A California nonprofit is creating a program that it hopes would make it easier for cities and counties to offer solar financing to their denizens.

A California nonprofit plans to launch a program that aims to make it easier for cities and counties to offer solar financing to their residents.

The California Statewide Community Development Authority (CSCDA), a joint power authority of the California State Association of Counties an the League of California Cities, is developing a statewide solar financing program that would essentially be a much larger version of the one launched by the city of Berkeley last fall.

Berkeley made headlines when it created an innovative program in which the city would sell bonds to pay for installing solar energy systems for its residents and businesses. The residents then repay the city via property taxes, plus interest, over a 20-year period (see Berkeley to Launch Solar Financing Program).

Berkeley hired Oakland-based Renewable Funding to administer and line up financing for the program, which was limited to a pilot scale of $1.5 million partly because willing investors were hard to come by.

The CSCDA has hired Renewable Funding to develop a similar program – its member cities and counties could join it instead of creating their own.

The program would solve some of the challenges faced by cities and counties in trying to line up financing and administering their own programs, said Cisco DeVries, president of Renewable Funding.

"It allows you to finance at a big scale and should allow for a more cost-effective program," DeVries said. "It also allows for more diverse bonds, which would allow for cheaper bond rates."

Making solar affordable has been a challenge to overcome for an industry that wants to see a mass adoption of its products and services. Thus far, consumers nationwide rely heavily on rebates and other incentives offered by federal, state, local governments and even utilities to cut the expensive upfront costs of buying and installing a solar energy system.

"Our program offers a good offset to the biggest hurdle for solar – the big upfront costs," said Terrence Murphy, a program manager at the CSCDA. "Cities and counties that are operating their own programs now have to allocate current employees to do the work. Through us, they don't have the same responsibility, but they can still offer the same types of programs."

The CSCDA wants to make the program available not only for solar installations but also for energy efficiency improvements, Murphy added. The energy efficiency improvements would have to be permanent to a home, so replacing windows and adding insulation would count, but not changing light bulbs. 

DeVries is the architect behind Berkeley's program. He was working as Mayor Tom Bates' chief of staff and came up with the idea of using special tax districts to sell bonds and finance solar installations. Local governments throughout the country have used special tax districts to pay for sanitation, utilities, fire services and other public services.

Berkeley's program was so popular that it received all the applications it could accommodate in nine minutes. Renewable Funding, which was founded in 2008 and has 12 employees, bought the bonds issued by Berkeley.

The California Legislature then passed AB811 last year to ensure that all cities and counties have the authority can finance solar installations and collect payments via property taxes. Selling bonds isn't the only way for local governments to fund their programs.

Sonoma County in northern California launched its program in spring this year. It set aside $45 million from its treasury and another $70 million from the Sonoma County Water Agency to fund the program, which is not only for solar power generation but also energy efficiency projects.

Boulder County in Colorado launched its program in April this year and hired Renewable Funding to administer it. Boulder County could issue up to $40 million in bonds for the program.

The CSCDA program is scheduled for deployment this fall, DeVries said. After cities and counties sign up, Renewable Funding will work with them to put the program to work. Residents and businesses should be able to start signing up in early 2010.

DeVries and his staff have been analyzing the potential demand of the program. Funds could come from bonds or direct capital, he said. His firm already ha lined up the Royal Bank of Canada as one of the underwriters.

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