San Fran Finds Novel, and Cheaper, Way for Businesses to Go Solar

A new initiative will allow Bay area small businesses to collectively purchase solar systems, cutting both upfront costs and government red tape

Moscone Center
Solar electricity system on the roof of the Moscone Center, San Francisco's largest convention center/Credit: Mark H. Ambinder

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California Gov. Jerry Brown set a lofty new target this week: to generate enough clean green energy from rooftop solar panels and small wind turbines to power 3 million homes statewide by 2020.

Speaking at a UCLA clean energy conference on Monday, the governor said that 12 gigawatts, more than half of California’s 20-gigawatt renewables goal, should come from local, distributed generation — namely, small-scale clean energy projects on homes and businesses. The goal, he said, is to skirt the high costs and extensive review periods of utility-scale installations.

Now, a new initiative in San Francisco could at least begin to help turn Brown’s big idea into reality.

Earlier this month, the city kicked off its three-month-long Solar@Work program that allows smaller businesses in the Bay Area to collectively purchase solar systems.

Jenna Goodward, an associate at the World Resources Institute (WRI), said the city approached her organization with the idea after she co-authored an April report highlighting cooperative solar purchasing.

The study found that banding businesses together to buy solar panels could shrink upfront installation costs by up to 15 percent and cut by three-quarters the time spent on processing permits and fees.

“San Francisco was working with its commercial residents and local businesses on solar [installations],” she told SolveClimate News. “But even though it was helping them with feasibility studies, there wasn’t a lot of uptake. It found that one of the … barriers was upfront costs and the lack of access to affordable financing.”

Currently, most government incentives are geared toward larger businesses.

For instance, only big box stores like Walmart and warehouses with massive rooftops are eligible for the federal 1603 treasury cash grant, which covers 30 percent of renewable energy project costs. Big corporations, meanwhile, often see returns from the long-term power purchase agreements that come with installations.

But for property owners with limited roof space and smaller businesses, decades-long agreements “don’t always create the sort of payback that the particular market segment really needs to get excited,” Goodward said.

“That led us to realize that there needed to be a new program that brought in both the best pricing available — making use of a group model to get a discount — and combined that with financing options that would really make [solar] affordable,” she said. “Aggregating their demand was a way to get returns to scale.”

WRI teamed up with Optony, a Silicon Valley-based solar consultancy, and the National Renewable Energy Laboratory (NREL) to scout out a solar provider to carry out its collaborative purchasing project.

San Mateo, Calif.-based SolarCity will offer financing options to at least 20 property owners in three Bay Area counties and the cities of Richmond, El Cerrito and Albany, including solar leasing, capital loans and loan guarantees.

The solar firm will also offer custom design and installation for all solar arrays, and, in some cases, monitoring, performance guarantee and insurance.

“Traditionally it has been possible to make solar affordable for large businesses, and it has been possible to make it affordable for homeowners,” said Jonathan Bass, SolarCity’s director of communications. “But it has been harder to make it affordable for small- and medium-sized businesses. This program allows us to do that.”

SolarCity, which has more than 15,000 customers in 11 states plus the District of Columbia, works mainly with homeowners, government and big commercial enterprises like eBay.

He said that he has already seen a “tremendous amount of interest” among area business for the Solar@Work program.

“Businesses are looking to reduce their operating costs, and they generally want to do something positive for the environment,” he said. “If you could allow businesses to pay less for solar than what they pay for other forms of electricity, then they’ll overwhelmingly choose [solar].”

Solar@Work installations are expected to total more than 2 megawatts of solar capacity by the end of this year. Commercial solar power in San Francisco currently generate 5 megawatts of electricity, compared with 7 megawatts on government and residential properties.

“The city has the ambitious goal of meeting its electricity needs with 100 percent renewable energy,” Melanie Nutter, director of San Francisco’s Department of the Environment, said via press release announcing the project. “So we need to do everything we can to make sure our local and regional building owners have the ability to install renewables with minimal up-front investments.”

Goodward of WRI said that although the program’s deadline is set for Oct. 14, additional rounds in the Bay Area and across California might be organized.

“If Solar@Work gets a lot of participation and a lot of uptake, there are a lot of cities who would want to do this,” she said, adding that she had already discussed the program with officials from two other cities.

“I think this could pick up a lot of steam.”

Cutting Red Tape

A statewide expansion of the program may indirectly help tackle another obstacle to achieving Brown’s goals for distributed generation: miles of red tape and high permitting costs.

“Hopefully we’ll get insights from one city that can inform best practices in another,” Goodward said. “Eventually you could see regions working to coordinate their permitting, but that would be a step beyond this particular initiative.”

Ethan Sprague, director of government affairs for SunRun, a San Francisco solar provider, said that variation on permitting processes between jurisdictions causes long wait periods and higher fees.

Nearly 18,500 jurisdictions nationwide have permitting authority on rooftop solar systems, according to the U.S. Department of Energy, though few coordinate their programs or offer online paperwork.

“That whole bureaucracy is so twentieth century,” Sprague told SolveClimate News. “If this market is going to grow and provide economic benefits to the state, we really need to improve the underlying infrastructure that is slowing down adoption.”

At the UCLA conference on Monday, SunRun unveiled a new study from the economic consultancy AECOM that says simplified permitting processes could generate more than $5 billion in additional growth for California, an increase of nearly 20 percent of the current market.

The report cautions that failure to adopt more efficient residential solar permitting could jeopardize the anticipated $30 billion in economic gains from natural market growth in California.

SunRun reported in January that local solar permitting and inspection processes add an average of more than $2,500 per home installation nationwide.

“Because the permitting bureaucracy is unnecessarily increasing the cost of solar, it is preventing a lot of customers from going solar,” Sprague said. “Our ability to serve customers is based on our ability to provide them energy at a cost at or below their current rate. If we can remove that [$2,500] cost, we could serve more people.”

Beyond California

He noted that the permitting studies were meant to inform not only Californian jurisdictions, but also participants in the DOE’s $12.5 million Rooftop Solar Challenge, a program announced in June as part of its SunShot Initiative.

The challenge aims to assist municipal governments in slashing the cumbersome costs of siting, permitting, installing and connecting small-scale solar systems.

“The opportunity is ripe for local jurisdictions to jump on this bandwagon,” Sprague said.

He said that not only does streamlined permitting “help those people who couldn’t afford to go solar now afford it, but for those who could afford it, it increases the benefits that they would get.”