Bills back trend of rental solar panels

More and more Coloradans are opting to lease solar energy systems for their homes to avoid the large up-front cost of buying solar panels.

To facilitate the practice, Sen. Mark Udall, D-Colo., is backing a bill to reduce the risk to companies that want to rent solar equipment.

Meanwhile, Gov. John Hickenlooper signed a bill Friday to reduce the permitting fees that local governments charge installers.

Colorado already ranks as a top market for the solar business. The state government provides a number of loans, tax exemptions and rebates for system installation. The state also has the third-highest number of solar installers affiliated with the American Solar Energy Society, according to FindSolar.com.

However, solar panels still remain largely out of reach for residential ownership. Prices for a complete system can range from $10,000 to $40,000 even after state and federal rebates and incentives, according to Cooler Planet, a Seattle renewable-energy company.

To address this problem, several companies have started to offer solar power financing services, where instead of buying panels, homeowners use company-owned equipment and pay for the power they use.

Although there are no savings guarantees, customers often will pay less for the leases and the electric bills than they previously paid for electric bills alone.

“This business model is making it so that solar is affordable for millions of Americans,” said Susan Wise, a spokeswoman for SunRun, one of the nation’s largest solar-power service companies, which also provides service in Colorado.

“This is just a much better way to go solar,” she said. “You don’t actually want the equipment. You just want the clean power.”

SunRun doubled the number of customers it serves from 5,000 to 10,000 between early 2010 and 2011, Wise said.

Close to half of all solar customers in Colorado use a solar lease-type model, as opposed to owning their own panels, according to Neal Lurie, the executive director of Colorado Solar Energy Industries Association.

“I think that solar-related financing programs, including solar leases, are going to see significant growth in the months ahead,” Lurie said. “This model barely existed just a couple years ago. The fact that they have close to 50 percent of solar customers participating in solar leases reinforces the fact that it just makes it easier for customers.”

Udall wants to encourage further growth in the solar market, which currently accounts for just 1 percent of the nation’s electricity supply.

Along with Sens. Sheldon Whitehouse, D-R.I., and Lamar Alexander, R-Tenn., he sponsored legislation that would allow the Department of Energy to ensure the value of leases for residential solar energy panels. Whitehouse introduced the bill, S. 1126, on June 1.

The bill allows companies that lease solar panels to pay a premium to join the program, and they would be protected if homeowners defaulted on the cost of the lease or the system didn’t produce enough energy. Because the companies would pay a premium, the cost of the program to the taxpayers would be zero.

The senators hope the program would encourage more companies to offer such leases and bolster the solar-energy market.

“By making solar energy more accessible to people, you stimulate manufacturing, you create jobs, you also create an interest in solar energy,” Udall spokeswoman Jennifer Talhelm said.

At the state level, Wise said that rebates and other incentives are making it possible for solar leasing to exist.

“We still very much need subsidies in order to make this work,” she said.

Wise said that in the future, the industry’s goal is to be subsidy-free.

A major area that needs to be addressed is inconsistencies in solar permitting practices from municipality to municipality, Wise said. Such differences, on average, add about $2,500 per installation.

“If you can streamline permitting processes across the industry and have a standard process with online submission forms you will significantly reduce the cost of solar,” she said.

Efforts are under way at both the national and the state level to address this issue. The Department of Energy and the White House are enlisting local governments to design a streamlined permitting process that they would encourage cities to adopt.

In Colorado, Hickenlooper on Friday signed into law legislation that would ease the state’s permitting process. It limits the cost of solar permits and related fees to the local government’s actual cost to issue the permit, not to exceed $500 for a residential installation.

“I think this is ground-breaking legislation that is likely to become a national model that other states will follow,” said Lurie with Colorado Solar Energy Industries Association.