Environmental technology loans

[dilettante]

I heard an interesting idea on NPR yesterday and was curious to see people's impression of it.

The general premise is that the problem with renewable energy technology (in this particular case, solar cells) is that there is a very high up-front cost which only pays off itself slowly over the course of many years. If you equip your roof with solar panels, you pay a huge amount of money to do it and it can take many years (or even decades) for the energy savings to make up that giant expenditure. Of course the more the technology is implemented, the cheaper it will become, but unless it becomes cheaper, very few people are likely to make use of it. Such the problem.

The proposed solution is for the government to offer low interest, long-term loans to homeowners for the sole purpose of purchasing and installing renewable energy technologies (again, solar panels was the example). The loan would then be paid off over the years with the savings in energy costs gained through the technology. These loans would be tied to the property, so, if you sell the house, the debt (and the solar panels) transfers with it like a lien.

Such a scheme certainly isn't likely to make anyone much money; I'd have to imagine that, at best, the savings on energy bills and the payment on the loans would cancel one another out for many years. But it would remove the hurdle of up-front costs for those who genuinely want to go green. Thoughts?

[Americano]

I heard an interesting idea on NPR yesterday and was curious to see people's impression of it.

The general premise is that the problem with renewable energy technology (in this particular case, solar cells) is that there is a very high up-front cost which only pays off itself slowly over the course of many years. If you equip your roof with solar panels, you pay a huge amount of money to do it and it can take many years (or even decades) for the energy savings to make up that giant expenditure. Of course the more the technology is implemented, the cheaper it will become, but unless it becomes cheaper, very few people are likely to make use of it. Such the problem.

The proposed solution is for the government to offer low interest, long-term loans to homeowners for the sole purpose of purchasing and installing renewable energy technologies (again, solar panels was the example). The loan would then be paid off over the years with the savings in energy costs gained through the technology. These loans would be tied to the property, so, if you sell the house, the debt (and the solar panels) transfers with it like a lien.

Such a scheme certainly isn't likely to make anyone much money; I'd have to imagine that, at best, the savings on energy bills and the payment on the loans would cancel one another out for many years. But it would remove the hurdle of up-front costs for those who genuinely want to go green. Thoughts?

Those are a type of infrastructure improvement forward thinking government should implement to reduce energy import dependency and consequential monetary inflation. Unfortunately those ideas are in line behind F35 combat jets, bailing out incompetent financial institutions and other government spending offering enormous profit margins to special interests sponsoring them in conjunction with corrupt politicians.

[drgoodtrips]

I heard an interesting idea on NPR yesterday and was curious to see people's impression of it.

The general premise is that the problem with renewable energy technology (in this particular case, solar cells) is that there is a very high up-front cost which only pays off itself slowly over the course of many years. If you equip your roof with solar panels, you pay a huge amount of money to do it and it can take many years (or even decades) for the energy savings to make up that giant expenditure. Of course the more the technology is implemented, the cheaper it will become, but unless it becomes cheaper, very few people are likely to make use of it. Such the problem.

The proposed solution is for the government to offer low interest, long-term loans to homeowners for the sole purpose of purchasing and installing renewable energy technologies (again, solar panels was the example). The loan would then be paid off over the years with the savings in energy costs gained through the technology. These loans would be tied to the property, so, if you sell the house, the debt (and the solar panels) transfers with it like a lien.

Such a scheme certainly isn't likely to make anyone much money; I'd have to imagine that, at best, the savings on energy bills and the payment on the loans would cancel one another out for many years. But it would remove the hurdle of up-front costs for those who genuinely want to go green. Thoughts?

Seems a good idea in principle, but the logical question I think would have to be "what happens if the savings fail to offset the costs?"

I'm not proposing that as a barrier or a way to be a nay-sayer - I just think it's the logical thing to discuss.

[Americano]

Seems a good idea in principle, but the logical question I think would have to be "what happens if the savings fail to offset the costs?"

I'm not proposing that as a barrier or a way to be a nay-sayer - I just think it's the logical thing to discuss.

I looked at several levels of solar installations when we were designing our current residence and all the cost/payback calculations were, IMO, very conservative and realistic. My resistance was to the long-term aspect of carrying the large capital investment before it was amortized by energy savings, about 12-years. The ROI just wasn't there for me without a government or private entity shouldering a portion of the capital cost. That was four-years ago, when electric costs were much lower, so I'd think they'd now be much more attractive and will continue to gain in popularity. I certainly don't foresee generated electricity dropping in cost.

[Michael]

My thoughts on this subject is that it is a generally good idea that does serve the general public interest and therefore general public money is reasonably justified.

The problem I see here is the agency. Applying such subsidies on the 'consumer' side is very difficult and complicated. Applying such subsidies on the 'supplier' side is much easier (and easy for companies to lobby for).

The problem is that 'supplier' side subsidies are not efficient at all - they tend to go to the politically well connected, and more often than not, will not go to the most environmentally best technology. Consumer-side subsidies are much more efficient in rewarding companies that offer good technology.

This is entirely a practical matter of application. If the subsidies are on the supplier-side, then they are aren't really all that good. If they are applied on the consumer side, then yes, this could be a really good policy initiative.

[Americano]

My thoughts on this subject is that it is a generally good idea that does serve the general public interest and therefore general public money is reasonably justified.

The problem I see here is the agency. Applying such subsidies on the 'consumer' side is very difficult and complicated. Applying such subsidies on the 'supplier' side is much easier (and easy for companies to lobby for).

The problem is that 'supplier' side subsidies are not efficient at all - they tend to go to the politically well connected, and more often than not, will not go to the most environmentally best technology. Consumer-side subsidies are much more efficient in rewarding companies that offer good technology.

This is entirely a practical matter of application. If the subsidies are on the supplier-side, then they are aren't really all that good. If they are applied on the consumer side, then yes, this could be a really good policy initiative.

Supplier subsidies in tax form are generally used to increase post-tax margin and subsequent ROI for investors and seldom passed on to consumers.

[partofme]

My thoughts on this subject is that it is a generally good idea that does serve the general public interest and therefore general public money is reasonably justified.

The problem I see here is the agency. Applying such subsidies on the 'consumer' side is very difficult and complicated. Applying such subsidies on the 'supplier' side is much easier (and easy for companies to lobby for).

The problem is that 'supplier' side subsidies are not efficient at all - they tend to go to the politically well connected, and more often than not, will not go to the most environmentally best technology. Consumer-side subsidies are much more efficient in rewarding companies that offer good technology.

This is entirely a practical matter of application. If the subsidies are on the supplier-side, then they are aren't really all that good. If they are applied on the consumer side, then yes, this could be a really good policy initiative.

In order for it to reward companies that offer good technologies they would have to be given for all products so that they allow competition to be equal I assume.

[Michael]

In order for it to reward companies that offer good technologies they would have to be given for all products so that they allow competition to be equal I assume.
I'm thinking of a 'consumer-credit' type system.

Any company with good environmental technology would have to 'apply' to be listed as an eligible supplier.

Then any consumer who purchases one of those 'listed' products can then get a tax credit for that purchase.

This keeps allows the 'market principle' to sort out which technologies really are the best ones since a large market of consumers will tend to favor the very best ones (and ignore the not-so-good ones).

Any subsidy program that doesn't work like this is prone to being a closed club for politically connected companies - regardless of environmental value and very likely to put public money into unproductive enterprises and/or unpopular or useless technology.

[dilettante]

I'm thinking of a 'consumer-credit' type system.

Any company with good environmental technology would have to 'apply' to be listed as an eligible supplier.

Then any consumer who purchases one of those 'listed' products can then get a tax credit for that purchase.

This keeps allows the 'market principle' to sort out which technologies really are the best ones since a large market of consumers will tend to favor the very best ones (and ignore the not-so-good ones).

Any subsidy program that doesn't work like this is prone to being a closed club for politically connected companies - regardless of environmental value and very likely to put public money into unproductive enterprises and/or unpopular or useless technology.

I like the list of eligible suppliers idea as a means to keep the useful aspects of market principles, but I prefer the idea of government financed loans to tax-credits. A tax-credit is essentially the gov giving away (or giving back, depending on how you want to look at it) money; if the government simply created low-interest loans to finance green technology, then it would have a smaller impact on the long-term budget and would require fewer tax increases to compensate.

[dannydesiliva]

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