
marketability of green building, Cum. LEED urdays. This trend
author Jerry Yudelson offers up a Reg. x 10% 4.5 47.5 62 107.7 179.2 281.0 alone will lead to more
Cum. LEED
dozen reasons why green is the way to energy-efficient homes
JERRY YUDELSON
Cert’s 1.0 15.0 24 168.0 167.0 323.0
go. Cum. LEED and remodels, with a
1. The commercial and institutional Area, MMSF 8.4 51.0 80 141.0 217.0 350.0 heavy focus on existing
green building market continues to grow Source: U.S. Green Building Council urban landscapes.
at more than 50% per year (see Figure 5. These same
1). In 2005, LEED-registered projects boomers will want to
In 2005, LEED-registered projects and project area grew by more than
and project area grew by more than 50%, and LEED-certified projects grew by nearly 100%. upgrade their single-
50%, and LEED-certified projects grew family homes to make
by nearly 100%. LEED statistics indicate them energy efficient,
considerable growth potential for the conservation. In 2003, well before the both to save on future utility costs and to
green home market. Some of the LEED current rise in energy prices, market show a concern for such issues as global
projects are multifamily residential struc- studies for the King-Snohomish Master warming and environmental protection.
tures, typically above three stories. Builders Association (Seattle area) showed The strong role played by Governor
2. The new federal energy bill a willingness on the part of home buyers Arnold Schwarzenegger’s solar programs
(Energy Policy and Conservation Act of to pay 1% more—about $2,500 on a in promoting solar energy should help to
2005, or EPAct; see Table 1), which pro- new $250,000 home—for a home kick-start the solar industry in California,
vides increased incentives for residential energy package. Isn’t it likely that home for example. With the new solar PV
solar systems; prolonged oil prices above buyers will soon be willing to pay $5,000 incentives, look for a rapid rise in 1kW
$60 per barrel; and natural gas prices more, especially with the new $2,000 solar-electric systems and $5,000 solar
above $8–$10/MMBtu ($0.80–$1.00 home builders’ incentive? water-heating systems, as homeowners
per therm) have changed the psychol- 4. The continued movement of baby discover that installing these systems is the
ogy of the consumer for the first time boomers back into urban cores will bring most visible way to show that they are
since the oil price shocks of the 1970s. more discriminating buyers to condo doing something to save energy. (Right
New credits for home builders should developments, requiring builders to have now, there is a shortage of semiconduc-
spur more investment in energy-effi- a green point of differentiation.The com- tor-grade silicon for producing PV panels
cient homes. panies that employ these boomers will on the market, but this shortage should be
3. In November 2005, DOE’s Energy want to offer greener office buildings to over by next year.) (See “Solar Subsidies
Information Administration raised its build a recruitment and retention edge. are Booming,” p. 6, for more on solar.)
projected 2025 oil prices, in today’s dol- What people learn from working in 6. A growing body of successful green
lars, from $33 (2004 forecast) to $54 per green office buildings will also translate to home developments with a strong focus
barrel, a 65% increase. Over time, this will their choices at home.The rise of the cre- on solar and conservation features, in all
probably translate into higher electricity ative class, first chronicled in a book by major growth regions—including
and gas prices for residential applications, the same name by Richard Florida in Florida, California, and the rest of the
and more interest on the part of home 2002, has the potential to change Ameri- Sunbelt—will give developers confi-
buyers and homeowners in investing in can demographic geographic patterns as dence in their ability to deliver a high-
12 www.homeenergy.org JULY/AUGUST 2006 • HOME ENERGY
7. performance green development on a addition to these energy efficiency mea- roll out its finalized program
conventional budget.A good example is sures, High-Performance Homes incor- guidelines in 2007. Given the
Shea Homes, in San Diego, California. porate passive-solar thermal water success of the LEED for New
Shea is the country’s tenth largest builder, heating, and PV for electricity produc- Construction (LEED-NC) pro-
and in 2001 it developed a good package tion. Shea Homes joined the industry’s gram and the growing recogni-
of energy conservation and solar tech- Built Green program in 2005—further tion of the LEED brand name,
Green Building
nologies. Shea’s new product line, the evidence of its commitment to building LEED-H should begin to affect
High-Performance Home, meets the energy-efficient housing. the residential market in signifi-
7. A rising cant numbers by 2008. Other
trend for local programs, such as the home-
boomers and the builders’ Built Green program
Table 1. EPAct 2005: Key Provisions for Commercial
new creative class (which is now in seven states) and
Buildings
Affected Technology Tax Credit
is to relocate into the programs of certain local util-
Photovoltaics 30% (residential limit is $2,000 credit)
the top 30 major ities, as well as the National Asso-
Solar thermal systems 30% (residential pool credits eliminated) metropolitan ciation of Home Builders
Microturbines 10% (up to $200/kW credit) areas, where (NAHB) voluntary certification
Energy conservation $1.80/ft2 (federal tax deduction if there are more program, should also keep the
investments for HVAC, exceeding 50% savings vs. ASHRAE sophisticated new-home energy conservation
envelope, lighting, and 90.1-2001 standard); up to $0.60/ ft 2 builders who market growing rapidly.
water-heating systems for lighting retrofits alone will understand 9. Related green buying habits
New homes exceeding the need for should begin to affect the home-buying
50% energy savings vs. green homes.We and retrofitting market. Look at the
model code $2,000 credit for site-built homes are already seeing impact that the $228 billion LOHAS
Source: www.fsec.ucf.edu/EPAct-05.htm.
this trend in market has had on organic foods, hybrid
vehicles, ecotourism, and organic cotton,
to name just a few examples. If home
Table 2. LOHAS Consumer Markets, 2006 energy conservation could be marketed
Sustainable Ecological Alternative Healthy Personal as more of a consumer product than a
Economy Lifestyles Health Care Lifestyles Development technical product, imagine how green
Green building Ecological Health and Natural, Mind, body, and homes could benefit from this growing
and industrial home and wellness organic food spirit products consumer trend.
goods office products solutions and beverage (CDs, books, tapes) 10. More cities will begin to require
Renewable Organic/ Acupuncture, Nutritional Personal that standard commercial projects be built
energy and recycled homeopathy, products development green—especially projects that have a
alternative fiber products naturopathy seminars
major impact on the infrastructure.These
transportation
requirements and policy directions will
Resource- Eco-friendly Holistic Dietary Yoga, fitness,
efficient appliances disease supplements weight loss
spill over into the home-building market
products prevention over the next half decade. In 2005, many
Socially Ecotourism Complementary Personal care Spiritual states and quite a few cities began to
responsible and travel medicine products and require LEED Silver level certification
investing services from their own buildings. One can view
U.S. Market: U.S. market: U.S. market: U.S. market: U.S. market: the growing tendency of home builders
$76.5 billion $81.2 billion $30.7 billion $30 billion $10.6 billion to undergo voluntary certification pro-
Source: Natural Marketing Institute grams as an attempt to forestall legislative
action on the part of states and cities, and
one can predict that the green building
requirements of an Energy Star Home, Atlanta, Chicago, Boston, NewYork, Seat- trend will overwhelm that attempt over
meaning that it is designed to use 30% tle, San Francisco, and Portland,Oregon. the next five years.The success of LEED-
less energy for heating, cooling, and water This segment of the population is espe- H will begin to make itself felt in the
heating than would the same footprint cially well represented in the Lifestyles of 2008–2010 time frame as a tool for green
built to 1993 National Model Energy Health and Sustainability (LOHAS) psy- building advocates to use in persuading
Code standards.These homes are fitted chographic market grouping, which is local governments to adopt green build-
with advanced features, including radi- said to encompass up to 30% of the U.S. ing requirements in all new homes.
ant-barrier roof sheathing that reflects population (see Table 2). Of this market 11. Look for Energy Star to marry
heat away from the attic and thermosta- grouping, 65% are women. up with LEED to promote energy-effi-
tic expansion valves that are designed to 8. The LEED for Homes (LEED-H) cient and zero-net-energy, or carbon-
improve HVAC system performance. In program, now in its pilot phase, expects to neutral buildings. We will begin to see
HOME ENERGY • JULY/AUGUST 2006 www.homeenergy.org 13
8. buildings routinely cut energy use builders will have to become more green buildings in their cities and
to 50% or more below current socially responsible, if they want to get towns. I believe that this will translate
state standards through integrated their projects permitted, built, and sold— into significantly increased activity in
design and innovative technologi- and if they want to attract top talent to the home energy markets, both for new
cal approaches. As we become keep their revenues and profits growing. homes and for conservation retrofits.
more aware of the carbon prob- Look for the corporate governance and
lem, and of the ways in which socially responsible investing movements
buildings and urban settlement to begin to influence how the top ten FOR MORE INFORMATION:
patterns contribute to global builders (who account for 30% of all For figures on projected 2025 oil
warming, architects and others in new homes in the country) plan, design,
Green Building
prices, see U.S. Department of Energy,
the design and construction indus- and market their homes. Energy Information Administration,
try will begin to face up to their 12. The U.S. Green Building Coun- Annual Energy Outlook 2006 at
responsibility to find ways to cil’s LEED green building rating system www.eia.doe.gov/oiaf/aeo/
address these issues. One sign of registered more than 1,000 projects last aeoref_tab.html.
this change is the position state- year for the first time ever, totaling more
ment adopted by the American than 130 million ft2 of space. I predict For a PATH evaluation report, see the
Institute of Architects (AIA) in that the total number of LEED-regis- Toolbase Web site at
www.toolbase.org/tertiaryT.asp?
December 2005, calling for a min- tered projects will increase more than
DocumentID=4120&CATEGORYID=1505.
imum 50% reduction in building fourfold by the end of the decade, and
energy consumption by 2010. In that it will continue to increase at more For more information on green
its statement, the AIA supported than 20% per year thereafter. I further marketing, see the Natural Marketing
“the development and use of rat- predict that the number of LEED-certi- Institute Web site at
ing systems and standards that pro- fied projects will exceed 500 by the end www.nmisolutions.com.
mote the design and construction” of of 2006.This means that homeowners
more resource-efficient communities.As and home buyers everywhere will con- To view a copy of the AIA’s position
public companies, the major home tinue to see more information about statement, go to www.aia.org.
14 www.homeenergy.org JULY/AUGUST 2006 • HOME ENERGY
9. WHY IS A SOLAR ELECTRIC HOME WORTH MORE?
Andrew J. Black
Member of the American Solar Energy Society, OnGrid Solar
4175 Renaissance Dr, #4
San Jose, CA 95134
andy@ongrid.net
(408) 428-0808
(Presented at Solar 2004, Portland, Oregon, July 2004, to the American Solar Energy Society)
”Copyright 2004, Andy Black & the American Solar Energy Society. All rights reserved
ABSTRACT 2. DIRECT SAVINGS INCREASE VALUE
Solar electric systems increase the value of homes in several 2.1 Solar Reduces Home Cost Of Operation
ways. They can reduce or eliminate the energy operating cost A properly designed and installed solar electric system can
of the home. They hedge against or eliminate the effect of reduce the net electrical consumption and electric bill of a
electric rate inflation. As a component of the home, in many home. Electric bills can often be reduced to nearly $0.00 per
cases they can provide an attractive vehicle for financial month. In some cases there are minimum fees. Factors
investment. affecting the reduction in the electric bill include:
ß How much energy was generated by the solar system.
These monetary benefits are financially quantifiable. A solar ß When the energy was generated.
electric system increases home value by $20,000 for each ß When energy was consumed in the home.
$1,000 in annual reduced operating costs, according to the ß Net-Metering of energy exported to the utility.
Appraisal Institute. A solar electric system compares very ß Time-of-Use rate tariffs on the imported and exported
favorably with other home improvements in percentage of cost energy.
recovered. Often, a solar system can recover much more than ß Reduction in penalty surcharges due to offsetting high usage
100% of its cost, and this percentage actually increases over amounts (see Fig. 1).
time as electric rates rise.
A solar electric system can also supply numerous intangible
benefits that may be valued by some buyers.
1. INTRODUCTION
For solar to be accepted by the broadest spectrum of society, it
must compete on the financial terms society expects,
regardless of the intangible health or social benefits it
provides. These intangible benefits are highly valued by some,
but seem not to be something for which the broader cross
section of society will pay more. To compete on a financial
basis, it must provide a “good” financial rate of return.
However “good” is relative to its comparative risk. In Fig 1: PG&E Rate Tiers with penalty surcharges for high
financial circles, this is termed “Risk vs. Reward.” levels of usage.
For solar to be evaluated as an investment, the risk must be Average users use 130% of baseline (the first two tiers). High
quantifiable and understandable. The solar industry is getting users are penalized for excess energy consumption. Usage
beyond the feared risk that the systems won’t work. There is above average (130% of baseline) is charged at $0.194,
now much proof that they work very well. Another risk is $0.238, or $0.258 per kWh.
liquidity. If the owner must sell the property before the system
has achieved payback, can they get some money back out of 2.2 Reduced Cost Increases Value
the system? How much and at what rate does it depreciate? According to articles by Nevin in the Appraisal Journal1,2, the
increase in appraisal value for a home with an energy
This paper will show that solar electric systems in California efficiency measure (in this case, a solar electric system) is
will increase a home’s value. The increase in value is often as about twenty (20) times the annual reduction in operating
much or more than the systems initial net cost. Hence the costs due to that energy efficiency measure.
payback risk may be eliminated from the beginning. This
paper will also show that the solar system’s value as a That is to say, if a solar system can reduce the electric bill by
component of the home’s value will appreciate, not depreciate $1,000 per year, the home is worth about $20,000 more in
over much of its 30-year design lifetime. increased appraisable value.
The rational is that if the $1,000 is not spent on electricity, it is
available to be spent on a larger mortgage payment at no net
10. change in the cost of living. The amount of mortgage that can
be supported by $1,000 depends on mortgage rates and the tax TABLE 2: 2003 NATIONAL AVERAGES OF COST
rate of the borrower. RECOVERY FOR REMODELING PROJECTS.
Nevin states that after-tax mortgage rates have averaged about Percentage
Project Resale
5% over the longer term. At 5%, a $20,000 mortgage costs Project of Cost
Cost Value
$1,000 per year, hence the 20:1 ratio. Mortgage rates vary, so Recovered
depending on market conditions, the ratio has ranged from less Deck Addition $6.3K $6.7K 104%
than 10:1 to over 25:1. As of March 2004, long term mortgage Bathroom Remodel $10.1K $9.1K 89%
rates at historic lows of 5.5% before tax, or 3.3% after-tax. At Window Upgrade $9.6K $8.2K 85%
these very low rates, the ratio is about 30:1. Kitchen Remodel $44K $33K 75%
The assurance to a consumer of good resale value for the solar 2.4 Probable Limits to Immediate Appreciation
system may be important over the near-term, mid-term and Will a homebuyer pay more for a used solar system on an
long-term futures. It would be inappropriate to assume rates existing home than the net cost of a new system that they
will stay at low levels over the mid-term and long-term, so it is could retrofit to the home after purchase? That is, why should
more reasonable to continue with Nevin’s estimate of 5% a buyer pay 153% (see Table 1) for a used solar system, when
after-tax, giving the 20:1 ratio. This will be referred to as the they can get a new one at 100%? This is an open question.
“20:1 ratio product.”
However, buyers apparently do pay about 4% more for homes
Table 1 illustrates the relative increases in appraisal value with decks than if purchased a home without a deck and
compared to system net cost for several examples in contracted for its installation. Even more striking, Remodeling
California’s PG&E service area. In California the penalty Online3 reports that in Boston, San Francisco and St. Louis,
surcharges increase as the electrical usage increases. homebuyers paid over 215% of the cost of the retrofit. This
Therefore, the larger systems in the example are paying same phenomenon occurred with other types of improvements
relatively higher electric rates and see substantially larger in certain cities, even though the national average was less
savings in proportion. than 100%.
2.3 Comparison To Other Home Improvements 2.5 Appreciation, then Depreciation
A solar electric system compares very favorably with other As the systems age, they should appreciate if electric rates
home improvements in percentage of cost recovered. Often, a rise. The more rates rise, the larger the 20:1 ratio product on
solar system can recover much more than 100% of its cost. savings. This will continue until near the end of life when
The last column in Table 1 shows the percentage of cost depreciation can be assumed to occur (Note: “depreciation”
recovery for the three solar cases. here refers to the real loss in financial value, and is unrelated
to the “depreciation schedules” used in taxation).
Remodeling Online3 reported in its “2003 Cost vs. Value
Report” on the relative cost recovery of common types of Depreciation will begin to occur a few years before the 25
home improvements based on data from national home year warrantees on the solar modules expire, as the inverters
remodeling and home resale surveys. Some of these projects begin to need replacement, and as the system requires more
are highlighted in Table 2. The best cost recovery of all maintenance due to age. During this period, it is anticipated
common remodeling projects was the addition of a deck. On that the system’s 20:1 ratio product based on the much larger
average it returned 4% more in resale value than it cost. future savings will be discounted by the depreciation into end
of practical life.
It should be noted that all these resale values are in addition to
the benefit enjoyed by having and living with each project 2.6 Price Support
after completion. The same can be said of solar. The solar In the future, homebuyers may not be willing to pay more than
owner gets to enjoy the utility bill savings and any desired 100% of contemporary costs for a new system. The 20:1 ratio
non-financial benefits. product shows there may be price support for paying at least
TABLE 1: EXAMPLE APPRAISAL INCREASES IN VALUE FOR CALIFORNIA HOMES
Pre-Solar Pre-Solar Usage System Monthly Final Net Appraisal Equity % Cost
Bill (kWh per Month) AC Size Savings Cost Increase @ 20:1 Recovered
$80 600 2.6 kW $73 $17.5K $17.6K 100%
$190 1100 5.2 kW $184 $31.4K $44.2K 141%
$310 1575 7.8 kW $303 $46.3K $72.6K 157%
Variables: $3.00/W Rebate, 7.5% State Tax Credit, 31% Federal Tax Bracket
Net cost includes a Permit Fee of $600 & Time-of-Use meter fee of $277
Simple roof installation by a full service provider with no complications. Utility Territory PG&E XB.
12. 5. INTANGIBLE BENEFITS purchase a more expensive home custom-built for this
There are numerous intangible benefits that will attract buyers purpose6. Wood further states that market appeal and resale
as well; environmentally sound energy use & self-production, value are lowered when the energy-conserving home looks
the feeling of independence from the utility and its high or noticeably different from most others.
rising rates, and incorporation of high technology that some
will enjoy having built into their home. 7. CONCLUSION
Several ways of demonstrating that solar electric systems
6. EXAMPLES IN THE MARKETPLACE increase the value of homes have been shown, reducing the
6.1 Few Comparables To Date financial risk to purchasers. Solar electric systems can reduce
There are few if any documented cases where a solar electric or eliminate the current and future energy operating cost of the
home clearly sold for a quantifiable higher amount vs. its home. They hedge against or eliminate the effect of electric
comparables. rate inflation. As a component of the home, in many cases
In California, as of March 2004, there are about 9,000 grid they can provide an attractive vehicle for financial investment.
tied solar homes, 94% of which were installed in the last three These tangible benefits are financially quantifiable. A solar
years, since the power crisis. There are about 4,000 more in electric system increases home value by $20,000 for each
the queue to be installed in the next year. $1,000 in annual reduced operating costs due to the system. In
California, a solar electric system compares very favorably
Since the normal occupancy time of a home is about 7 years, with other home improvements in percentage of cost
many of these new solar homes have not sold. It is likely that recovered, often recovering more than 100% of its cost.
most homeowners who install solar are planning on staying in
their homes longer than average, or they would likely not have 8. RECOMMENDATIONS
made the investment. Therefore, relatively few solar homes 8.1 Future Areas of Study
have sold throughout the state. A survey is needed of actual retail sales of solar homes. The
study might test resale value against comparable homes and
Once these homes begin going on the market in large contemporary local net installed system costs.
numbers, and the market can evaluate the claims of reduced Another study might evaluate the change in resale value when
operating costs and assign them a value, studies can be both buyer and seller are informed of the ways of valuing a
conducted to determine the validity of the claims in this paper. solar system on a home.
It will then be possible to compare a solar home side by side
with a similar non-solar home. 8.2 Suggestions for Implementation in Other Areas
In the author’s opinion the most important factors that could
6.2 Reasons For Confidence improve solar financial viability in other areas are:
Approximately 13,000 homeowners in the last three years ß Implementation of Time-of-Use Net Metering
have seen enough value in solar systems to make a major ß Establishing a tiered electric rates penalizing high users
financial commitment. As long as their systems perform, they ß Small and declining subsidies as needed
are likely to have that value realized. This will support the Small subsidies may be needed in certain regions with low
market in two ways. They have a higher likelihood of electric rates until electric rates rise and solar costs fall as has
purchasing solar on their new homes when they move. The happened in California. There are several states that have
author has already seen this happen in three individual cases. sufficiently high electric rates. If those states adopted Time-of-
They will provide examples and word-of-mouth in their Use Net Metering and a tiered rate structure, solar for large
communities that the systems have and create value. users to be very close to financially viable without any
While the 13,000 may have purchased primarily for their own subsidy, as is the case in California.
use, it is reasonable to conclude there are others who would be
interested in purchasing, thus creating a market support for 9. REFERENCES
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http://www.remodeling.hw.net, March 5, 2004
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Residential, Small Business and Large Business Sectors 1970 to 2001,
6.3 Counter Examples and Caution California Public Utilities Commission, November 2001
Many homeowners and purchasers have opinions about the (5) Local Government Commission, Californians Willing to Pay More for
Solar Homes, Currents Newsletter,
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are looking at and don’t object. If the home looks weird it can (6) Pursaga, Joyanne, Healthiest Homes Not Catching On, New Media
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http://www.fims.uwo.ca/newmedia/energy/energy_pursaga_hhouse_d2_p.htm
Toronto real estate appraiser Alan Wood finds that while , December 2003
homeowners are willing to invest solar, most are unwilling to
