Published on March 18th, 2008 | by The Dave Room6
How South Bay Neighbors Saved Thousands on Going Solar
Recently, a neighborhood group – the Downtown San Jose Solar Project – banded together to purchase solar in bulk and find their own solar installer through a competitive bidding situation. They put their collective requirements for three solar systems out to bid by several solar companies to get the best price, equipment, warranty, and service.
As of February 20, the project included 24 San Jose homes producing 99kW of electricity. The 24 systems in San Jose will produce 3,560,000 kWh over the systems’ lifetime and will eliminate, according to today’s current fuel mix, about 5,055,861 pounds of carbon dioxide. The community group wants to see this program spread across the Bay Area and held a training for people interested in setting up their own community discount programs.
Eight people from San Jose’s District 3 have been working consistently outside of the regular jobs for 3-4 months. The first thing they did was contact their city council person. The District 3 council member Sam Liccardo was very supportive from the start. His staff arranged meeting logistics and a designated staffer attended all the group’s meetings. The meetings were mostly promoted through email lists including the Liccardo’s e-newsletter and several articles in local media.
The largest amount of the group’s effort – about 3 and a half months – was selecting a vendor among those that bid upon the job to install solar photovoltaics on the first three homes in the project. Following the lead of Marni Kamzam, who writes RFPs for living, they put together an extensive RFP with weighted attributes (e.g., cost is important and therefore rates 5 on a scale from 1-5). Kent Haliburton of REC Solar, the eventual winner of the installation work, said the community group’s RFP was as extensive and professional as any commercial job.
The individuals in the group had the choice of buying their solar system outright or signing a residential Power Purchase Agreement (PPA) whereby a financing company purchases the equipment, monitors and maintains it, and sells the customer the electricity generated. 75% of the Downtown San Jose Solar Project customers chose a residential PPA model from a private solar company called Sun Run.
Sun Run offers a residential PPA that can be used in cooperative purchasing agreements. It reduces the upfront cost of solar by half and fixes the cost of electricity produced by the panels at a cheaper rate than the customers would pay currently from PG&E for a 20 year period of time. At the end of the 20 year contract, the system can be purchased for an average of $2,000 or the contract can be renewed for a rate that is 10% less than baseline from PG&E at this time.
Sun Run is able to offer a lower overall price with less money upfront than the householder could get on their own because businesses receive the full 30% federal solar tax credit. In contrast, homeowners are capped at $2000 and those that file the Alternative Minimum Tax can’t participate at all. To increase their margins, Sun Run accelerates the depreciation of the system and does additional proprietary financial wizardry.
After the group selected REC Solar as the installer with the Sun Run residential PPA as a financing option, the group started a 60 day period for District 3 residents to sign up. (There are still four days left!) They deliberated on whether to allow residents from outside District 3 to participate. In the end, they did not market the program outside the District and handled requests from outside the District on a case by case basis.
This effort provides an excellent model for organizing for cooperative buying of solar photovoltaics in the neighborhood context. From an example provided by Sun Run, it appears participants received an average “community discount” of about $2000 or 10%. The process is relatively pain free and short (60 days or less) if you already have an installation partner selected.