Solar EnerTech (SOEN)

[OCKHAM'S RAZOR]

At the end of 2011 there were approximately 100,000 installations and 1GW of solar PV in California (1). The state has dual goals of one million solar roofs by 2018 and 12 GW of distributed generation by 2020. Can California cities scale their clean energy infrastructure by an order of magnitude over the next six to eight years while attracting investments and generating local jobs?

The math says yes and the answer to the future of clean distributed energy in California may be found in Sonoma County.

Sonoma County and the Future of Energy

Here’s the math: the city of Sonoma had 507 solar watts per resident and 4.5 solar installation per 100 residents at the end of 2011, according to Environment California’s “California Solar
Five Reasons Why California Cities Will Build One Million Solar Roofs and 12 Distributed GW by 2020

California Cities Have dual goals of building One Million Solar Roofs and 12 Distributed GW by 2020

Cities 2012”. (1) This does not sound like much. However, if you extrapolate these numbers
to California’s 38 million residents, the state would have 19 GW and 1.7 million installations of solar. This would mean that the Golden State would surpass its 2020 distributed generation goal by 45% and the number of solar installations by 70%.

Sonoma achieved these numbers in less than three years, in the midst of a national financial crisis, and despite opposition from Federal Housing Finance Agency.
Is it a stretch to think that California cities and counties can achieve over the next eight years under friendlier economic conditions and ever-decreasing solar costs what Sonoma has done in less than three years?

What is the Sonoma County Energy Independence Program?

The centerpiece of Sonoma’s clean energy program is the Sonoma County Energy Independence Program. SCEIP is a PACE (Property Assessed Clean Energy) program established March 2009 with the goal of “improving performance in 80% of Sonoma County homes and commercial spaces to highest cost-effective efficiency levels.”

PACE is a local municipality finance program that enables municipal governments to tap private capital markets to finance energy efficiency and clean energy projects for homes and commercial properties through an assessment on their property taxes.

Sonoma County’s PACE program for instance has the following characteristics:

The financing takes the form of an assessment, not a loan. Unlike a loan, an assessment is attached to the property rather than the individual.
The assessment takes the form of a lien, so the payback responsibility automatically transfers to subsequent owners if the property is sold before the assessment is fully paid off.
Financing must be 10 or 20 years and is paid through an assessment on the owner’s annual property taxes.
Improvements must be permanently fixed to the property.
Project size must be less than 10 percent of the value of the property.

PACE financing was originally designed to get around the fact that energy efficiency and clean energy investments have longer-term payoffs while the capital costs generally need to be borne up front.(2) The concept of PACE was created in 2005 in California and soon spread to 23 states around the nation.(3)

Sonoma and Boulder County’s success in attracting investments, creating jobs, and building a clean energy economy has spurred other municipalities around the country to adopt PACE programs. Miami-Dade County, FL, for instance, has announced a $550 million commercial PACE program led by Ygrene Energy, a Santa Rosa (Sonoma County)-based financial services company.(7) Ygrene is also targeting a $100 million PACE fund for Sacramento, CA.

These two PACE programs together will generate 17,000 jobs and $2.3 billion in economic activity, while using private capital only, according to the PACE Commercial Consortium.(8)

If the whole US achieved Sonoma’s 507 solar watts per resident and 4.5 solar installation per 100 residents by 2020 we would have 159 GW of solar and 14 million solar installations. This wattage would be six times larger than what Germany, the world’s solar market leader, has achieved so far and it would represent about 15% of America’s peak power needs. Sonoma did its part in just three years.

I asked Sonoma County Energy Indepence Program’s Diane Lesko what were the most important ingredient in building it into a winning program. “Political will,” she said without missing a beat. “You need leadership coming together to achieve our common goals.”
Sources:

(1) “California Solar Cities 2012”, Environment California Research & Policy Center , January 24, 2012 http://www.environmentcalifornia.org/reports/cae/californias-solar-cities-2012.

(2) PACE Financing, Wikipedia, the Free Encyclopedia, http://en.wikipedia.org/wiki/PACE_Financing

(3) “What is PACE?”, http://pacenow.org/blog/about-pace/

(4) “Economic Impacts from the Boulder County, Colorado, ClimateSmart Loan Program: Using Property-Assessed Clean Energy (PACE) Financing”, National Renewable Energy Labs, July 2011.

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