Dec 26 - San Jose Mercury News, Calif.

If you think you need $20,000 to $30,000 in cash upfront to install a solar system on the roof of your home, think again.

A number of Bay Area solar companies -- including Akeena Solar, SolarCity, Sungevity and SunRun -- are pioneering new business models and creative financing mechanisms to make rooftop solar more affordable.

And local and state governments, as well as Washington, are poised to help. The White House is promoting a new form of financing generically known as PACE, or Property Assessed Clean Energy, that allows private property owners to pay for renewable projects like solar and energy efficiency upgrades through an addition to their property tax bill.

Several Bay Area solar installers are trying to make solar mainstream by either providing financing options themselves or streamlining the marketing and sales experience for consumers.

SolarCity, based in Foster City, provides solar power system design, financing and installation. But the startup has made a name for itself largely by being the first company to offer a "SolarLease" -- solar for no money down.

"The rate of solar adoption in the United States is still really slow," said CEO Lyndon Rive, a South African entrepreneur who cofounded the company in 2006. "If we continue at this pace, we're not going to make a difference. The upfront cost to the consumer is still the biggest barrier."

Instead of buying a solar system, consumers lease

it for 15 years and pay SolarCity a monthly bill. In many parts of California, they save 10 to 15 percent a month on their combined electric and lease-payment bills. When the 15-year lease expires, homeowners have the choice of upgrading the system, extending the lease or having the panels removed for free.

SolarCity has about 5,000 customers. About half buy their solar systems outright, but the other half -- 2,700 customers to date -- have chosen to lease.

One of them is Roger Whitley, 58, who lives near Silver Creek High School in San Jose. With a monthly electric bill of $600, his main motivation for going solar was financial.

"The lease made it easier for us to go ahead and take the leap," Whitley said. "We have a pool, a hot tub, air conditioning, and two teenage boys with Xbox and PlayStation. The electric bill was killing me."

Solar panels were installed on his house in late 2008, and Whitley now makes a lease payment of $190 a month to SolarCity. But his PG&E bill has been reduced to less than $300 a month, so his total monthly outlay for electricity is substantially less than the $600 he used to pay.

SolarCity operates in Arizona, California, Colorado and Oregon. The company, which has 510 employees, is growing rapidly: It plans to expand into five additional states in 2010 and has 170 job openings for sales, installers and support staff.

Sungevity, based in Berkeley, has taken the concept of going solar completely online. You can go to the company's Web site, type in your address, and immediately see a satellite image of your roof.

Sungevity then measures the size and pitch of your roof -- as well as direction and possible shade obstacles -- remotely. Potential customers get a customized "iQuote" within 24 hours. The company says it saves consumers time and money by bringing the sales process online. Systems can be as low as $7,000 after a federal tax credit and state rebate.

SunRun, a San Francisco startup, helps consumers go solar for as little as a $1,000 installation fee. Bay Area consumers then enter a solar power purchase agreement, or solar PPA, and pay SunRun a fixed rate for the solar electricity, which typically is substantially less than their previous electric bill.

Lowe's, the big-box home improvement store, is also part of the movement to make solar more affordable. It has begun stocking solar panels from Los Gatos-based Akeena Solar. The hope is that ambitious do-it-yourselfers will make going solar a weekend project.

Currently, Akeena's Andalay AC solar panels are available in 21 Lowe's stores in California, including all 15 in the Bay Area. Lowe's plans to soon offer an installation service to customers daunted by the idea of totally doing it themselves.

"I'm ready to plunk down," said Louis Gadda, who lives in the Alum Rock neighborhood of San Jose. He was at a Lowe's eyeing panels that cost $893 each but qualify for a 30 percent federal tax credit. "I figure that I can really cut down the installation costs if I do it myself."

On the government front, there is growing momentum around financing solar and energy-efficiency projects through PACE programs. Piloted by the city of Berkeley a few years ago, the concept has gone nationwide.

Sixteen states, including California, Colorado, Texas and New York, have passed legislation enabling these types of program. The next step is for individual counties or municipalities to begin issuing bonds. The concept requires that cities have the ability to form a "special tax district" or "assessment district" to finance energy improvements; some municipalities already have the authority, but many require enabling legislation.

PACE attaches the cost of the solar or energy efficiency upgrades directly to property taxes. That means that if you need to move or sell your house, you're off the hook: Whoever pays the property taxes is responsible for the surcharge to pay back the loan.

"We believe this will be one of the game changers," said entrepreneur Jack Hidary, a co-architect of the wildly popular Cash for Clunkers program for the auto industry and an advocate for PACE. "This is a great new business opportunity for investment banks because they can issue bonds. Part of the reason why PACE is so exciting is it leverages private capital for the sake of public good: energy efficiency and solar. And it's a good bet. If it's backed by property taxes, you don't have to worry about someone defaulting on a loan."

PACE programs are already up and running in cities such as Berkeley and Palm Desert, as well as Sonoma County and Boulder County in Colorado.

Several Bay Area counties, including Santa Clara, Santa Cruz, San Mateo, and Alameda, have plans to issue PACE bonds and plan to launch programs next summer.

Contact Dana Hull at 408-920-2706.

-----

To see more of the San Jose Mercury News, or to subscribe to the newspaper, go to http://www.mercurynews.com.

Copyright (c) 2009, San Jose Mercury News, Calif.

Distributed by McClatchy-Tribune Information Services.

(c) 2009, McClatchy-Tribune Information Services