Green Collar Blog

Part 3 in a series of 4 posts from Dr. Nicole Peill-Moelter, the Director of Environmental Sustainability at Akamai, in which she documents what she learned while deploying a solar system on her home in California.  This segment covers financing options for solar systems, buy vs. lease and rebate and tax considerations.  This is great stuff...thanks Nicole.

Financing Options

Now that you're nearly ready to call the sales rep, let's look at various financing options that are available. 

PV solar companies now offer residential consumers financing options that make solar affordable for most anyone with sufficient electricity consumption, roof space and the right location.  These options include outright purchase of a system and system lease (or power purchase agreement).  What's best for you will depend on your situation including how long you plan to own your property, how much you can put down upfront and what your goals are, e.g., saving money or using renewable energy.

Outright Purchase

Outright purchase of a system may make sense for you if you can afford the capital outlay upfront and plan to be in your home for twenty or more years.  For example, a 5.0 KW system can cost in the neighborhood of $30,000, not including rebates and tax credits.  You are responsible for the maintenance, monitoring and repair of the system.  Since there are no moving parts, systems are generally low maintenance, requiring only cleaning of the PV panels and keeping the panels free of shading.  Although PV panels typically degrade less than 1% per year PV panels are warranteed for twenty years, and usually operate much longer than that.  Inverters have 10-year warrantees.  A twenty- to thirty-year amortization of your system usually results in a very favorable return on investment (ROI), e.g., energy costs of <$0.06/KWH.  You can also borrow money for the system which will lower the ROI but can still make sense given the strong ROI for systems used for 20-30 years. 

Even if you will be in your home less than 20 years, PV systems improve the property value so you can extract the residual value of the PV system when you sell.  Some cities are considering incorporating financing of the PV system into the home's property tax thereby tying the system to the home not the original buyer which overcomes a common financing hurdle.

Because you will own the system and be responsible for its operation, repair and performance you should thoroughly vet the PV and inverter technology and manufacturers.  For example, I learned that some cheaper PV panels can be of inferior quality resulting in leakage of the panels which decreases or ruins their performance. This is important if you want your system to last beyond the warrantee period.  In another example, micro inverter technology enables conversion of the DC electricity to AC at each panel.  The advantage of this is that if one panel is shaded or is not operating the other panels will still operate at full performance.  This is not so when the panels are linked together connecting to a single inverter as is the case for most systems.  If one panel is shaded or non-operable they all are.  Micro inverters are more expensive but may be worth it in the long run - especially if your roof is shaded.

System Lease

For those who cannot afford or don't want to outlay the full capital cost of a system upfront, more and more companies are offering a system lease, or power purchase agreement.  In this case the PV solar company owns, installs and is responsible for the system.  It also guarantees the annual output of the system for the life of the lease which is likely to be 10-15% less than the actual output.  One of the financial advantages of this purchase option is the PV solar company can take advantage of the business writeoffs associated with the system such as equipment depreciation which is not the case for a private owner. 

Lease agreements can range from zero down, 50% down to 100% down.  The advantage of 100% down is there are no finance charges which lower the ROI.  The lease allows you to lock in a guaranteed rate for your energy (KWH) which is not the case with your current situation.  At the end of the lease you can opt to renew the lease or have the system removed.

Unlike a purchased system the PV and inverter technology is not so critical for a leased system.  This is because the PV vendor guarantees the system output.  So it doesn't matter if you have a Ferrari or a Honda on your roof, it will get you where you want to go.

Rebates and Tax Credits

State rebates and federal tax credits help offset the cost of a PV system.  Rebates vary state by state and over time.  In California the California Solar Initiative (CSI) rebate has been in place for years and subsidizes systems under 1 MW on a per watt basis, e.g., 35¢/Watt.  This subsidy is reduced over time as the installed base of PV increases.  The federal tax credit is 30% of the cost of the system and is realized in the year that the system is installed.

If you purchase the system you are eligible for these rebates and tax credits.  If you lease a system you transfer the rights to these financial incentives to the PV vendor.  These incentives in addition to capital equipment depreciation and other business deductions enable PV vendors to reduce the cost of a PV system to consumers.

In this interview with Karen Biscoe, founder and President of Green Search Partner, we discuss what's really happening in the Green Economy when it comes to hiring.  Where is the action, what types of people are being brought on board, who is getting funding, how is the economy and the (lack of ) government support impacting the green sector.

Listen to the whole interview:

Here is a summary of most of the Q & A.  If you are a green company and looking to bring the right people on board, or if you are a company planning on hiring the right person to spearhead sustainability in your organization, give Karen a call. 

Q: As a recruitment specialist in the green space, how do you feel the green economy is doing in the face of this recession? T

A:  The green industry, like many others with respect to job creation, is moving very slowly. Over the past several years there has been a tremendous amount of innovation and development of new technologies, both from the commercial and academic sectors. But for many of these entrepreneurs, the struggle continues for capital and resources required to get these technologies past the proof of concept stage, and out into the marketplace. You can't create jobs if you don't have the funding to get your product to the market. 

Q:  What sectors of the green economy are gaining traction?

A:   Small Hydro-Electric seems to be gaining more traction here in the northeast. There has also been an increase in development of new polysilicon technologies, bio fuels, and waste treatment/management. 

Q:  How does your firm define a ‘Green' business?

A:  This is what I call the gray/green area. There are several definitions of a green business. In my mind, the primary definition is a business that focuses on the direct development of technologies or systems that make a positive impact on the environment and decrease our dependence upon traditional fossil fuels such as oil and coal. Another definition is a company that utilizes eco-friendly resources in the development of products that allow people to enjoy a higher quality, sustainable lifestyle without compromising environmental integrity. Additionally, a green business can be defined as one that, while not directly involved in the design and manufacturing of a green technology, they are employing the dynamic use of new or existing technologies designed to increase awareness and ultimately allow the user to manage and reduce our overall CO2 emissions. Examples of this are demand-response control solutions, or consulting firms that retrofit buildings to increase energy efficiency and decrease water usage. Some may define a green business as one that employs and maintains sustainability policies relative to how they run the operations of their company, such as a robust reduce/reuse/recycle policy. From my perspective, sustainability is something all companies should be practicing consistently. Having a sustainability policy doesn't necessarily qualify a company as a "green" business.

Q:  What types of employees and executives are green companies looking for?

A:  Great question, I get that one a lot. The answer is pretty subjective based on where a particular company is in its development. The initial need is usually on the R&D side, so civil, environmental, chemical, electrical, and mechanical engineers are in high demand in the early days of development. As a company moves from research and development to commercialization, a GM with good project management experience, a project finance person and market research expert is likely to find a role within a clean tech company before a salesperson would. But, I would also venture to say that if you are a business development expert with strong relationships within the public utilities this is a good time for you to be getting your resume out there.

Q:  Does your firm specialize in a particular type of hire, or do you fill all hiring needs for green businesses?

A:  Typically, a founder or CEO will call upon me to help build out their management team or to hire several key staff people for the organization. Considering the average size of a client company is between 2 and 50 employees, being nimble and highly adaptable as a recruiter can make the critical difference for them. However, there are certain roles best handled by a recruiter with specific technical expertise, such as IT. In this case, it's best to say "I can't help you with this, but I know someone who can". 

Q:  Are large, traditionally non-green businesses looking to bring green expertise on-board? For what reasons.

A:  Yes, but the roles they are hiring for depends upon the business model in question. Those organizations that have put sustainability on the top of their priority list may hire at the corporate level to put sustainability policies in place. I've had several clients adjust or add titles to their org charts such as "Chief Sustainability Officer" In some cases, companies have hired or brought in and marketing and branding consultants to "green up" the company's identity and public profile. In companies with very complex manufacturing and distribution operations, hiring a senior person to implement a green approach absolutely makes sense and should be the company's top priority. That's not to say there is no need for other talented professionals in their R&D, operations, sales or even IT departments. But many companies are still very hesitant to hire on the basis of a green agenda alone, they will need to see the market stabilize before hiring the "nice to have" green collars among us.

Q:  What makes recruitment in the green sector unique?

A:  It's incredibly dynamic, educational, and exciting. The green movement has really captured both the analytical left brainers and enterprising right brainers throughout this nation. The competitive collaboration of our brilliant academics paired with the creative energy of business leaders has once again harnessed the entrepreneurial spirit of US. I hope the new technologies coming from countries like China and Israel serve to inspire our government leaders. We need more commercial and government support to provide the necessary funding and resources to launch these worthy start-ups.

We have been trained in this country over the last 30 years to believe that government is bad.  That it is filled with incompetent buffoons that don't want to work and are incapable of accomplishing anything meaningful.  Recently, I've had two experiences that make me think the opposite can be true, and I'm hoping for a third.

The first is with FEMA (Federal Emergency Management Administration).  You may have heard about the tremendous flooding that took place in New England in March.  My house, that never had water in the basement, flooded 4 times, once with over 2 feet of water.  We lost our washer/dryer, furnace, hot water heater, insulation, and we lugged a hundred contractor garbage bags full of ruined "stuff" out to the curb.  We had to move out of the house for 5 days as the gas / heat was shut down (by order of the fire department) and clean up went on.  Needless to say, we lost big money, and had no flood insurance (we're not in a flood plain, who thought we would need it?).  With hundreds of thousands of families similarly affected, the region was declared a national emergency, and FEMA was mobilized to help with emergency relief.

 I have told many people that if my interaction with FEMA were with a private corporation, it would consider it the best brand experience I have had in 20 years.  Here are some highlights:

• The website was easy to use and understandable
• My wife insisted I call anyway.  They picked up on the first ring
• The agent (Leon) was incredibly professional, courteous and the interview was as painless as possible
• The inspector called 3 days later to set the inspection appointment (on a Saturday night)
• The inspection took place the next day (Sunday afternoon)
• The inspector was pleasant, professional and did the entire inspection on a tablet PC connected live to the central FEMA database (he was from Milwaukee and handles emergencies throughout the country)
• We had some unusual issues that were not covered in the basic questionnaire, and our inspector called his supervisor and had the items approved within 10 minutes
• A check for some much needed relief arrived the following Wednesday (3 days later).  It didn't come close to covering our losses, but it isn't supposed to.  It's supposed to cover 'emergency' losses.

This may be the agency that botched Katrina, but I will sing the praises of FEMA (and I have been) to anyone who will listen.  I personally have had discussions with at least 10 neighbors that have had similarly positive experiences.

The second story also has to do with water.  This past week the main 10 foot water pipe supplying Boston and 30 other communities with fresh water, burst.  The response of the state, municipal and local governments was phenomenal.  Within 2 hours there was not a person in the state that hadn't heard the news.  A 'boil-water' order went into effect as the MWRA (Massachuesetts Water Resource Authority) seamlessly switched the entire water infrastructure to the back-up resevoirs and wanted to be sure there were no health concerns as those resevoirs are no longer treated to be drinking water.  There was no interruption in water service or pressure, and aside from needing to scramble to get bottled water (which most local governments distributed), the only headache was needing to boil water to do dishes.  They initially thought it might be 7 to 10 days to fix the pipe and turn the main water line back on.  It was less than 72 hours, and it turned out that there was no bad bacteria in the backup resevoirs in any event.  Two great government success stories.  This is what government is supposed to do - competently serve the people. 

Now, those of you who know me understand that I am a huge believer in the free market, and Green Collar Research is proof of that belief.  Our mission is to facilitate transactions in the open, free-market, green economy by providing contacts, information and best practices so that businesses can become more sustainable and more profitable at the same time.  However, I also believe that government can and must play an important (and competent) role in furthering our nation's interests.  This brings me to my wish.

That the government competently do its legislative job and stimulate the green economy.  I want America to win the clean tech economic race and our free market economy is handcuffed by the lack of government certainty in this space.  If we don't move soon, China will be so far in front of us, that we'll lose the leadership position in the great growth industry of the 21st century - energy technology.  Economists, sustainability experts and government leaders agree that the government must do three key things in order to unleash the power of our economy on this task:

1.  Put a substantive price on carbon emissions, either through a carbon tax or a carbon cap & trade
2.  Invest aggressively in basic R&D
3.  Use our tax code to encourage investment in energy efficiency and that green jobs stay in America

Things the government shouldn't do include:  legislating investment in certain technologies in this race (ethanol, for instance); assume that revenues raised (and associated consumer and business price increases) from the price on carbon can't be mitigated by intelligent use of the tax code - tax what we don't want (carbon), not what we do want (jobs?).

There are so many reasons to invest in the green economy - national security, the environment, climate change, re-vitalizing our manufacturing base - but the most basic and self-serving of all may be the most important.  Investing now  will create jobs and grow our economy, and if we don't do it soon, it won't.

Let's hope the government competency trend will continue.

Green Collar Media believes it is time for a substantial increase in the gas tax in America. Not being in love with the idea of any type of higher taxes, we are firmly convinced that a gas tax increase is the right type of tax to use to pay for the war surge in Afghanistan, and will provide the country with three absolutely critical benefits. :

First; we simply cannot continue to add to the enormous deficit with new war spending. We must have a means to pay for it (and all new programs) - or our kids will never forgive us. This means new taxes - growth alone will not generate enough revenues to close the gap. Additionally, if we keep this up, our international creditors will get even more nervous than they are now, will have more leverage over us than they currently do (if you don't think they have leverage, read the news coverage of Obama's trip to China), and interest rates are going to go up on our debt and the burden will increase dramatically. We must show fiscal responsibility as a society.

Second, increasing the price of gasoline leads to changes in driving behavior, which lowers our emissions - a vitally important goal for our nation and the planet. This post from when gas was $4 a gallon discusses how that was happening and what it meant. The fact of the matter is there is only one way gas prices are going over the next 20 years, and that is UP, UP, UP. As a society we need to get ahead of that curve and make that inescapable fact work for us. If we don't, we're proving that our heads are so far in the sand, ostriches are embarrased for us.

Finally, more expensive gasoline will stimulate demand for green solutions in the vital transporation sector of the green economy and create jobs. American auto companies (what's left of them) are betting their futures on fuel efficient vehicles. A gas tax will accelerate the adoption of these vehicles and the solutions of dozens of other entrepreneurs and companies that are working like mad to bring new products to market. And let's be honest - deep down, don't we all want to drive a Tesla or a Fisker? Stimulating this marketplace in this manner will allow these companies to reach economies of scale and bring the prices down. We'd probably also be happy with Tesla's mid-sized sedan, or Fisker's minivan as long as the performance was based on what they're doing with their sportscars.

These are three things that are vital to our country. Nobody likes to be taxed and feel the pinch in the wallet, but this is exactly how the tax code should be utilized when absolutely necessary. It should be focused on discouraging or eliminating things that are not in our interest as a nation (greenhouse gas emissions, runaway deficits, sending jobs overseas) and encourage areas that are in our interest (new green technologies, manufacturing jobs, exportable products, lowering emissions). We cannot scream "No Taxes Under Any Circumstance, Ever!" and expect that our country will not continue to suffer. We need to use the tax code to further our national interest, and a significant gas tax will do that at this point in our history.

Join this Facebook Group to add your voice to the cause.

When I started writing Green Collar America, I did so because I felt that the green technologies and  solutions that were going to make our nation and our society more sustainable represented the next great industry that would drive America's future prosperity.  According to a just released report produced by The Breakthrough Institute and The Information Technology and Innovation Foundation we are going to be buying all that technology from Asia.

Every American should read at least the "Overview" page of this report.  There are 5 points on that page...here is the first:

Asia's rising "clean technology tigers" - China, Japan, and South Korea - have already passed the United States in the production of virtually all clean energy technologies, and over the next five years, the government's of these nations will out-invest the United States three-to-one in these sectors. This public investment gap will allow these Asian nations to attract a significant share of private sector investments in clean energy technology, estimated to total in the trillions of dollars over the next decade. While some U.S. firms will benefit from the establishment of joint ventures overseas, the jobs, tax revenues, and other benefits of clean tech growth will overwhelmingly accrue to Asia's clean tech tigers.

That 3-to-1 investment disparity is assuming that the US Senate will pass a clean energy bill like the American Clean Energy & Security Act which the House of Representatives passed earlier this year.  That is by no means a certainty, and is actually very unlikely based on what's going on with healthcare.  The outspending will be more in the ball park of 10-to-1 in that case - and it is only that close because some of the stimulus bill went to clean tech.  However, we're sending a ton of that stimulus money overseas anyway and not creating Green Collar Jobs at home - because we can't buy cost competitive clean tech products here. 

Even if we do pass such a bill the report argues that it;

includes too few proactive policy initiatives and allocates relatively little funding to support research and development, commercialization and production of clean energy technologies within the United States.

Instead, we are relying on some tax incentives and other market stimulating solutions that - in past times - have jump started innovation and moved America into a leadership position.  There are a lot of good things to be said about this bill - as Representative Markey (the primary author) describes in this video
 

Unfortunately, the race may be over before this approach even gets us running - we have never had competition that was willing to spend half a trillion dollars to kick our ass before.

There is only one answer - we all have to get off our asses and scream at Congress until we drown out the noise from the people who JUST DON'T GET IT.  We don't have time for obstruction - we need to move and we need to move now.  Unless you have another idea for a multi-trillion dollar industry that is being birthed right now and can sustain our country and our economy, call your congress person...please.