Sunday, July 5, 2009

Patriot Solar Power, L.L.C.

Bringing the benefits of solar power to middle and lower income residents of Dallas, Texas

(This is the Executive Summary for a new project we’ve been working on for the past year, Patriot Solar Power. It was originally inspired by T. Boone Pickens and the Pickens Plan. We think we’ve finally got the details worked out well enough to see if there is interest in funding a pilot program, but the ultimate goal is to bring a greener Dallas to all our residents, regardless of income).

Project Overview:

Photovoltaic generation of power (solar power) has become an economically viable source of power generation in Dallas, Texas because of incentives at the federal level with the 30% renewable energy credit and locally with Oncor’s new incentive of $2.46 per watt of photovoltaic power for residential users (limited to five kilowatts per customer). However, the initial capital cost of installing a solar power system (estimated by Oncor at $6,000 to $10,000 per kilowatt) is prohibitive to almost all middle-income and lower-income residents in Dallas.

Central Dallas Community Development Corporation (Central Dallas CDC) wants to change this and bring the benefits of solar power to the middle and lower income residents of Dallas. We will do this acting through a limited liability company, Patriot Solar Power, L.L.C. Patriot Solar Power, L.L.C. will make solar power available to residents living in areas of the City of Dallas where the average median income is less than 80% of that for the Dallas Metropolitan Statistical Area, beginning with an initial program bringing solar power to 100 households.

The solar systems will be installed for program participants at no cost. Patriot Power will receive as lease payments a portion of the utility bills paid by participants to their electric company, based on the value of the electricity produced by the solar systems. The process will be entirely transparent to residents, who will pay their utilities bills as always. The utility bills of the residents will not increase because of the solar power systems. In addition, Patriot Power, L.L.C. will return a yearly rebate to each participant equal to 10% of the value of the energy generated from the solar panels at their home.

Project Financing – New Markets Tax Credits:

The economics of Patriot Power, L.L.C. work because the existing incentives for solar power can be wrapped within a New Markets Tax Credit structure, potentially reducing the cost by an additional 25%. New Markets Tax Credits must remain invested in the project for a seven-year period. By the end of the period, a sinking fund established to repay the New Markets Tax Credit loan that will have grown sufficiently to refinance the loan.

At the end of the seven-year period, Patriot Power, L.L.C. will double the rebate to program participants to 20% of the value of the electricity produced by the solar system. Any excess proceeds beyond those needed to maintain and operate the solar system will be expended to pay for the installation of additional solar systems or for other activities that will result in the reduction of the use of nonrenewable energy resources in North Central Texas.