By Diane Mastrull

Pennsylvania will start issuing rebate checks in July to help homeowners offset the cost of installing solar-powered energy systems, but don’t expect an immediate stampede to plug into the sun.

Even with a state rebate of up to 35 percent, on top of maximum federal tax credits of 30 percent, going solar requires a sizable investment. The typical four-kilowatt residential system costs about $35,000.

In all but affluent households, that is an unthinkable expense, says David Blumenfeld – especially now, when “everybody is hurting, everybody is scared about losing their job.”

So he is offering another pathway to the sun.

By offering homeowners the option of leasing solar systems – a deal that would not involve the up-front costs typical of buying such equipment – Blumenfeld’s new company, Urban Eco Electric, hopes to raise a bumper crop of solar panels across Philadelphia’s rowhouse rooftops.

UEE, believed to be one of only a few such companies nationwide, also would guarantee 50 percent decreases in monthly electricity costs for the first two years of a 20-year agreement.

For the subsequent 18 years, customers would pay their current electric rates – as long as their electricity use did not exceed the amount on which that rate was based. The rates would remain frozen even in the likely event of substantial increases, which are expected when utilities start lifting rate caps in 2011.

“At the end of the day, the savings are substantial,” Blumenfeld said of solar leasing.

It is a relatively new green-economy concept, largely confined to California and Connecticut, but expected to “be very prevalent” soon, said Adam Stern, executive vice president of the Gemstone Group Inc., a renewable-energy investment-banking firm in Wayne.

“In fact, my organization is creating a solar-leasing business for Pennsylvania,” Stern said last week. “We are working on a late-summer or early-fall launch.”

After that, Gemstone plans to turn its attention to New Jersey, where grants and loan programs are the financial-assistance options available to homeowners for solar-powered systems.

Gemstone was the architect of Connecticut’s solar-leasing program, which debuted last summer, and is managing its leasing company.

UEE, formed in January, has a staff of three and expects to employ as many as 100 within 18 months as installers, systems monitors, and sales staff are added. The company has been marketing for about a month, canvassing neighborhoods, street fairs, and Earth Day events.

The goal is to get 100 signed contracts within 100 days, said Blumenfeld, 47, a lawyer and real estate broker who lives in Lower Merion. Once that target is reached, installation would begin.

As its name implies, UEE is confining its work to the city. Flat rowhouse roofs and their unobstructed access to the sun make them ideal properties for solar-heating systems, Blumenfeld said.

An added plus is that most city homes use gas for heating and cooking, making it that much more possible to serve 100 percent of a rowhouse’s electricity needs through solar, he said.

Blumenfeld grew up in the city and spent seven years with Grasso Holdings as a partner responsible for acquisitions and new development. With conditions in the development business “dreadful” over the last year, Blumenfeld said, he decided that “it was time to go out and do something new.”

He thought about the solar industry largely because the state legislature had passed in July Gov. Rendell’s $650 million Alternative Energy Funding Act, which allotted $100 million for the solar-rebate program for homes and small businesses.

The more Blumenfeld read about solar initiatives, the more convinced he grew “that everyone was focused on the wrong market – large power-purchase agreements. Going after the residential market seemed a huge opportunity.”

In typical solar-installation deals, customers are told to expect a return on their investments in five to seven years at best. Blumenfeld said that is merely guesswork – and completely irrelevant to those who cannot come up with the money for installation.

How UEE will get a return on its investments is a complex matter of depreciation, tax credits, and use of federal, state, and local incentives. For instance, using the solar electricity generated by its systems, UEE would have the ability to sell renewable-energy certificates to utilities to help them meet renewable-energy-portfolio standards.

Andrew Kleeman, managing partner at Center City-based Eos Energy Solutions, is a solar installer who contends the essentials are not in place to make leasing work “in the foreseeable future.” Still unclear in Pennsylvania, he said, is how solar-leasing companies would access state rebates that are available to homeowners buying solar systems.

Those subsidies are “essential to making the numbers work,” Kleeman said.In the three-story Queen Village rowhouse Peter and Rebecca Lazor live in with their 2-year-old son, $30,000 in green improvements already have been made. They have replaced all the windows, reinsulated the house, and replaced the appliances with energy-efficient models.

Installing a solar-power system “was the next logical move,” said Peter Lazor, 38, an architect. But an out-of-pocket expense of $25,000 to $40,000 “was cost-prohibitive” – they would have to stay in the house far longer than anticipated to derive enough energy savings to justify a loan for the system.

Then along came Blumenfeld with his leasing pitch, an idea Lazor found “really attractive.” Come summer, he hopes to have a rowhouse juiced by the sun.

Our Perspective:

PA has just started it’s solar initiative. A small step indeed but a much needed step.

Should you wanrt to know more about financial structures and other financial opportunities that take advantage of federal and stae incentives, contact:

Hutchinson Business Solutions

You may email us george@hbsadvantage.com