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ETpro's avatar

Do you think municipal bonds would be a good way to fund the switch to solar panels?

Asked by ETpro (34505points) February 7th, 2010

At current prices for solar panels and conventional energy, it takes about 10 years for the investment in solar to pay itself off for the average homeowner. Of course, after that, it’s pure profit for homeowner and government alike, as it cuts energy costs and reigns in growing demand which would otherwise necessitate building costly new energy infrastructure.

Massachusetts is considering legislation to allow municipalities to bond the debt necessary and finance homeowners in switching to solar power for their homes. Payments would be added to their property taxes. What do you think of the idea?

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9 Answers

marinelife's avatar

I think it is a fine idea.

PandoraBoxx's avatar

It sounds like a great idea. According to that plan, the homeowner is repaying the municipality for the solar panel as an add-on to their tax bill, secured by a lien against the property. If the house sells, the unpaid portion of the solar panels gets paid off at closing. This would be an attractive offer for those who intend to stay in their homes, and would be a great selling feature.

galileogirl's avatar

Bonds may be useful to fund low interest loans forenergy saving residential upgrades. I on’t think govt funds should be used to outright pay for them. I also think new construction should be required to meet certain green standards.

ETpro's avatar

Thanks, all. Seems to me to be an imminently sensible idea.

IchtheosaurusRex's avatar

Munis are a good way for cities to finance all sorts of things. The problem is they’re market driven, and cities have to contend with bond ratings the same way that private companies do. Big cities in financial distress can issue bonds, but they carry a higher risk with a concomitant higher interest rate. That means higher taxes down the road.

I think a tax credit would be a more sensible way to help homeowners finance these things. Any time you borrow money to pay for something, you end up paying more for it.

ETpro's avatar

@IchtheosaurusRex Isn’t that just robbing Peter to pay Paul? Tax credits mean lower revenues. So if a municipality was already in financial trouble, then it’s only going to get worse when they deliberately cut revenue.

IchtheosaurusRex's avatar

When you issue bonds, you’re borrowing from Peter to pay Paul, and you’re going to pay Peter back more money than you borrowed. Another instance of TANSTAAFL. I don’t believe that a city in financial trouble would be doing either, however – bond issues or tax credits. These are cities that are having trouble paying for street repairs or firefighters or garbage collectors.

Another thing to consider is that you’re borrowing money to pay for something that will get cheaper over the years. Solar cells are improving all the time, and economies of scale will make them less expensive, just like flat screen TVs.

ETpro's avatar

@IchtheosaurusRex Exactly. Tax credits or municipal bonds both impose a cost. The municipality must be in shape to bear that cost, or it isn’t a good idea. But building new power plants has a cost, too. There are no free rides.

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