Solar energy gets a new 'lease' in Oceanside, Calif.
This quiet seashore community has just made solar energy history. Under a unique venture guided by local government and funded by private investors, Oceanside - nestled on the coast between San Diego and Los Angeles - has become the first city in the United States to lease solar hot water systems to local consumers.Skip to next paragraph
Subscribe Today to the Monitor
The program, launched Dec. 21, already has generated an unprecedented (for solar) $20 million in private investment and sparked interest nationwide. The venture, developed under a state energy program, centers around a Solar Municipal Utility (SMU), which sets the city up as a middleman between consumers and selected solar businesses.
Its attraction is threefold:
* Homeowners and businessmen are spared the large and sometimes prohibitive investment necessary to purchase a solar system. For a small deposit, consumers can lease solar equipment from city-approved dealers, who retain ownership of the systems and all responsibility for maintaining them.
In addition, 55 percent of an individual's monthly solar utility bill - collected by the city - qualifies for a Californa state tax credit. Although such credits are available for individuals who purchase solar equipment, the only way to take credits for leasing is if the leasing is done through a city SMU.
* The three companies approved to operate in Oceanside - Planned Energy International, Solar Energy Leasing Corporation, and World Energy Leasing - act, in essence, as tax shelters for private investors.
The companies arrange investment packages that provide them with capital to purchase solar equipment for leasing - and that offer investors substantial federal tax breaks, including credits for investing in capital equipment, in renewable energy equipment, and depreciation.
So far, the three companies have attracted $20 million in private investment, with several million dollars more under negotiation. That sum ''is the largest investment of private capital in solar in one place ever,'' says Andy Konigsberg , who helped develop the Oceanside SMU concept as project manager for Western SUN, a federally funded program that provided start-up funds for the Oceanside project.
* The city will add to its coffers by charging a 10 percent fee on the gross revenues it collects. In addition, as more consumers sign up for solar leasing - the city's first-year goal is 1,200 systems - there will be a reduction in Oceanside's overall energy demand.
Most important, say solar energy activists, the Oceanside MSU will help speed commercialization of solar technology because it deals with the two principal barriers that currently exist in the solar marketplace: the high initial cost of investing in a system and lack of consumer confidence in solar equipment. The former burden is removed from the consumer through the leasing arrangement; the latter is at least partially eased by the city's involvement in passing out solar information and in authorizing solar firms to do business through the SMU.
An average resident's solar hot water bill (about $25) may for the time being be slightly more than a gas or electric bill. But leasing advocates say that a solar lease will pay off both in tax credits and as natural gas prices begin to escalate (natural gas prices in California currently are among the lowest in the country).
''It's a cost-saving plan that I was interested in,'' says Wolfgang Kupka, one of three partners who own a seven-unit apartment building and the city's first SMU customer. ''I'm looking forward to seeing a substantial reduction'' in hot water bills.