Milwaukee Shines, a Bright Idea for MN
I recently wrote a blog asking what comes next for Minnesota’s solar industry after the current extension of Xcel Energy’s Solar*Rewards program expires at the end of 2015. The Solar*Rewards approach focuses on rebates and incentives to entice consumers to install solar panels on their homes or businesses.
Rebates and incentives are just one way for policymakers to overcome a critical barrier to implementing solar on a wider scale in Minnesota: the upfront costs to install the solar panels. Although solar panels pay for themselves through lower electricity bills and good net metering policies, it can take up to 20 years for that to occur. Many people and businesses need help on the front end to cover the costs they make back over time.
But covering those costs can come from other sources. A program operated by the City of Milwaukee called Milwaukee Shines lays the groundwork for loans to help people invest in solar arrays on their rooftops. Operating through the statewide Summit Credit Union, the Milwaukee Shines program offers $2 million worth of loans, with up to $20,000 available per loan, to Milwaukee homeowners.
That kind of money isn’t going to fund large solar arrays like the one that went online at the Bloomington, MN IKEA store this summer. But $20,000 will definitely get you a 3 to 4 kW solar array and the loans can go towards any array up to 6 kW. That is an effective funding level for the residential rooftop market the program seeks to capture.
The loans have low-interest fixed rates, and finance up to 15 years with no penalties for early payments, no fees and no down payments required. The Wisconsin utility WE Energy provided $100,000 through a previously allocated grant for a loan loss reserve to help protect the credit union from defaults.
In short, Milwaukee Shines has created a standardized loan structure to fund residential rooftop solar panels in a metropolitan area with minimal cost, hassle and risk to customers. Because on-site solar energy is fairly new in Minnesota and Wisconsin, banks may not have experience funding solar investments. Finalizing a customized loan for a small rooftop solar array may raise time and cost barriers for consumers, and may not yield beneficial interest rates and practices.
The Milwaukee Shines model offers Minnesota an alternative revenue stream for encouraging solar at the local or state level than the traditional incentives and rebates. Credit unions throughout the state could provide similar loans with little money needed from utility or government funds for loan loss reserves. With increasingly lower installation costs, this could be an effective way to bring residential rooftop solar into the mainstream.