We are rapidly building a distributed energy system in our cities, but not all communities are sharing in its benefits. With new policies and programs, we could spread the benefits of solar more equitably.
The declining cost of solar energy is creating opportunities for all Americans to save money on their energy bills. And no one needs to save money more than low-income consumers, who pay a much higher portion of their income for energy than do other consumers.
But as the saying goes, it takes money to save money. Low-income consumers face barriers that others don’t. They are often renters or live in multifamily housing — and lack ownership of their roofs. They may have little to no savings that can be used to buy solar systems, and low credit scores or a lack of credit history may impede their ability to finance a system.
Many of the policies that encourage solar power were not designed to address the barriers that low-income households face. And conversely, many policies that provide financial or energy assistance to the poor were not designed to use solar power.
The newfound affordability of solar creates the opportunity to align policies and programs across the federal, state and local levels; to make the most of limited budgets; and to achieve multiple policy goals at once.
A new guide from the Clean Energy States Alliance, a consortium of state agencies and other public organizations, looks in-depth at policies and programs that can be used to bring the benefits of solar to low-income consumers.
The guide draws on a wealth of recent research, program experience, and new thinking about policies and programs. It describes many financing ideas that have emerged, such as property-assessed clean energy (PACE), Pay As You Save (PAYS) and crowdfunding. It covers direct incentives like renewable energy certificates (RECs) and solar renewable energy certificates (SRECs), compensation mechanisms like virtual net metering, and new business models like community solar.
The guide has six particular recommendations for government agencies and policymakers to consider when approaching low-income solar.
1. Leverage state energy policy to support low-income deployment. Many states already have policies to encourage renewable energy. State renewable portfolio standards (RPSs), financial incentives, community solar and net metering policies can all be adapted to support low-income solar. Colorado, for example, experimented with a requirement for community solar programs to include low-income customers, while Washington, D.C., and Massachusetts have used their RPS programs to provide financial incentives for low-income solar.
2. Adapt housing and anti-poverty programs to include low-income solar. A vast array of federal and state programs seek to reduce poverty and promote economic development, two things that solar power can help with. Energy assistance programs, like the Low Income Home Energy Assistance Program (LIHEAP) and the Weatherization Assistance Program (WAP), can be adapted (and in some cases are being adapted) to include solar power as approved cost-effective measures. There are further opportunities in the many public housing programs, economic development incentives for impacted communities, and job training and placement initiatives. HUD has been turning to solar to reduce the $5 billion a year it spends on utility bills in public housing.
3. Set up a financial vehicle. Many financial strategies can enable access to solar. They may require enabling legislation or new regulations, and involve working with utilities, solar developers, county agencies and/or financial institutions. Because of the diversity of options, legal and regulatory complexity, and potential range of stakeholders, it may be beneficial to establish a lead agency with specialized skills in project finance. The Connecticut Green Bank, for example, is not a single “policy,” but a multifaceted vehicle that develops, tests and deploys innovative financial strategies, and provides leadership to other stakeholders and agencies. Given the many financing vehicles that already exist, the expertise and leadership of an agency steeped in clean energy financing can be just as important as having a substantial endowment.
4. Promote volunteerism. Using solar power to help low-income consumers can be appealing to the public, because it simultaneously helps solve social and environmental problems. Volunteer labor can drive down the cost of installations while providing job training and community service opportunities. Groups like Habitat for Humanity and Grid Alternatives have found success with this approach. It can be encouraged through public policies, including financial and promotional support, preferential permitting, and public recognition.
5. Partner with trusted low-income allies. In many cases, government officials and program managers may not be best situated to promote programs in low-income communities. Early stakeholder engagement and coalition building can help ensure greater buy in and program enrollment. Partnering with organizations that are trusted within the particular market segments you are trying to reach — such as low-income outreach and advocacy groups, community action agencies, and other service institutions — can reinforce mutual trust and improve outreach and marketing.
6. Ensure programs provide tangible benefits to low-income consumers. It may seem obvious to say that low-income customers should benefit from low-income solar programs, but in practice it can be difficult to achieve. For example, installing solar on a low-income, multifamily apartment building won’t necessarily provide savings for the tenants. Low-income solar programs should complement existing programs and provide real financial benefits for the low-income customers they serve.
While there is a need and opportunity for innovative policies to encourage low-income solar, the perception that solar is only for the wealthy is already being eroded by real-world deployment of solar across the income spectrum.
Research by Kevala Analytics found that there have been nearly as many installations in low-income neighborhoods in California — about 20,000 cumulative by 2015 — as in high-income neighborhoods.
GTM Research and PowerScout estimate that there are 100,000 low-income solar customers in California, New York, New Jersey and Massachusetts, and that 34 percent of solar customers in New Jersey had household incomes below the state median.
Policy and program innovation can help accelerate this progress, and deliver benefits not only to the poor but to the government agencies, charities and taxpayers that support them.
Bringing the Benefits of Solar to Low-Income Customers: A Guide for States and Municipalities is available here. The guide author, Bentham Paulos, presented the findings on a webinar on Thursday, May 18. Slides and a recording of this webinar are available here. More information and resources about solar equitability and consumer protection are available on CESA’s Sustainable Solar Education Project webpage.