July 19, 2007

Chamber Connection

Solar energy – the next revolution

By Pat Dando
Special to the Times

In the mid-90s the invention of the Internet browser made the World Wide Web available and resulted in the rollout of Internet connectivity. This created an economic revolution that has fueled our local economy.
Now, we are at the same critical juncture with solar energy. Circumstances are in place for solar to become our next regional economic driver. Here’s why:

A unique window of opportunity exists around renewable energy in California. Solar technology is advancing every day—much of it in San Jose. Favorable rebates from our renewable-friendly utility PG&E and a combination of tax incentives are prompting us to “go solar.” While clearly good for the environment, this offers significant benefits to business and government as well.

Fortunately, San Jose is considering options that could make it a “Solar City.” Mayor Chuck Reed called for this during his State of the City speech in February. Councilmembers Judy Chirco and Sam Liccardo will bring the issue to the city’s Transportation and Environment Committee in August. Kudos to all involved. This may be the rare occasion that business should follow government’s lead.

As Reed touts the city’s budget shortfall as “enemy number one,” the committee faces challenges ahead. There are essentially two paths we can take:

Pay outright or finance the capital costs of solar energy systems—the panels, installation, integration into the grid, etc. In the city’s case, this would be financed through bonds. For businesses, this could be a one-time expense or financed like other capital improvements. In this scenario, the operation and maintenance costs would fall to the city or the business.

Allow a third-party to “lease” roof space on buildings, install solar energy systems and sell the energy back to the city or businesses. The energy cost is predetermined and codified under a long-term energy contract—or Power Purchase Agreement (PPA)—generally for 20 to 25 years. In PPAs, maintenance and operation costs are borne by the third-party, the terms of which are set forth in the PPA—and in the case of the city, all regulations for contracting with the city would be adhered to.

Considering the city’s budget crunch, a PPA is the city’s best option—and may be for local business as well.
A PPA can accomplish some important goals with no capital outlay. The city:
Would become cleaner and greener.

Would avoid the steep capital costs of going solar. Under most PPAs, the city could buy the system outright after a set period and eventually own its own solar system.

Could add financial predictability to its bottom line by locking-in a portion of its energy cost. Under a PPA, the city will be able to foresee the cost of at least part of its electricity for 20 to 25 years.

We are now on the cusp of a solar revolution not unlike the Internet revolution. With incentives and technology aligned, the city, chamber members and other businesses could move solar to “wide-release.” It would be good for our environment and our local economy, and good for the bottom lines of both the city and business.

Pat Dando is President & CEO of the San Jose Silicon Valley Chamber of Commerce.