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Dispatch / January 16, 2010

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This article was first published by AlterNet.

HESPERIA, CA—Say hello to the thing that could save our gas-guzzlin’ suburban lifestyle: affordable residential solar power that’s within reach of the most cash-strapped America consumer. This breakthrough is not a result of technological innovation, but a new financing scheme cooked up on Wall Street called a “residential solar lease,” a no-money-down, low-monthly plan that has made solar electricity cheaper than the stuff we get by wire. It’s an old approach to a new source of energy, and it is taking California by storm.

“Go solar for $0 down. Now you can afford to go solar without the high initial cost of installing a system. Instead of buying the equipment, you simply lease it,”  boasts the Web site of SolarCity, a well-financed Silicon Valley start-up that has been pioneering the residential solar lease.

A solar lease is a fairly simple arrangement that is not unlike a car lease. Instead of dishing out tens of thousands of dollars upfront to buy and install a rooftop solar array, homeowners simply borrow one for a low monthly fee. Like a car lease, customers sign a contract that locks them in for a specified period of time with the option of extending their lease or buying the panels at the end of the contract. It makes sense when you consider that a typical homeowner would have to cough up between $20,000 and $50,000 to buy and install a solar panel system. A solar lease, on the other hand, would only cost them somewhere around $100 a month.

California, the world’s third-largest solar-power market, saw twice as many people file for solar power permits in 2009 than in 2008, with much of the surge in demand being driven by this newfangled solar product. (Demand is so high that a black market for stolen solar panels has sprung up in the Golden State.)

SolarCity, one of the first companies to aggressively market solar leases, signs people up for 15-year contracts that run an average of $110 a month (with a 3.5-percent increase every year). SolarCity says customers can typically expect to shave 15 percent off their electricity bill from day one, with savings potentially growing over time if energy costs continue to rise. Competing companies — like SunRun out of San Francisco or American Solar Electric out of Scottsdale — offer the same basic deals.

A $100 electricity bill is a steal for California, a state that takes fifth place for highest electricity rates in the country, especially for the millions of people who inhabit the southern, sun-baked reaches of the state.

“My bill goes over $200 during summer when we keep the central AC going twelve hours day,” explained Paul Bosacki, who sits on the city council of Hesperia, a rustic, sprawling exurb on the edge of the Mojave Desert 90 miles east of Los Angeles. Bosacki was the first — and so far the only — person to sign up for SolarCity’s lease program in his town, but he won’t be alone for long. Because now he pays $89 a month and gets all the juice his household needs, while saving $21 dollars off his average electricity bill.

We walk around to Bosacki’s backyard, where a single Joshua tree keeps watch over a jacuzzi and a panoramic view of the Mojave Desert, and he gives me a tour of his solar system: a slim grid of black panels on the roof and a box that converts its electricity to proper voltage. Bosacki might have to spend a couple of bucks a month on additional electricity from his local utility in the summer, but in the few months he’s had the system, he’s been well in the clear. “I turned it on in September and haven’t gotten a bill since,” he says, adding that he would never be able to afford the $40,000 his solar setup retails for without the solar lease.

Not only do homeowners like Bosacki save money with solar, but they stand to make some, too. The beautiful thing about the technology is that it allows you to feed all your surplus electricity — like when you’re on vacation, at work or taking a nap — into the grid. The only downside is that, until 2010, local utilities in California paid customers in electricity credits rather than in real money. But a new law will now force them to pay in real money, as in cold hard checks they’ll soon start getting in their mailboxes. Called Consumer Net Metering, this new regulation finally does an end-run around an insane California law that only allowed utility companies to sell electricity; a restriction that had been putting a serious damper on small and alternative solar projects. Now even the small-time homeowner could actually make an honest buck on the energy market. Welcome to the cheap new world of debt-financed green energy.

“We’ve been selling like crazy down here because of the lease program,” a SolarCity rep told the Orange County Register, explaining that the company had not been able to meet demand in Southern California, which has been so high it outstripped SolarCity’s meager financing ability. In April 2009, 3,000 people signed up, biding their time until SolarCity lined up more investors to fund the installations — a wait the company predicted could take a year to clear. Other solar lease companies are seeing similar growth.

“Falling prices, rising utility rates and new government incentives may finally be driving serious growth in the region’s market for residential solar power,” wrote theSacramento Bee in September 2009, when applications for solar panel installations suddenly quadrupled in the Sacramento region.

Even in this harsh credit freeze climate, investors seem to be rushing in to fill the need. While loans to American businesses have dropped by 17 percent compared with last year, solar leasing companies have taken in hundreds of million of dollars in new funding. SunRun received $105 million in financing from U.S. Bankcorp earlier last year and another $90 million in December. The bank also doubled SolarCity’s funding to $100 million. National Bank of Arizona gave SolarCity $5 million for solar leases in Arizona. Morgan Stanley, J.P. Morgan and Goldman Sachs all have been in the solar lease game from the beginning, in large part because they have been able to rig the financing and government subsidy structure in a way that guarantees profits, allowing them to easily recoup their investments through complicated tax credit and green energy derivatives schemes — all of if risk free, as usual.

California goes the extra mile, providing the largest solar subsidies of any state ($2.2 billion has been made available through 2016). Investors can expect to be credited 80 percent of their products’ retail cost, meaning that financiers like Goldman Sachs are able to turn an instant profit for their investors on every solar panel array — before customers even pay their first solar lease bill. The handouts have been so good, in fact, that greedy  investors are constantly demanding bigger profits.

“Investors historically expect seven percent to eight percent, which includes the tax benefits and a slice of profit during the life of the fund,” wrote Green Tech Media about the amazing profits being squeezed out of the residential solar market. “Now they want ten percent or more.”

Solar start-ups are popping up to compete for customers and the billions of dollars of federal and state subsidies for solar and renewable energy. Some are pioneering do-it-yourself solar kits you’ll be able to buy at Home Depot, while others are working to integrate solar panel technology into building materials like roof shingles and siding.

Looking through slick Web sites and optimistic sales pitches, yet with nothing real to sell, is reminiscent of the dot-com bubble. It seems like solar hype is about the only thing for sale, and a sign that America’s solar energy market is probably entering the same dangerous bubble-burst territory Spain found itself in last year, when the government heated up the solar market with with $1 billion in subsidies and then crashed the party when it ran out of money and was forced to suddenly cut funding, causing a world-wide solar recession and a glut in solar panel parts that persists even today.

But bubble or not, there are huge ramifications from this full-on race to develop affordable, ubiquitous residential solar technology.

Peak oil theories have been gaining strength ever since the real estate market collapse turned vast stretches of sub-prime suburbs into ghost sprawl, giving us a scary glimpse into our post-oil future. Its preachers have been pounding the empty oil drum, warning the masses about our helpless dependence on cheap oil and how a shortage would reduce us to pathetic hunter gatherers — all the while urging people to stock up on dry astronaut food and how-to farming guides for urbanites through their online stores.

“[T]he truth is that no combination of solar, wind and nuclear power, ethanol, biodiesel, tar sands and used French-fry oil will allow us to power Wal-Mart, Disney World and the interstate highway system — or even a fraction of these things — in the future,” James Howard Kunstler, the populist apostle of peak oil for this generation and failed Y2K theorist, prophesied in a Washington Post op-ed they called “Wake Up, America. We’re Driving Toward Disaster.” Even the New York Times has joined the scare fest with this kind of crap: “Suddenly, the economics of American suburban life, idealized around the world, are under assault as skyrocketing energy prices inflate the costs of reaching, heating and cooling homes on the distant edges of metropolitan area.”

Standing in Paul Bosacki’s backyard, on the edge of Southern California’s suburban sprawl, it is hard not to agree with the suburban doomsayers. With a panoramic view of the Mojave Desert, you can see the sub-prime suburbs creeping deeper into the open desert. This is one of the most arid, inhospitable places in America, yet it is also one of the fastest-growing, swelling to a population of almost 400,000 over the past few decades, booming higher and crashing harder than most other regions in the country. Looking at this failed McTractHome paradise and left-behind carnage — half-built master-planned communities and a sea of vacant homes with dead lawns dry and rotting in the heat — it seems there is no way it can survive, not with its four-hour daily commute to Los Angeles and summer air-conditioning bills that can feel more like mortgage payments.

But affordable roof-top solar has the power to nip a suburban energy freakout in the bud. Not only can it power the most outlandish McMansion palaces out in the hottest reaches of the American West, but it can also power the cars that get people there and back.

“You’ll be able to plug in electric vehicles into these things to charge them off your own panels,” says Bosacki, intuitively picking up on the possibilities that residential solar power have opened up for suburbia. “One day, we’ll be probably be able to lower energy costs for cars to zero. That’s one of the unintended benefits of these things.”

That is exactly what SolarCity seems to be angling for. The company was created in part by Elon Musk, a Silicon Valley millionaire and the man behind Tesla Motors, the experimental electric car company that recently rolled out its first model: the souped-up, $100,000 base price sports car called the Tesla Roadster that does 0-60 mph in 3.7 seconds. The San Francisco Business Times wrote about Musk:

At 37 years old — and with a net worth estimated at more than $300 million from past endeavors like PayPal — Musk is making contributions to clean energy that may become his legacy. Tesla was the first company to produce an electric car that gets more than 200 miles per charge, and SolarCity is one of the largest installers of solar panels in the country. SolarCity was also the first company to market solar-power systems with no down payments that could save customers money from day one.

Rumor has it Tesla is working to unveil a mass market all-electric sedan sometime after 2012, with SolarCity playing a part. SolarCity already offers charging stations as a deluxe option for its residential solar power systems; the company equipped over 2,500 electric vehicle charging stations so far and recently installed five experimental Tesla charging stations along Highway 101 from San Francisco to Los Angeles. It’s all part of a bigger strategy to provide the foundation for cheap, readily accessible solar electricity, and a ray of hope as far as our suburban lifestyle is concerned.

The fact that the biggest suburban growth has been taking place in the sunniest spots in the United States — California, Florida, Nevada, Arizona — means that these sweltering locales will become even more popular with solar power. After all, who can say no to trading up to a larger home and reducing energy bills at the same time? And that just might make solar the thing that will sucker us into the next reckless speculative real estate boom. Amen to that.

This article was first published by AlterNet.

Yasha Levine is a mobile home inhabitin’ editor of The eXiled. He is currently stationed in Victorville, CA. You can reach him at levine [at] exiledonline.com.

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26 Comments

Add your own

  • 1. This One Guy, Y'know?  |  January 16th, 2010 at 3:01 pm

    “Scam” is right. No amount of solar power WILL be able to replace th’oil we’re using, because it takes energy to make solar panels, and we simply don’t have the raw energy (in the form of oil) left in the fucking ground, accessible cheaply enough, to let us make the solar panels we need to replace it. Maybe if we’d started about 25 years ago, but now, even this, as nifty as it is, is “too little, too late”.

  • 2. hambone  |  January 16th, 2010 at 7:12 pm

    hey One Guy, where does the oil go in my solar panel?

    dumbass.

  • 3. Mad Nomad  |  January 16th, 2010 at 10:07 pm

    Actually, whether conservation needs to be added to the scheme in the future or not, this sounds like a reasonable program.

    Granted, the water issues will pop up again when real estate promoters try to use solarized homes to sell houses in the desert, but who knows? Maybe homeowners will store their junk in their house out in the desert, and sell the electricity from the panels while they live in a houe located near a reliable water source. Just have to keep the desert rats from raiding their nest somehow.

    There is probably enough oil-based plastic and silica to create enough solar panels to pull the scheme off. I don’t think we’re doomed to face a solar panel shortage, as long as there are enough manufacturers out there to feed the roofing market.

    Seems to me there are a lot more stupider ideas out there than this one. Hope this works in helping to transform the energy market somehow.

  • 4. Frank McG  |  January 16th, 2010 at 10:21 pm

    hambone doesn’t seem to understand energy usage in the manufacturing process.

    16 years before the lease company sees a profit on its panels? That’s quite the turnaround.

  • 5. Rammspieler  |  January 16th, 2010 at 10:43 pm

    I was wondering when Yasha finally ran out of his McMansion rental budget. Living in a trailer, eh? Might of as well have just squatted in one of those empty houses across the street.

  • 6. LG  |  January 17th, 2010 at 5:32 am

    Yasha-
    The math in the first few paragraphs had me scratching my head. Then I read the part about the gov’t fronting 80 percent of the cost. And Goldman Sachs’ involvement. Now it makes sense.

  • 7. mikey  |  January 17th, 2010 at 8:23 am

    If the payback is obviously more than the expense, then the idea that the energy input exceeds the output is just silly. The oil goes into the panel once at the manufacturer but the electricity is generated for 50 years. The argument is similar to the canard that alcohol from corn has an input that exceeds the output while neglecting to note that the spent corn is sold for cattle feed making the cost of the alcohol negligible.

  • 8. geo8rge  |  January 17th, 2010 at 8:42 am

    $2.2 billion has been made available through 2016. Cali may go bust this year, so don’t count on the government $. The need for subsidies indicates solar really does not work.

    “Solar panels have an effective lifespan of about 20 to 25 years, and their value and wattage output decrease steadily over time.”

    Solar panels operated in an area without regular rain need to be cleaned off regularly, probably with water.

    There are other maintenance issues with operating a personal power plant that will cost you money. See solar msg boards for what needs repair.

  • 9. proletariat  |  January 17th, 2010 at 10:26 am

    It’s sort of funny to me how someone living in a mansion (with a Jacuzzi, no less) puts up solar panels in a token attempt to be green.

    Then again I am actually intelligent and know things about electricity, so there’s that. This man would get much more benefit out of a capacitor bank, but woe betide the poor sap who’d have to explain capacitive and inductive reactance to him.

  • 10. subgenius  |  January 17th, 2010 at 12:59 pm

    Rare earth elements are the defining issue in production of efficient photovoltaics (and batteries for EVs). And China has that market cornered.

  • 11. joe the junky  |  January 17th, 2010 at 3:38 pm

    Nice Article. I think we’re all pretty damn sick of major-media scare tactics by now.

  • 12. badnewswade  |  January 17th, 2010 at 4:06 pm

    Solar capitalism… interesting. Don’t know about the cars though.

  • 13. Charlie Manson  |  January 17th, 2010 at 4:40 pm

    “Hesperia, a rustic, sprawling exurb . . .”

    Ёб меня косо!

    Levine, what’d you ever do to deserve Hesperia?

  • 14. Fissile  |  January 17th, 2010 at 4:57 pm

    The electric car is the wet dream of techno-geeks who only know enough about science and engineering to get themselves into trouble, or corporate shysters running a scam. Currently there exists no battery that has anywhere near the energy density of a gallon of dino-juice, nor is such a battery likely to come along in the near future — ask any Ph.D chemist if you don’t believe me. Yes, electric motors are much more efficient than internal combustion engines, which mitigates against the lower energy density of batteries, but I really doubt you’ll ever see an EV that has the same range as a similar size/performance dino powered car. EV’s will eventually be a viable transportation option — when gas costs climb above $5/gal — for short commutes around urban areas. On the other hand, if you believe that you’ll be driving an EV 2 hours one way from your desert McMansion, to your job in LA, with the AC set to 60 degrees, all I can say is: BLAHAHAHAHAHAHAHAHAHAHAH!

  • 15. Philip Pilkington  |  January 18th, 2010 at 6:15 am

    Hehe more of the same…

    Anyone else notice that eco-bullshit was one of the most popular knee-jerk reactions to the economic crisis?

    “Green technology” shines out of the business pages as what appears to be a stock market bubble inflates. Who knows… it might turn out to be the best thing the left ever did for business – temporarily, of course, but the profits will be pocketed before the whole thing crashes.

    As for the eco-nuts themselves I came across a group today who greatly resembles them. They’re called the “Extropians” and they believe they’re “fighting the effects of entropy” through “a constant expansion of information” (isn’t that what the peeps that invented CDOs etc. were doing?). These guys aren’t some sort of cult either, they’re made up of people from the top of the scientific food chain and actually have some lobbying power. But they aren’t so dissimilar to the eco-nuts. They know somethings wrong – they see the effects of a failing form of social organisation – and so they distract themselves with some scientific nonsense that gives them the key to saving the world.

    I’m sure the end result won’t be anything we haven’t seen before. Probably a bunch of people defaulting on their solar-payments. Someone once said “once as tragedy, a second time as farce”. Who was that again?

  • 16. Rate Crimes  |  January 18th, 2010 at 10:15 am

    The leasing programs are often based on regressive schemes that further erode social cohesion.

  • 17. badnewswade  |  January 18th, 2010 at 1:09 pm

    “Who knows… it might turn out to be the best thing the left ever did for business – temporarily, of course, but the profits will be pocketed before the whole thing crashes”

    I don’t know. The computer revolution gave us 20 years of growth; “green” solar technology could keep us going for another 20 before the invevitable next 10-year bubble and just in time for the successor technology (probably space exploration).

  • 18. smurf boner  |  January 18th, 2010 at 1:34 pm

    that’s all well and good about the solar panels but what’s so great about urban sprawl and suvs et al that makes them worth saving? Anything that delays their decline exacerbates the problems they cause.

  • 19. Frank McG  |  January 18th, 2010 at 7:51 pm

    Hold on I’m not done laughing at Hambone’s stupidity.

    “Why would higher gas prices cause the price of groceries to go up? Last time I checked, I didn’t see a place to pour in gas on my loaf of bread!”

  • 20. asdf1234  |  January 19th, 2010 at 4:21 pm

    Everything about California is man made. Southern California was built in the middle of a desolate place. It shouldn’t exist but it does. People living in the desert. California has farms in the middle of the desert. There shouldn’t be food stuff growing in the desert but California still manages it. Taken as a “nation” California can be ranked as one of the most technologically advanced places on Earth (which is why they always work with the Israelis, but thats gonna change soon because the Cali government likes to tax to death its bussinesses)

    If something dramatic happens like energy shortages, California will definately be on the spotlight. It would be interesting how a state with water problems, sprawling cities, and farms out in the middle of the desert, along with its technological base would fare.

  • 21. asdf1234  |  January 19th, 2010 at 4:36 pm

    Pacific California Republic is a NATURE DEFYING success of a nation. But the liberals are doing everything to weaken it. Liberals block the building of very important liquefied natural gas terminals because they are “too dangerous and can explode” (even tho the odds of those facilities exploding are less than a traditional refinery) Liberals sue wind energy companies because the blades killed a few birds. Liberals block the private investment in water infrastructure which is badly needed.

    Sighs….Where is Ronald Reagan when you need to expose communist moles withing Hollywood?

  • 22. carl the druid  |  January 19th, 2010 at 8:48 pm

    “Not only do homeowners like Bosacki save money with solar, but they stand to make some, too. The beautiful thing about the technology is that it allows you to feed all your surplus electricity — like when you’re on vacation, at work or taking a nap — into the grid.”

    That’s a pretty brilliant idea. Better than having the government telling you when you can and can’t use the juice aka rationing. Maybe a new type of interstate energy market might emerge.

    “Called Consumer Net Metering, this new regulation finally does an end-run around an insane California law that only allowed utility companies to sell electricity; a restriction that had been putting a serious damper on small and alternative solar projects.”

    Isn’t nice when the government backs off and allows the markets to do their thing a little?

    “But a new law will now force them to pay in real money, as in cold hard checks they’ll soon start getting in their mailboxes.”

    That sounds pretty cool. Alaska has this similar thing where oil royalties are paid to its residents and it arrives in their mailboxes.

  • 23. Rik  |  January 20th, 2010 at 7:29 am

    Hell — I don’t feel I’ve been oversold on peak oil. If anything, we aren’t taking energy remotely seriously enough. Energy is the base that dictates the scope of your actions. If that scope suddenly contracts real hard, a lot of people are going to be hungry.
    As such, I’m not so exercised about this scheme. I’m sure the banks are making their money off of it, but energy can get you through times of no money better than money can get you through times of no energy. This project serves to stimulate alt-energy production — paid for energetically by using oil. So we’re paying for renewable energy with nonrenewable energy, which is exactly the bargain we need to be making now. We’re going to need all the watts we can get before long. We’re in a depression and gas is $80 a barrel? Just think what it would be if the economy was actually healthy.

  • 24. hambone  |  January 20th, 2010 at 3:55 pm

    McG, you seriously do not understand what you are talking about. Let me get this straight- your point is that we are running out of plastic? There is not a shortage of silica. There is not a shortage of energy. Oil does not factor in to the manufacture of solar panels, and there is no problem shipping things where they need to go. Once manufactured, a solar panel installed in a good location will more than make up for the energy bound up in it’s own manufacture. You are a tool.

  • 25. SG  |  June 22nd, 2010 at 7:34 am

    I’ll be sold when you show me a solar panel factory that is powered by solar panels!

  • 26. DBM Solar  |  August 8th, 2016 at 8:23 pm

    This is a very great news! Solar power has already been very useful in any way it can. Looking forward for a better solar energy in the future.


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