Friday, November 06, 2009 at 9:42:23 AM - by Jeanne Roberts

San Diego, the California city with more rooftop solar panels than any other city in the state, plans to initiate wide-scale solar financing options through property taxes starting in 2010.

San Diego currently has almost 2,300 solar roofs that together could generate enough energy to power 12,000 homes, but this number will rise next year as the Department of Energy, or DOE – which this year announced $10 million to 16 cities – funds its 40 new Solar America Cities Special Projects.

The funds come via the American Recovery and Reinvestment Act, or ARRA, and will help cities like San Diego to increase solar energy through innovative programs which the DOE then hopes to replicate across the nation.

In San Diego, the solar financing model operates via a city-wide program that lets homeowners pay for solar panels and their installation through property tax bills over a 20-year period.

The loans carry a fixed-for-life interest rate, just like a standard mortgage, and stay with the house. That is, the property tax increase remains with the residence. So, for example, if a San Diego resident puts in a $20,000 solar system, the cost over the 20-year period will be capital costs ($1,000) plus interest, and if the house is sold, the new owner “buys” the system through property taxes.

It’s a good plan in practical terms because a homeowner doesn’t have to add the cost of the panels to the sale price, and the new owner-of-record can claim any renewable energy credits, or RECs, applicable.

The program is courtesy of California law AB811, passed on July 21, 2008, which allows municipalities to create loan programs for renewable energy systems via tax assessments. In San Diego, it’s called the Solar Roof Program, a pilot that launched in July of 2009 with an expected 150 to 300 participants.

Once the program goes viral, in 2010, participation is expected to jump into the thousands – a future that the University of San Diego School of Law identifies, in its newest report, as the single best road to long-term emissions reduction targets mandated in future Waxman-Markey-type legislation.

The loans will range from $5,000 to $50,000, and be offered on a first-come, first-served basis, with various conditions applicable. Even so, the program provides for long-term solar financing that doesn’t cripple homeowners or the city. This latter, as Erik Caldwell (policy advisor to San Diego Mayor Jerry Sanders) notes, is the biggest win-win, since San Diego was never in a position financially to finance solar installations.