Published on California Progress Report ( Drops Another $9 Million into P...
Oh no, not I … I will surviveI’m fighting these PG&E bills that are burying me aliveSo vote No on Prop 16, to make our pow...
7/13/2010                                                              Solar power done cheap - Jun. 28, 2010             ...
7/13/2010                                                       Solar power done cheap - Jun. 28, 2010 The challenge now f...
7/13/2010                                                                    Solar power done cheap - Jun. 28, 2010 beside...
Twelve Reasons Why the Green Home Market                    Is Ready to SurgeGreen Building                               ...
performance green development on a                      addition to these energy efficiency mea-       roll out its finalize...
buildings routinely cut energy use    builders will have to become more            green buildings in their cities and    ...
WHY IS A SOLAR ELECTRIC HOME WORTH MORE?                                                     Andrew J. Black              ...
change in the cost of living. The amount of mortgage that canbe supported by $1,000 depends on mortgage rates and the tax ...
100%. This will provide a current owner the assurance that          4.1 Financial Investment Viewpoints and Teststhey can ...
5. INTANGIBLE BENEFITS                                             purchase a more expensive home custom-built for thisThe...
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PG&E Announces 30% Rate Increase

  1. 1. Published on California Progress Report ( Drops Another $9 Million into Prop 16; Asks for a $4BILLION Rate HikeCreated 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 16requires a two-thirds majority of voters to pass a public alternative to PG&E, consumers will be trapped paying these ever-escalating ratehikes 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 theirmessage.“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 isusing 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-jackour electoral process. PG&E is doing it with Prop 16, but the June ballot also has Proposition 17 – which is funded by Mercury Insurance tomaximize its profits. “If Prop 16 passes,” said Mirkarimi, “every state with an initiative process will be vulnerable to this corporate predatoryinterest.”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 toconsider 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 billionfor the utility company. And if Prop 16 passes, local municipal efforts to give customers a competing alternative would require the dauntingtask 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 CaliforniaChamber 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 Partytaking a “yes” position), and yesterday the Los Angeles County GOP came out against Prop 16. Even the San Diego Taxpayers’ Associationhas 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 theirmessage out. Ben Zolno of Sebastopol has run a YouTube campaign that prides on spending only “one-millionth” of what PG&E is spendingto 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 extranine 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 GloriaGaynor’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 petrifiedWhen 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 payI wanna dump PG&E and get clean energyI can change who sends me juice, we can break monopoly16 takes away my choice, and that really bothers meSo just vote NO ... on Prop 16Let’s turn it around now, ‘cause PG&E’s just playing meanThey’re dropping 35 mill, just to trick me with their liesAnd all the while, they’re planning a 30% rate hike
  2. 2. Oh no, not I … I will surviveI’m fighting these PG&E bills that are burying me aliveSo vote No on Prop 16, to make our power cleanI 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 intendedas 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 PolicySource URL:
  3. 3. 7/13/2010 Solar power done cheap - Jun. 28, 2010 Subscribe to Money Symbol Keyw ord Find CNNMoney on Facebook Follow CNNMoney on Twitter Home Business News Markets Personal Finance Retirement Technology Luxury Small Business Fortune Video My Preferences Right Now Solar power done cheap Intel has best quarter ever Stocks rally on Alcoa profit, Greek auction China: The new fast food nation 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 ( ) -- 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 Americas dirty, fossil fuel- $150,000 a year. See detailed profiles, job openings based economy. and more for all 25. More "Id like to see America and the world become sustainable," said Morris, a Building the Ochocinco brand transplant from Flint, Mich., whos 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 whats 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 companys 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 Theyre hooked up to the electric See all jobs grid, so when they need more power than the panels provide, theres 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 Playboys private play Fortunes 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 companys 33-year old CEO with major entrepreneurial connections. Ochocinco turns to Twitter to amplify his brand and…/index.htm 1/5
  4. 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 dont 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 Original Shows The obstacles are no doubt huge, but Rive may just be the man for the job. Hes 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% Its 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 Its growing. Last year the company had 300 employees. Now its 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. Thats 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 doesnt 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…/index.htm 2/5
  5. 5. 7/13/2010 Solar power done cheap - Jun. 28, 2010 besides, "Id rather pay a green business instead of a huge utility." The helping hand If SolarCitys customers and employees seem happy with the arrangement, they owe one entity a big thanks: the government. Thanks to a mix of federal, state and local incentives, some 50% of the costs of solar power are subsidized. Many of those subsidies are set to expire in eight years. The solar industry thinks it can compete without them, but its clear costs will have to come down. "Its dependent on a lot of key breakthroughs and variables," said Bill Ong, a solar power analyst at the investment bank of Merriman Curhan Ford. "One can debate whether they are on track or not, but progress is being made." As for solar power mounted on homes like SolarCitys model, known as "integrators" Ong said there is room for that type of power and larger commercial systems. "Its a big market for multiple players," he said, "and the integrator has this niche." But with so many challenges facing solar, and Rives proven track record seemingly allowing him to get into any industry, why hed pick one as risky as solar? For the potential. Share this Email Print Europes solar eclipse China trouncing U.S. in clean energy investing Getting a green job isnt so easy First Published: June 28, 2010: 12:12 PM ET Sections COMPANIES ECONOMY TECHNOLOGY SMALL BUSINESS PERSONAL FINANCE Worlds most profitable China: The new fast Intel has best-ever Bernanke: $40B in Should you buy energy companies food nation quarter as PC sales small biz loans stocks? Russian energy giant The parent company of KFC pick up disappears Billionaire investor T. Boone Gazprom tops the list, while and Pizza Hut reports Stronger server and PC sales The Chairman of the Federal Pickens talks about the BP and Toyota round out the explosive growth in China as help lift Intel to best quarter Reserve addresses the small impact of the BP spill and the top 5. More consumers there warm to fast ever, in second quarter as business credit crunch: More buying opportunity he sees in food. More demand for tech continues to must be done. More oil shares. More rise. More Intel has best-ever quarter as PC sales pick up Pay raises are coming -- IRS starts mopping up Bill Nygren votes for the China: The new fast food but they wont be much Windows XP just wont go Congresss tax-reporting Comcast deal nation FCC indecency rules struck away mess Debt collectors get nasty down Facebook assets frozen in BP gets stricter with claims bizarre New York lawsuit © 2010 Cable New s Netw ork. A Time Warner Company. All Rights Reserved. Terms under w hich this service is provided to you. Privacy Policy. Advertising Practices. Home Portfolio Calculators Contact Us Newsletters Podcasts RSS Mobile Widgets Site Map User Preferences Advertise with Us Magazine Customer Service Download Fortune Lists Reprints Career Opportunities Special Sections Conferences Business Leader…/index.htm 3/5
  6. 6. Twelve Reasons Why the Green Home Market Is Ready to SurgeGreen 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 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 JULY/AUGUST 2006 • HOME ENERGY
  7. 7. performance green development on a addition to these energy efficiency mea- roll out its finalized programconventional budget.A good example is sures, High-Performance Homes incor- guidelines in 2007. Given theShea Homes, in San Diego, California. porate passive-solar thermal water success of the LEED for NewShea 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 Buildingnologies. Shea’s new product line, the evidence of its commitment to building LEED-H should begin to affectHigh-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: 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 buildingrequirements of an Energy Star Home, Atlanta, Chicago, Boston, NewYork, Seat- trend will overwhelm that attempt overmeaning 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 theheating than would the same footprint cially well represented in the Lifestyles of 2008–2010 time frame as a tool for greenbuilt to 1993 National Model Energy Health and Sustainability (LOHAS) psy- building advocates to use in persuadingCode 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 marryheat 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 seeHOME ENERGY • JULY/AUGUST 2006 13
  8. 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 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 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 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 14 JULY/AUGUST 2006 • HOME ENERGY
  9. 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 (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 reservedABSTRACT 2. DIRECT SAVINGS INCREASE VALUESolar electric systems increase the value of homes in several 2.1 Solar Reduces Home Cost Of Operationways. They can reduce or eliminate the energy operating cost A properly designed and installed solar electric system canof the home. They hedge against or eliminate the effect of reduce the net electrical consumption and electric bill of aelectric rate inflation. As a component of the home, in many home. Electric bills can often be reduced to nearly $0.00 percases they can provide an attractive vehicle for financial month. In some cases there are minimum fees. Factorsinvestment. 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 exportedfavorably 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 usage100% 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 intangiblebenefits that may be valued by some buyers.1. INTRODUCTIONFor solar to be accepted by the broadest spectrum of society, itmust compete on the financial terms society expects,regardless of the intangible health or social benefits itprovides. These intangible benefits are highly valued by some,but seem not to be something for which the broader crosssection of society will pay more. To compete on a financialbasis, 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 highfinancial 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). Highquantifiable and understandable. The solar industry is getting users are penalized for excess energy consumption. Usagebeyond 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 systemhas achieved payback, can they get some money back out of 2.2 Reduced Cost Increases Valuethe 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 energyThis paper will show that solar electric systems in California efficiency measure (in this case, a solar electric system) iswill increase a home’s value. The increase in value is often as about twenty (20) times the annual reduction in operatingmuch 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. Thispaper will also show that the solar system’s value as a That is to say, if a solar system can reduce the electric bill bycomponent of the home’s value will appreciate, not depreciate $1,000 per year, the home is worth about $20,000 more inover 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. 10. change in the cost of living. The amount of mortgage that canbe supported by $1,000 depends on mortgage rates and the tax TABLE 2: 2003 NATIONAL AVERAGES OF COSTrate of the borrower. RECOVERY FOR REMODELING PROJECTS.Nevin states that after-tax mortgage rates have averaged about Percentage Project Resale5% 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 Recovereddepending 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 Appreciationsystem may be important over the near-term, mid-term and Will a homebuyer pay more for a used solar system on anlong-term futures. It would be inappropriate to assume rates existing home than the net cost of a new system that theywill stay at low levels over the mid-term and long-term, so it is could retrofit to the home after purchase? That is, why shouldmore reasonable to continue with Nevin’s estimate of 5% a buyer pay 153% (see Table 1) for a used solar system, whenafter-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 homesTable 1 illustrates the relative increases in appraisal value with decks than if purchased a home without a deck andcompared to system net cost for several examples in contracted for its installation. Even more striking, RemodelingCalifornia’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. ThisTherefore, the larger systems in the example are paying same phenomenon occurred with other types of improvementsrelatively higher electric rates and see substantially larger in certain cities, even though the national average was lesssavings in proportion. than 100%.2.3 Comparison To Other Home Improvements 2.5 Appreciation, then DepreciationA solar electric system compares very favorably with other As the systems age, they should appreciate if electric rateshome improvements in percentage of cost recovered. Often, a rise. The more rates rise, the larger the 20:1 ratio product onsolar system can recover much more than 100% of its cost. savings. This will continue until near the end of life whenThe 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. ValueReport” on the relative cost recovery of common types of Depreciation will begin to occur a few years before the 25home improvements based on data from national home year warrantees on the solar modules expire, as the invertersremodeling and home resale surveys. Some of these projects begin to need replacement, and as the system requires moreare highlighted in Table 2. The best cost recovery of all maintenance due to age. During this period, it is anticipatedcommon remodeling projects was the addition of a deck. On that the system’s 20:1 ratio product based on the much largeraverage 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 tothe benefit enjoyed by having and living with each project 2.6 Price Supportafter completion. The same can be said of solar. The solar In the future, homebuyers may not be willing to pay more thanowner gets to enjoy the utility bill savings and any desired 100% of contemporary costs for a new system. The 20:1 rationon-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.
  11. 11. 100%. This will provide a current owner the assurance that 4.1 Financial Investment Viewpoints and Teststhey can get their money back out of the system if they need to A financial life cycle analysis can test the feasibility of a solarsell. In the mean time, they can enjoy its benefits. project. The simplest test looks at all the costs and all theThe “100% of contemporary costs for a new system” level savings, including inflation, over the 30-year life of thewill vary over time. In much of the world, this is a declining project. If the net savings are larger than net costs, then theamount. In California, where the rebate on solar systems is project pays for itself in these simple terms. Generally solardeclining more quickly than gross system installed costs, the systems pay back 2 to 4 times as much as they cost. This testnet price to consumers is increasing. In California this should does not account for the “Time Value of Money” which islead to increasing levels of price support compared to costs akin to not accounting for the lost interest you could havepaid. earned elsewhere if you didn’t have to pay for the solar system up front.3. HEDGE AGAINST INFLATION3.1 Electric Rates Have Generally Increased This test can also be expanded into the Payback test, whichThroughout history, electric rates have generally trended asks when a system has “Paid For Itself.” This is considered ahigher. Fig 2. illustrates the average 6.7% annual compounded crude test, because it does not account for the future value ofincreases from 1970 to 2001. This is an effective doubling of all the assured savings that will be accrued due to the longrates every 12 years. warrantees on solar electric modules. Usually paybacks occur in 7 to 15 years, leaving 13 to 20 years of system life remaining to be enjoyed. A more detailed test looks at the Rate of Return over the same 30-year project life. All the costs and all savings are accounted for in their relative timeframe. Using an “Internal Rate or Return” analysis, the effective interest rate paid by the project can be found. This interest rate can be compared with other investments. Residential solar projects in California often have Internal Rates of Return in the 10% to 20% range, which compares favorably with the long term stock market at 10.5% over the last 80 years.Fig 2: California Public Utilities Commission 30 YearCalifornia Electric Rate History4.3.2 HedgingHedging is a financial term meaning “to counterbalance withanother transaction to limit risk.” A solar system offers a“hedge” or protection against continued rate increases.A home that substantially cuts its net electric usage is lesssubject to inflation and price spikes. The present value of thesefuture savings can be quantified using discount rates and © Copyright 2004, REgrid Power. All rights reserved.estimates for inflation rates. Larger California residentialcustomers were also subjected to changes in the rate structureestablished by the tiered pricing (see Fig 1). Fig 3: Cash flow effect of 5kW solar on a $175/month bill.3.3 Kilowatt-Hours Not PurchasedThere are many small charges bundled with the electric Cash flow is another type of test. It compares the savings ongeneration charge for each kWh. Charges for Nuclear the utility bill with the cost of financing the system. In manyDecommissioning, Trust Transfer, Transmission, Distribution, cases starting the first month, it costs less to borrow the moneyBonds, and taxes are all eliminated for each kWh that is not to put a system in, than it does to keep paying the utility.purchased. Future charges added to the electric rate will be Borrowing at a fixed interest rate gets more advantageous asavoided as well. the electric rates go up and the effective savings grow, but the loan payment stays the same. These projects often achieve4. ADDITIONAL INVESTMENT IN THE HOME positive cash flow right away, and improve as inflationA solar system offers an additional avenue for investment in increases the electric bill savings. See Fig. 3 for an example ofthe home. Like adding another room, the solar system allows a 5kW PV system offsetting a $175/month bill.the owner to put more money to work in the real propertyinvestment. There are several ways to view and test this Generally, homes that spend $65 or more a month oninvestment. electricity tend to be good candidates. Cases that show solar to be a good investment will naturally attract homebuyers who will want to get that good investment.
  12. 12. 5. INTANGIBLE BENEFITS purchase a more expensive home custom-built for thisThere are numerous intangible benefits that will attract buyers purpose6. Wood further states that market appeal and resaleas well; environmentally sound energy use & self-production, value are lowered when the energy-conserving home looksthe feeling of independence from the utility and its high or noticeably different from most others.rising rates, and incorporation of high technology that somewill enjoy having built into their home. 7. CONCLUSION Several ways of demonstrating that solar electric systems6. EXAMPLES IN THE MARKETPLACE increase the value of homes have been shown, reducing the6.1 Few Comparables To Date financial risk to purchasers. Solar electric systems can reduceThere are few if any documented cases where a solar electric or eliminate the current and future energy operating cost of thehome clearly sold for a quantifiable higher amount vs. its home. They hedge against or eliminate the effect of electriccomparables. rate inflation. As a component of the home, in many casesIn 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 solaryears, since the power crisis. There are about 4,000 more in electric system increases home value by $20,000 for eachthe 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 favorablySince the normal occupancy time of a home is about 7 years, with other home improvements in percentage of costmany 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 intheir homes longer than average, or they would likely not have 8. RECOMMENDATIONSmade the investment. Therefore, relatively few solar homes 8.1 Future Areas of Studyhave sold throughout the state. A survey is needed of actual retail sales of solar homes. The study might test resale value against comparable homes andOnce 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 whenoperating costs and assign them a value, studies can be both buyer and seller are informed of the ways of valuing aconducted 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 sidewith a similar non-solar home. 8.2 Suggestions for Implementation in Other Areas In the author’s opinion the most important factors that could6.2 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 Meteringhave seen enough value in solar systems to make a major ß Establishing a tiered electric rates penalizing high usersfinancial commitment. As long as their systems perform, they ß Small and declining subsidies as neededare likely to have that value realized. This will support the Small subsidies may be needed in certain regions with lowmarket in two ways. They have a higher likelihood of electric rates until electric rates rise and solar costs fall as haspurchasing solar on their new homes when they move. The happened in California. There are several states that haveauthor 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 largecommunities that the systems have and create value. users to be very close to financially viable without anyWhile 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 beinterested in purchasing, thus creating a market support for 9. REFERENCESsome extra, but as yet unquantified value. (1) Nevin, Rick et al, Evidence of Rational Market Valuations for Home Energy Efficiency, The Appraisal Journal, The Appraisal Institute,A survey conducted for the California Energy Commission’s, October 1998Renewable Energy Program showed that 50% of Californians (2) Nevin, Rick et al, More Evidence of Rational Market Values for Homewould be willing to pay more for a home already equipped Energy Efficiency, The Appraisal Journal, The Appraisal Institute,with solar technology, and more than 60% would be more, October 1999 (3) Alfano, Sal,.2003 Cost vs. Value Report, Remodeling Online,interested in a home that has a renewable energy system than, March 5, 2004in one that doesn’t5. (4) CPUC Energy Division, PowerPoint Slide: California Electric Rates Residential, Small Business and Large Business Sectors 1970 to 2001,6.3 Counter Examples and Caution California Public Utilities Commission, November 2001Many homeowners and purchasers have opinions about the (5) Local Government Commission, Californians Willing to Pay More for Solar Homes, Currents Newsletter,attractiveness of various solar technologies on residential,roofs. Some like it, some do not, some don’t know what they May/June 2002are looking at and don’t object. If the home looks weird it can (6) Pursaga, Joyanne, Healthiest Homes Not Catching On, New Media Journalism,hurt value. real estate appraiser Alan Wood finds that while , December 2003homeowners are willing to invest solar, most are unwilling to