What would happen if solar panels were free? What if it were possible to know everything about the world—not the Internet, but the living, physical world—in real time? What if doctors could forecast a disease years before it strikes? This is the promise of the World Changing Idea: a vision so simple yet so ambitious that its full impact is impossible to predict. Scientific American’s editorial and advisory boards have chosen projects in five general categories—Energy, Transportation, Environment, Electronics and Robotics, and Health and Medicine—that highlight the power of science and technology to improve the world. Some are in use now; others are emerging from the lab. But all of them show that innovation is the most promising elixir for what ails us. —The Editors
The No-Money-Down Solar Plan
A new wave of start-ups wants to install rooftop solar panels on your house. Upfront cost: nothing
By Christopher Mims
The biggest thing stopping the sun is money. Installing a rooftop array of solar panels large enough to produce all of the energy required by a building is the equivalent of prepaying its electricity bill for the next seven to 10 years—and that’s after federal and state incentives. A new innovation in financing, however, has opened up an additional possibility for homeowners who want to reduce their carbon footprint and lower their electric bills: get the panels for free, then pay for the power as you go.
The system works something like a home mortgage. Organizations and individuals looking for a steady return on their investment, typically banks or municipal bond holders, use a pool of cash to pay for the solar panels. Directly or indirectly, homeowners buy the electricity produced by their own rooftop at a rate that is less, per kilowatt-hour, than they would pay for electricity from the grid. Investors get a safe investment—the latest generation of solar-panel technology works dependably for years—and homeowners get a break on their monthly bills, not to mention the satisfaction of significantly reducing their carbon footprint. “This is a way to get solar without putting any money down and to start saving money from day one. That’s a first,” says SolarCity co-founder Peter Rive.
SolarCity is the largest installer of household solar panels to have adopted this strategy. Founded in 2006 by two brothers who are also Silicon Valley–based serial entrepreneurs, SolarCity leases its panels to homeowners but gives the electricity away for free. The net effect is a much reduced utility bill (customers still need utility-delivered power when the sun isn’t out) plus a monthly SolarCity bill. The total for both comes out to less than the old bill. SunRun in San Francisco offers consumers a similar package, except that the company sells customers the electricity instead of leasing them the panels.
Cities such as Berkeley and Boulder are pioneering their own version of solar-panel financing by loaning individuals the entire amount required to pay for solar panels and installation. The project is paid for by municipal bonds, and the homeowner pays back the loan over 20 years as a part of the property tax bill. The effect is the same whichever route a consumer takes: the new obligation, in the form of taxes, a lease or a long-term contract for electricity, ends up costing less than the existing utility bill.
“What we’re really seeing is a transition in how we think about buying energy goods and services,” says Daniel M. Kammen, director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley. Kammen, who did the initial analysis on Berkeley’s financing model, believes that by turning to financing, consumers can overcome the inherent disadvantage renewables have when compared with existing energy sources: the infrastructure for power from the grid has already been paid for and, in many cases, has been subsidized for decades.