Apr 10, 2009 -- STATE DEPARTMENT RELEASE/ContentWorks

The fuel is free, but most people are reluctant to pay the cost of the equipment needed to use it. That is the problem facing a growing number of local governments across America that are trying to persuade homeowners and businesses to install solar panels on their roofs to turn sunlight into electricity.

California, a leader in promoting solar power, has come up with innovative financing schemes and incentives to make it easier to use rays from the sun as a power source. These efforts are part of state and municipal leaders' push to cut greenhouse gas emissions and shore up the energy supply. State officials say the price of solar power is falling steadily in relation to hydrocarbon fuels and increasingly will provide "green" economic opportunities for their communities.

But solar power is still pricey, especially relative to electricity generated from coal. To push homeowners and businesses toward the environmentally friendly alternative, cities and utilities offer fee waivers and tax credits to homeowners and businesses installing solar panels. Installers of solar systems do their part. They offer financing options, such as "power-purchase agreements," which allow customers to buy solar power systems at a long-term fixed interest rate from a third party or to lease through 10-year leases with an option to buy.

San Francisco, for example, started a rebate program in July 2008 in which city residents can receive up to $6,000 toward the cost of solar panels. (Businesses can receive up to $10,000.) A typical 2.5-kilowatt solar system for a private house costs about $25,000. But when the city rebate is added to a separate state rebate and a federal tax credit, officials say, a solar electricity system can cost a homeowner as little as $4,000.

In September 2008, San Francisco announced a program of free energy-efficiency audits and solar assessments for the city's businesses. Specialists will advise businesses on ways to save energy and on the costs and expected savings from installing solar systems.

Across the San Francisco Bay, Berkeley, California, became the first American city in the fall of 2008 to adopt a program of city-backed loans to help homeowners install solar panels. The 20-year loans can be paid off as part of owners' property taxes. The plan reduces the risk for homeowners. If the house is sold, the new owner continues the payments. Palm Desert, California, adopted a similar program.

The incentives work. In 2008, despite a shaky economy, residents and businesses installed photovoltaic panels on their rooftops sufficient to generate a record 158 megawatts, two times more than a year before, according to the California Public Utilities Commission.

SOLAR CITIES

Another program for businesses is being funded in part by a $200,000 grant from the U.S. Department of Energy. In 2007 and 2008, the department named 25 cities as "Solar America Cities" in recognition of their efforts. Each received a grant of $200,000.

"These Solar America Cities aim to jump-start integration of solar power," said then-Energy Secretary Samuel Bodman in announcing the 2008 recipients.

California has the most Solar America Cities, a confirmation of the state's strong commitment to solar energy. In 2008, they were Sacramento, San Jose and Santa Rosa. In 2007, Berkeley, San Diego and San Francisco were selected.

One week after taking office, President Obama said, "California has shown bold and bipartisan leadership through its effort to forge 21st century standards."

HOMEOWNERS, CITIES PRODUCE ENERGY TOO

The state has been promoting solar power for more than a decade. A California law adopted in 1995 requires electric utilities to grant credit to residents for sending into the grid electricity they have produced but not used. The concept, known as "net metering," means that a typical home with solar panels or a wind turbine can end up with an electric bill close to zero.

"While you're at work, your meter is rolling backward," as the solar array sends electricity into the grid, Adam Browning, director of Vote Solar Initiative, which lobbies for more solar power, told America.gov. "When you come home at night, you use electricity [from the grid], and the meter rolls forward." The consumer pays only for the electricity beyond what he or she has sent into the grid.

San Francisco and some other California cities also have begun aggressively developing solar power generation for municipal electricity needs.

The city plans to install nearly 30,000 solar panels on the roof of Sunset Reservoir, the largest reservoir inside city limits. Upon completion in 2010, the project will produce five megawatts of electricity, making it the largest solar power system in California and more than tripling the current municipal power generation. The electricity will go to hospitals, schools and streetlights.

While cities across the country promote solar energy on their own, they also watch initiatives in California to see if they can follow suit.

News Provided By