There’s no doubt that solar energy production is growing fast. In the U.S., on average, there’s a new panel installation every few minutes.
But while utilities, businesses and homeowners have been adopting solar power at faster and faster rates, cities have not. The new Public Rooftop Revolution Report from the Institute for Local Self Reliance hopes to change that. The group finds that cities face unique challenges in making use of solar panels, but also highlights several that have overcome those obstacles and are now saving money and the environment.
What’s holding cities back?
Tight budgets are always a problem, but the institute says incentive policies that are stacked to favor the private sector are hurting even more. The federal government provides a tax credit that covers 30% of the cost of the solar installation and allows accelerated depreciation, which effectively cuts the cost more. But municipalities are tax exempt and therefore can’t take advantage of either.
The result is that solar energy that costs the private sector about 11 cents per kilowatt-hour can cost cities close to 16, according to the Institute for Local Self Reliance. The group strongly recommends that cities consider third-party ownership of the panels, where private companies own and install them on public property and sell solar power to the city under a long-term contract.
Council Lead Partner S&C Electric says financing won’t get in any city’s way. For years now, it has worked with a partner to allow cities to lease or rent solar solutions so cities don’t have to make huge upfront investments and they get to enjoy lower private-sector pricing.
The institute says these kinds of deals can significantly cut the cost of solar power, providing cities most of the benefits of the tax incentives everyone else qualifies for. It also recommends that the city’s approval process should be relatively streamlined and that any roofs used for the installation should have a long expected lifespan.
Cities share success stories
One of the cities profiled in the report is New Bedford, Mass., which used solar power to trim its annual electric bill by as much as $7 million -- 2.5% of the city’s total budget. The city’s panels -- on eight buildings and two nearby arrays -- were financed through Con Edison and Sun Edison. The program has been such a success that the city is now looking to expand its environmental efforts through other initiatives, such as LED street lights.
Denver used creative financing to get solar power at its airport and on affordable housing projects. All of its panels are owned by third-parties to qualify for incentives, but local government was instrumental in getting those projects off the ground. The airport loaned much of the money for the solar installation there and the loan is secured by the panels themselves. The county housing authority, meantime, leases the roof space to the company that owns the solar panels.
Raleigh, N.C., used similar financing strategies for its solar installations. It leases land to third-parties that install the solar panels, but retains an option to buy them at fair market prices after seven years once all the incentives have been collected.
The Institute for Local Self Reliance suggests there’s great potential for cities to do more with solar power. It estimates that mid-sized cities could install as much as 5,000 megawatts of solar -- one-quarter of all solar installed in the U.S. to date -- generating power at a lower cost than you can buy it from utilities.
While cities have extra obstacles in their way, several have shown that those obstacles can be overcome relatively easily. And the money saved can help finance other projects they would otherwise struggle to fund.
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