The Renter's Case for Alternative Energy

First, a bit of housekeeping: once again, my apologies to my faithful, albeit dwindling readership for my infrequent posting as of late. With George W. Bush yesterday's news, though, I'm finding it hard to get too worked up over politics these days. This is, of course, due more to my own political burnout from the past year and a half of excitement rather than the state of the world being all fine and dandy because my candidate of choice is now president.

As some of you know, I used to use this space to pass on recommended articles but I now find Google Reader to be a much better way to share articles. So if you're interested in reading what I'm reading, either bookmark this page:http://is.gd/iRGG OR add this RSS feed to your feed reader: http://is.gd/jLSk.

Now on to what's been stuck in my craw lately: the U.S. needs to focus much more of its alternative energy plan on renters for a number of reasons. While 68% of the homes in the U.S. are owner occupied units, out of the approximately 120 million homes in the U.S., that leaves around 34 million non-seasonal rental units. More progressive states like Oregon and California have already taken some steps in the right direction but much more needs to be done. The problem is how to incentivize landlords to invest in the units but right now, the rebate plans in most states and cities are nearly identical for homeowner's or renters.

Here in San Francisco, we have a good deal of local tax credits, coupled with state and federal credits for landlords but it still only covers about half of a capital improvement for a landlord. An average-sized house would usually need about a 1.5 to 2.0 kilowatt solar installation which costs about $20k. Sure, a $10k out-of-pocket expense sounds like a good deal with all the rebates but the only incentive a landlord has is a long-term one because it can improve the value of the home for sale or to increase rent. Even at half price, a landlord would have to be either a) quite environmentally conscious, b) willing to forego short-term payback on his/her investment or c) really like his/her tenants in order to reduce their utility bills.

Alas, the answer to this policy problem is not a simple one. On one hand, we may need to "over-incent" landlords in order to get the type of necessary overhauls to rental properties on a mass scale. But on the other hand, it may not seem fair to homeowners that taxpayers should shoulder such a large portion of what is also a landlord's capital improvement to his/her rental property.

I usually prefer to have some answers in these posts but this issue leaves me scratching my head. Additional thoughts and information would be most welcome.