Arizona Republic

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On the positive side, John McDonnell with Scottsdale, AZ-basedSunRenu Solar LLC explains that Arizona's peak sunshine and rebatesare making the state irresistible for potential solar and othermanufacturers. Furthermore, he goes on to say, solar power is oftremendous interest to commercial real estate owners.

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Then what's the problem? "Getting financing together is holdingsome clients back," he acknowledges.

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One issue, McDonnell explains, is that metro Phoenix energycompanies Salt River Project and Arizona Public Service is willingto pay up to 60% of a renewable project's cost. This is good.What's not so good is that the payment is over time, requiring alot of up-front, out-of-pocket costs. "A lot of people don't havethe expendable capital they did in 2004 to 2006," he adds.

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Steve Gossett Jr., vice president with Transcend Equity inDallas puts even more rain on solar's parade, pointing out that thepayback isn't too strong, though federal incentives are improving.Still, "solar is still a smaller percentage of the renewable energymarket in the United States," he remarks, adding that solar withoutfederal support "is abysmal." And, much like McDonnell, Gossettacknowledges that obtaining financing through conventional meansfor renewable energy products is extremely difficult.

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The current renewable assistance is a program called PACE, whichstands for Property Assisted Clean Energy. The main thrust of PACEis to encourage property owners to go solar without upfront costs.These are paid through clean energy finance districts that issuelow-interest bonds. Property owners wanting to opt-in to use thebond money for renewable energy can pay the loan back through along-term assessment on property taxes. Fifteen states, so far,have passed laws to allow such programs. But PACE isn't looking forcommercial Gossett remarks. Furthermore, mortgage holders don'tlike it because it creates problems if the property ownerdefaults.

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But both SunRenu Solar and Transcend Equity are trying toovercome this financing gap. SunRenu, which works on proposals anddesigns for solar energy systems, has teamed up with banks to helpproperty owners obtain financing for projects. Meanwhile, TranscendEquity is working on developing a multimillion fund to providefinancial resources to assist with green retrofit projects. Theplan is to raise money from private investors, then use theDepartment of Energy's money as a "loan loss reserve" to getlenders excited about projects.

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Is the move to solar and other sources worth all of this timeand effort? Definitely, McDonnell and Gossett say. "A lot of thefocus is on trying to get it out there and into the market,"Gossett comments. "The great thing about solar, is if you can getit on the grid, it can reduce infrastructure costs." He commentsthat the solar payback is 20 years, but McDonnell disagrees, notingthe payback on the investment is closer to four years.

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Furthermore, McDonnnell notes, the cost of the technology iscoming down and with rebates coming from the Treasury througheither a tax credit or grant, up-front checks will be available forthe investment through November 30, 2010.

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"The industry isn't going away," McDonnell adds. "The rebateswill decrease, but the costs will continue to go down."

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