Leno Bills Expanding Solar Power Clear Legislature

Assemblymember Mark Leno
Photo by Luke Thomas

From the Office of Assemblymember Mark Leno

Bills enable homeowners to benefit from solar power purchase agreements and property tax exclusion

September 8, 2008

SACRAMENTO, CA – In the last week of the legislative session, the California Legislature passed two bills authored by Assemblyman Mark Leno (D-San Francisco) expanding the installation of solar power in the state. AB 2863 will clear the way for power purchase agreements (PPAs) in residential solar power generation while providing key consumer protections. AB 1451 renews an existing exclusion from property taxes for the value of solar energy systems originally passed by state voters in 1980, and, for the first time, extends the tax break to builder-installed solar energy systems in new homes.

“Homeowners and renters have largely been left out of power purchase agreements, an innovative solar financing mechanism that delivers clean, renewable solar power at a lower price than the electric utility,” said Assemblyman Leno. “AB 2863 will put key residential consumer protections in place and define the regulatory landscape for the institutional investor that has been driving commercial solar installations. This is a win for consumers and investors,” he said.

Power purchase agreements are responsible for over 70% of commercial solar installations though the California Solar Initiative. They allow a property owner to have solar installed, owned, and maintained by another company with which a long term power purchase agreement is signed. AB 2863 designates companies selling solar electricity generated at the location where it is used through PPAs as independent solar energy producers. The bill also establishes consumer protections including contract disclosures, a mandatory notice that is filed with the title of real property, and price protections for residential renters.

Also authored by Leno, AB 1451 renews a long-standing exclusion from property tax assessment on the value of solar energy systems. The exclusion would sunset in January 2009 without the reauthorization in the Leno bill, and is considered a vital incentive for the construction of both homebuilder-installed systems and commercial scale solar farms to be constructed to meet the state’s mandated renewable energy targets for California electric utilities.

The bill’s sponsor is the Solar Alliance, a national alliance of solar photovoltaic (PV) manufacturers, integrators, and financiers dedicated to accelerating the deployment of solar electric power in the United States by promoting cost-effective state-based policies. Director of Western Policy, Sara Birmingham stated: “Large scale solar generation needed to supply California’s demand for renewable energy can be built in many locations throughout the Southwest. AB 1451 will keep California competitive with neighboring states and ensure that clean, green collar jobs made possible by our state’s ratepayer investments stay right here in the Golden State.”

The importance of AB 1451 was underscored with the August 14th announcement of a mega deal between Pacific Gas and Electric and two solar companies, SunPower Corporation and OptiSolar, Inc., for the purchase of 800 megawatts of renewable solar power generated by yet-to-be-built commercial scale solar plants. According to a press release by the solar companies, the deal would be risked if California failed to enact “state property tax exemptions relevant to the projects.”

Currently, bills are being held at the Chief Clerk’s desk. Once the Governor receives the bill, he will have until September 30th to sign or veto the measure.

FCJ Editor

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