For many homeowners, the idea of slashing their energy bills by installing solar panels on their roofs or undertaking solar retrofits is appealing, but they cannot afford to do so, because of significant upfront capital costs.
But borrowing a concept employed by about 20 other states, lawmakers are backing a bill that would allow local governments to help property owners install renewable energy systems or undertake energy efficiency projects by loaning money to residents and having it repaid through a special property tax assessment.
The legislation, SCS-1406, which cleared the Senate Environment and Energy Committee yesterday, is viewed by clean energy advocates as another tool to help grow the solar energy industry in New Jersey. The bill would direct the state Economic Development Authority to create low-cost sources of financing that towns participating in the program could tap.
“We see it as another means to address a significant hurdle to installing solar—the large upfront capital costs,” said Fred Zalcman, speaking for the Solar Alliance, a coalition of large solar manufacturers and installers.
Intimidating Upfront Costs
The initial capital cost for installing a solar system can be intimidating, often reaching tens of thousands of dollars. Under the bill, a homeowner could borrow the money at low interest rates and pay it back over 10 years, according to Sen. Robert Smith (D-Middlesex), a sponsor of the measure and chairman of the panel.
“We think it’s a good bill,” he said. “It’s being done in many other states.”
In addition to paying back the loan through a local property tax assessment, property owners could decide to pay it off by assigning the solar renewable energy certificates (SRECs) their systems earn to the municipality or the authority. The certificates, which can sell for more than $650, are earned for each megawatt of electricity produced by the solar system.
Environmentalists backed the bill, too.
“It’s a big bill for us here and nationally because it creates another tool for financing energy efficiency and renewables,” said Jeff Tittel, executive director of the New Jersey chapter of the Sierra Club. “In places moving away from solar rebates to market-based programs, it tends to work very well.”
In recent years, New Jersey, which is second only to California in number of solar installations, has sharply curtailed its rebate program for solar and moved to a system that relies primarily on solar certificates to finance systems, both small and large.
Matt Elliott, clean energy advocate for Environment New Jersey, agreed. “It gives more people access to solar,” he said. “For some people, the upfront cost of solar is still a barrier. This removes that hurdle.