Financing
Financing your Solar Electric System is the biggest challenge. The typical cost range per 1,000 watts or kilowatt (kW) for a grid-tied only system (no batteries) is $8,000 to $9,500. Currently, after Federal and State rebates the typical cost range is $4,500 to $5,500 per kW. The Federal rebate is 30% of the total system cost. The State rebate varies depending upon the incentive step level that the California Solar Incentive (CSI) program is within; currently, for the San Diego Gas & Electric (SDG&E) territory the program is in step level 6 or a rebate of $1.10 per kW. Once the total number of megawatts for step 6 is reached the program moves to the next step. The rebate for step level 7 is $0.65 per kW.
The bottom line is the upfront out of pocket cost is $8,000 to $9,500 per kW for your Solar Electric System. The Federal rebate will be received with your filing for the tax year the system was installed. Therefore, if your Solar Electric System was installed in June 2010 then the rebate will be received with your 2010 federal tax filing. The State rebate will be received within 45 days of project completion. While many residents support the idea of renewable energy, they frequently lack the up-front cash needed for these projects. In addition, since most people change houses every couple of years, it doesn’t make financial sense for a property owner to pay the large price tag, only to have the benefits reaped by a future homeowner.
Now for the good news, America’s Finest City and County is about to earn it’s most important title yet, as it transitions into America’s most renewable City and County. We are truly luck to reside in the best part of the country what else could we ask for and now we have the elected officials with our best interest in mind. .
The City of San Diego Program is the Property Assessed Clean Energy (PACE) program and the County of San Diego Program is the Go Solar…San Diego County.
In addition to these programs there are Federal Programs through “The American Recovery and Reinvestment Act of 2009” including the following:
- Conventional Energy Efficient Mortgages (EEMs)
- Federal Housing Authority (EEMs)
- Veterans Affairs (EEMs)
Quick Links
- PACE Programs
- Go Solar. . . San Diego County
- Conventional Energy Efficient Mortgages (EEMs)
- Federal Housing Authority (EEMs)
- Veterans Affairs (EEMs)
Financing Options Property Assessed Clean Energy (PACE) Programs
The uniqueness of the PACE Program is that it provides the up-front financing and then attaches that financing to the parcel’s property tax bill. The loan is structured with a 20-year, fixed-interest rate and accomplishes two significant objectives:
- Other than a $300 application/setup fee, there are no out-of-pocket costs to the homeowner.
- The property tax assessment transfers from one homeowner to another upon sale of the property.
With the proper mix of solar photovoltaic (PV) panels and energy efficiency measures, going solar can be cash-flow positive from day one. In one financial model demonstrated by John Helminski, emerging and renewable technology program manager for the City of San Diego, a typical 1,500-square-foot home could be renovated with energy efficiency features and solar panels for $36,433. When financed through the Clean Energy Program, that project would have a monthly cost of $284.14, but would result in a monthly energy bill savings of $304.34.
Coming soon to a rooftop near you
When fully implemented in late June 2010, the PACE Program will be available on a first-come, first-serve basis to residents in the City of San Diego. Up to $20 million will be available in the first phase, providing project funding for approximately 600 to 800 homes.
With the financing component in place, homeowners in San Diego will now have a clear pathway to solar, renewable energy and energy efficiency projects. As a result, this program creates jobs, promotes energy independence and it’s good for the environment.
Property Assessed Clean Energy or “PACE” programs, also commonly referred to as AB811 - style programs, allow local government entities to offer sustainable energy project loans to eligible property owners. Through the creation of financing districts, property owners can finance renewable onsite generation installations and energy efficiency improvements through a voluntary assessment on their property tax bills. The assessment district approach adds a powerful new option to the clean energy finance landscape.
Property owners benefit by avoiding the upfront installation cost of renewable onsite generation systems and energy efficiency measures and eliminating concerns that they will sell the property before recovering the system investment from utility bill savings. The result is that property owners in participating jurisdictions can finance their greening efforts with a minimal level of financial risk.
Cities benefit from forming clean energy assessment districts by providing options to its constituents to install clean energy technologies. Clean energy investments funded through these programs will assist local governments in reaching the goals of Assembly Bill 32, the California Global Warming Solutions Act of 2006. The PACE mechanism requires little or no investment of general funds and presents very low risk given that the loan repayment is a senior lien on the property, ahead of the mortgage itself.
- The city partners with a company to administer the program (or the city decides to do it themselves). The program is then usually funded with municipal bonds.
- The homeowner gets a site evaluation for solar power or energy efficiency improvements with any company they choose.
- Once a quote is given, the property owner applies with the city program administrator. A small fee covers the cost of the municipal solar financing program administration and discourages frivolous applications. This process can be administrated by HT Solar on your behalf at no added cost.
- Once the homeowner’s solar system is approved by the city, the program administrator pays the installer for the system that the homeowner purchased. The check is forwarded directly to the solar installer. There is no upfront payment for the homeowner, except possibly a deposit to the solar installer. This deposit will be refunded to the homeowner upon receipt of payment to the solar installer from the PACE program.
- The property owner pays it off on his or her property tax bill over 20 years, at a competitive rate of interest.
- If the home is ever sold, the solar system goes with it along with any tax liability.
- For starters, property tax financing solves the problem of “what happens when I sell my home?” The simple answer is that the solar power system and whatever tax liability you have both go to the new owner of your home.
- Secondly, the program doesn’t require shelling out any cash upfront or reducing equity in your home.
- Third, it’s backed by the city, so people know they won’t get scammed, and the financing is obviously secure since…well…it’s the IRS!
Go Solar. . . San Diego County Program
Source: http://www.sdcounty.ca.gov/fg3/gosolarfaq.html
The program is a public-private partnership of the County of San Diego and the commercial banking industry to offer loans to qualified property owners at attractive rates and terms to help access financing for making energy efficient and/or solar energy improvements to homes or businesses, such as installing solar systems. The details of individual loan programs available will vary based on the participating bank and the property owner's qualifications, but are generally offered in support of making energy efficient improvements and/or installing solar systems in an effort to promote regional energy independence.
- FAQs: Read this list of Frequently Asked Questions (FAQs) before getting started.
- Estimates: Obtain written estimates from a minimum of three licensed contractors.
- Participating Banks: Contact participating commercial banks for terms and loan process details. Complete the bank's loan application.
- Permits: Apply for any necessary building permits through your local planning/building office. Residents of the County's unincorporated areas can contact the County of San Diego Department of Planning and Land Use
- Property Tax Exclusion for Solar: The assessed value of your property will not increase as a result of adding most solar systems, with the exception of swimming pool and hot tub heaters. For more information contact the San Diego County Assessor/Recorder/County Clerk at (858) 505-6262.
Property owners in the unincorporated area will be able to access financing through CaliforniaFIRST for certain new energy efficiency and renewable energy property improvements, subject to program eligibility. Property owners in the City of San Diego or other cities in the region should contact your city to determine if your city will participate.
Additional details about CaliforniaFIRST program eligibility and costs are not available at this time. Limited information about the CaliforniaFIRST program is available from the program’s administrator, Renewable Funding, at http://www.renewfund.com/node/220.
What banks are participating?
A number of national and regional commercial banks are partnering with the County to offer loans to property owners for making energy efficient and/or solar energy property improvements. The list of available banks is posted here.
What are the terms of the loan? What is the interest rate?
Interested property owners should contact participating banks to determine loan terms, interest rates and other details. Criteria and terms may vary by financial institution.
Do I need a permit for installing photovoltaic (PV) solar equipment on my property?
Yes, a permit is always required. Although most properties should meet the zoning requirements to install solar equipment, all property owners/contractors should first check with their local planning/building department to verify. For residents of the County's unincorporated area, contact the County of San Diego Department of Planning and Land Use at 1-888-267-8770. Residents of the City of San Diego or other cities in the region should contact your city planning/building department.
Is there a building permit fee for installing photovoltaic (PV) solar equipment on my property? What are the costs?
For residents of the unincorporated area of the County of San Diego, there is no cost for a building permit. Under the County's Green Building Incentive program, building permit fees are waived for installation of solar equipment. Residents of the City of San Diego or other cities in the region should contact your city planning/building department for permit fee information.
Assessor Exclusion and Other Information
What is the property tax exclusion for solar?
State law prohibits an increase in the assessed value of your property based on the construction or addition of an "active solar energy system." Although the San Diego County Assessor/Recorder/County Clerk automatically reviews all building permits for any impacts to the assessed value of the property, permits for these systems are typically excluded. For more information contact the San Diego County Assessor/Recorder/County Clerk at (858) 505-6262.
What is considered an "active solar energy system" for the purposes of the property tax exclusion?
An "active solar energy system" is a system that uses solar devices, which are thermally isolated from living space or any other area where the energy is used, to provide for the collection, storage, or distribution of solar energy. An "active solar energy system" does not include solar swimming pool or hot tub heaters. For more information contact the San Diego County Assessor/Recorder/County Clerk at (858) 505-6262.
Do I need to contact the Assessor/Recorder/County Clerk to confirm that the property tax exclusion applies to my property?
No. The Assessor/Recorder/County Clerk will automatically review your permit information for any impact to the assessed value of your property. The Assessor/Recorder/County Clerk will contact you in the event that there are any questions about your active solar energy system or if further action is needed.
Conventional Energy Efficient Mortgages
Conventional EEMs are intended for buyers interested in buying an energy-efficient home. Essentially they increase purchasing power by permitting lenders to increase the borrower’s income by a dollar amount equal to the home’s estimated energy savings. Convential EEMs are offered by lenders who sell their loans to Fannie Mae or Freddie Mac. Moreover, the Fannie Mae loan is adjusted so that the value of the energy-efficient measures is reflected in the overall home value.
Federal Housing Authority EEMs
FHA EEMs exist to provide financing for homeowners who seek to implement energy- efficiency improvements. Lenders are allowed to add 100 percent of the cost of the improvements to an already-approved mortgage loan—provided that the costs don’t exceed $4,000 or five percent of the value of the home, up to $8,000, whichever is greater. Particularly important: (1) no additional down payment is required, nor do you have to re-qualify; (2) loan limits may be exceeded.
VA EEMs are available to qualified military personnel, reservists and veterans for energy-efficiency improvements when purchasing an existing home. Up to $3,000 of the improvements may be financed solely on the basis of documented costs, while $6,000 may be financed if the upgrades are deemed “cost effective." To review: if you’re looking into installing a photovoltaic (PV) system, chances are you’ve already learned that they require a sizeable upfront cost: a typical system can run you $25,000 or more. You also probably know, however, that once its installed your monthly energy bill will be a fraction of what it once was—and that, in the long run, you’ll likely end up saving money. More good news: as interest in solar continues to grow, more and more private lenders are likely to enter the market.
Home | About Us | Services | Total 5 Standard | Why Solar? | Solar Rebates | Financing | Photos | Educational Resources | Contact Us
Copyright 2010 | info@htsolar.com | 619.600.5599