'Solar bank': Will budget-cutters put it in eclipse?

There's a dark cloud over boosters of solar energy. It looks as if solar power and energy conservation -- two ways of lessening US dependence on foreign oil -- may be getting less funding from Washington.

Recent budget-cutting proposals affecting a "solar/conservation bank" have angered solar advocates. They accuse President Carter of a "betrayal of a promise" to speed the country toward receiving 20 percent of its energy from solar power by the year 2000. Tax credits, federal research, and the solar/conservation bank were to be the means for achieving this goal.

Although a federally funded solar/conservation bank still may be in the nation's energy future, it may not have enough money in it to stimulate the young alternative-energy industry.

The solar/conservation bank is a financing plan that had been backed by the Carter administration and many members of Congress before the recent drive to balance the federal budget. Federal money was to be pooled -- much as the Federal National Mortgage Association (or "Fannie Mae," as it is known) is a pool for home improvement mortgages -- and made available through local banks to homeowners at low interest rates. By cutting the financing cost of energy conservation equipment an solar power devices, more sales would be made and the industry would grow.

In January, the administration proposed $150 million for solar and $300 million for conservation. Then came the budget cuts. The President asked that, at least for this year, the conservation side of the bank get nothing and solar receive only $47.5 million -- enough to organize and to make a few initial loans.

In Congress, there are indications that the bank will be created, but weather the appropriation committees fund it at a substantial level is a major question.

Herb Epstein of the Solar Lobby contends that "it is blind and backward for President Carter to cut those very programs that offer the greatest promise of reducing inflationary pressure." Conservation and solar, he says, are the "only effective strategies" for cutting dependence on foreign oil.

A fully funded solar/conservation bank still is necessary for the nation to reach its 20 percent solar goal by the turn of the century, says Maxine Savitz, the Department of Energy's (DOE) deputy assistant secretary for conservation. Budget-balancing will cause a nine-month delay, she points out, but that should not make a major difference in the 20-year program.

"A lot of progress is being made by the industry already," she says. "Solar already has a healthy tax credit (raised from 22 percent to 40 percent under current legislation) and the enthusiasm seems to be growing."

How much would the solar/conservation bank help to stimulate industry? Apparently, quite a bit in the short run.

One solar equipment salesman in Maryland contacted by the Monitor says there is no lack of interest among visitors to his shop, but most find they are unable to finance the equipment. Visitors learn that active solar equipment begins around $1,500 for a basic hot water unit, plus installation, and ranges upward many thousands more, depending on the particular needs of a house.

If aid in financing is not available through the federal government, the answer may be for utility companies to sell or lease solar equipment to customers. The California Public Utilities Commission recently asked four major companies to plan a program to install 175,000 solar water heaters throughout the state.

DOE Deputy Assistant Secretary Savitz says she sees utilities as "one of several ways" of financing and delivering solar equipment. And George Tenet of the Solar Energy Industry Association, which represents 300 solar device manufacturers, says bringing utilities into solar sales and installation is "certainly viable."

"They have an instant network of distribution," Mr. Tenet points out. "But I don't know how enthusiastic the utilities or the solar people are to have them in the business."

Solar advocates, such as Mr. Epstein of the Solar Lobby, contend that large utilities could quickly squeeze out small solar contractors and dominate the market. Mr. Epstein says he believes utilities should have a "limited and circumscribed role" in solar energy development.