At the beginning of June 2015, ILSR released its Public Rooftop Revolution report, which described how cities across the nation put the shine on municipal rooftops with more than 5,000 MW of solar. That 5,000 MW is as much as one-quarter of all solar installed in the U.S. to date — and many cities could install solar little or no upfront cash. The energy savings would allow cities to redirect millions to other public goods.

ILSR’s Director of Democratic Energy John Farrell presented the report’s findings in a webinar, hosted by Applied Solutions, on June 9, 2015. But time constraints meant many unanswered questions. In the first guest-hosted episode, John answers questions from Carolyn Glanton of Applied Solutions on everything from the expiration of federal tax credits to the payback period for municipal solar arrays.

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Rooftop Revolution Webinar – Unanswered Questions
Read the Public Rooftop Revolution report

Watch the webinar or just click through the slides

 

Q: What opportunities are available with the expiration of the federal tax credit for wind and solar?

John Farrell: That’s a great question. The way I look at this is that all of the financial and financing structures revolve around that federal tax credit, the 30% federal tax credit. That means that any entity, whether it’s a for-profit or a nonprofit, is trying to find some sort of partner that can take advantage of that and lower the cost of the installation.

But these middle always take a cut of that. And it creates problems. So for example, during the financial crisis in 2008, when a lot of the Wall Street firms that had traditionally taken these incentives, did not have any tax liability because they were losing money hand-over fist. All of a sudden it was difficult for solar developers, whose businesses were continuing to grow, to find partners that they could work with for financing. Because nobody needed these tax credits. The federal government had to step in and transition it to a cash grant for a two-year period between 2009 and 2011.

What I see then, with that background, is that the expiration of those tax credits is going to give us a chance to look at financing tools that don’t involve those middleman, that there might be institutional investors that, for example, expect lower returns than Wall Street firms that will be willing to lend money at lower interest rates and lower project costs. And I think there’s already some evidence that suggest we could cover the loss of at least one of those tax incentives, the tax credit or depreciation, simply with lower financing costs in the near. So there might be some really good opportunities to expand lower cost financing and make it a bunch more accessible to different entities.

Q: Do you have any advice on financing for countries other than the US, such as local councils in Africa? What kind of legal issues does one have to put into consideration in such a venture?

John: I’m going to have to be very general in my response, because I don’t have kind of expertise with the finance and policy structures of other countries, or very limited experience. What I would say though with that policy framework is that policies like what Germany and Denmark and other countries have used, called a feed-in tariff (it’s much more common in Europe), are much better in terms of setting up the financing structure for renewable energy projects. They basically say anybody who wants to connect to the grid with a wind or solar project can get a guaranteed 20-year project at a guaranteed price, enough to make back their costs and make a small return on investment.