PHOENIX (By Ryan Randazzo Arizona Republic) August 22, 2008 — The Arizona Public Service Co. is introducing a new loan program that would allow customers to install solar panels on their houses at virtually no up-front charge.

It could be a good deal for some customers, and it could help the utility, as well.

The loans are designed to help customers begin making their own electricity without shouldering the big expenses for installation, which have put off many potential buyers.

Because the systems will mean lower monthly electric bills, they can actually be bought for less than what some people pay for power now.

APS has had a tough time persuading customers to install solar panels on their roofs or wind turbines in their yards. It needs that renewable power to meet its state-mandated goals.

"What we have put together is a kind of one-stop shopping opportunity for customers to install solar systems with no out-of-pocket expenses," said Eran Mahrer, leader of renewable planning for APS.

The GEOSmart loan program will allow APS customers to get loans for as much as $50,000 with interest rates as low as 7.99 percent through the Sacramento-based non-profit Electric and Gas Industries Association.

GE Money, a subsidiary of General Electric Capital Corp., will finance the loans, which do not require a home lien.

The EGIA promotes household energy efficiency and alternative energy and has managed rebates and loan programs with several utilities, mostly in California.

The loan will require a monthly payment, of course. But customers' power bills are expected to fall as well because APS credits customers for electricity they make beyond what their home uses.

"Certainly with this interest rate, there will be opportunities for customers to save money on a monthly basis," Mahrer said.

The alternative-energy program can use some promoting if APS is to meet state requirements.

The Arizona Corporation Commission requires utilities to get 15 percent of their energy from renewable sources by 2025, and 30 percent of that must come from "distributed" sources such as solar panels on roofs, rather than from renewable-power plants.

With big power plants like one burning scrap wood in Snowflake, the utility is on track to meet the overall goal, but with only 2,000 customers using household-energy systems generating about one-tenth of 1 percent of APS' energy a year, the utility is missing the distributed-generation goal.

"Our goal is to achieve or exceed compliance with the requirement," Mahrer said.

APS will pay EGIA $50 for each customer using the program, utility officials said. The number of people who can participate will be limited by the amount of money APS collects in renewable tariffs on customer bills, which it uses for customer incentives.

Calculating payments

The loan program has an online calculator at www.egia.com/aps to help prospective customers estimate what their monthly payments will be on solar-panel or hot-water systems of various sizes.

Contractors in Arizona who are certified to use the program said that working through the sometimes-complex finances with their customers will be much easier with the loans and could be exactly what many customers need to make investing in such a system attractive.

"It's a level above what we've offered before," said Sean Seitz, president and co-owner of American Solar Electric Inc. in Scottsdale. "In the past, we've had finance entities we've worked with, but we have referred customers to those entities, and they would negotiate rates."

Now, installers will be able to better estimate if a solar system's loan payments and lower electric bills will equate to annual savings compared with what people pay for electricity without the systems.

"That will be the big trigger point if this thing is going to be a success," Seitz said.

To make such calculations, everything from the size of a home's roof, its pitch and direction it faces, average electricity use from the home, size of the system and financing available needs to be added up, Seitz said.

Dan Modisette, owner of Efficient Energy in Flagstaff, hopes the program will help convince some of the potential customers he has spoken with about installing wind turbines in their yards to buy systems.

"APS is doing what I as an installer think should be done to get things moving forward," he said.

It also is important that APS has included wind power in the program, with that being more appropriate than solar in some parts of the state, he said.

"APS has gone from being not very progressive in their rebates to being one of the best in the country in the last six months," he said.

American Solar Electric and Efficient Energy were among five contractors qualified to use the program as of Thursday. APS officials said that more contractors are getting the proper training and that the Web site will list them as they become certified.

Financial decision

Deciding to add alternative energy to a house has become much more of a financial decision for people than an environmental decision, said David Warren, a director for the EGIA in California.

"Do you feel good going green? Sure," he said. "But do most people do it for that reason? No."

His group also advocates the rationale that paying off a loan for a solar installation gives people a stable expense, compared with fluctuating utility bills, he said.

"What you can do is lock your utility rate in for the next 30 years or so," Warren said. "Utility rates have a tendency to go up."

One of the regulators who imposed the renewable-energy requirement on APS and other utilities said he was happy to hear of the loan program.

"Obviously, we want to look at the interest rates and fine print in the contracts," Corporation Commissioner Jeff Hatch-Miller said. "Assuming it's reasonable, this opens the door to a lot of people. Without a program where this can be financed, you're leaving it to just the most wealthy people to take advantage."

APS could face penalties from the Corporation Commission for missing the renewable-energy requirement for distributed energy, but Hatch-Miller said efforts such as the loan program show the utility is making a good-faith effort to meet the requirement.

"We wanted to get people to step up to the plate and start doing some things," he said. "We are seeing that."