In Colorado, approximately 30% of households are considered energy burdened (more than 4% of their annual income is spent on utility bills) and 11% are considered energy impoverished (paying more than 10%). On average, low-income families spend over twice the proportion of their total income on energy bills then the average person in the United States. Posada, a housing authority located in Pueblo, Colorado, reports that this percentage can be even higher. They have worked with low-income households that spend as much on their utility bills as they do on rent, and in some cases utility bills can exceed rent payments.
At the same time, the number of solar installations is growing rapidly and the costs of solar systems have drastically reduced. However, even with the reduced costs and myriad of incentives and procurement options, the benefits of solar photovoltaic (PV) remain largely out of reach for low-income households. Even more problematic, low-income households pay into utility PV rebate and incentive pools, yet they rarely, if ever, directly benefit from the rebate and incentive pools themselves. The 49.1 million households that earn less than $40,000 per year (approx. 40% of all US households) account for less than 5% of solar installations. Improving the accessibility and uptake of community solar to low-income households is limited by a variety of marketing and communication, demographic, programmatic, and financial challenges. Fortunately, public and private entities are actively trying to solve this issue. So where have we seen some successes ?
Success #1: Community Solar: Helping low-Income households that rent or live in multifamily housing access solar
Many low-income households live in multifamily housing and/or rent. Therefore, there is little incentive to put a solar system (long-term investment) on a roof that may not be theirs within a few years. Solar gardens have helped solve this problem. Solar gardens consist of a large photovoltaic array on a large parcel of land. Individuals or businesses can buy a number of solar panels from a solar garden array or purchase electricity generated by a specified number of solar panels and receive credit, as utility incentives, on their electricity bills for the energy production that they own. Generally speaking, community solar is cheaper than individual modules because of the bulk purchase. Depending on how the solar garden is structured many times low-income households do not need to any upfront capital and see savings right away.
Click here for resources on how community solar can support low-income households. In addition, you can view the cutting edge Colorado Community Solar Gardens Act, which requires that 5% of electricity from each solar garden goes to low-income households by clicking here.
Success #2: Helping address the barrier of financing solar for low-Income households
There are many issues that arise for low-income subscribers when it comes to financing. Low-income households rarely have upfront capital to support a project and many low-income households are unable to get financing due to low or no credit scores (most solar leasing companies require a minimum credit score of 700!). In addition, even if they are able to get financing many households have too low tax liability to take full advantage of tax federal and state tax incentives.
Several companies have found workarounds by providing low-cost financing for low-income households. For example, PosiGen, a solar leasing company, has developed a low-income solar system leasing model that has successfully installed more than 4,000 systems since 2011. In order to fully utilize all of the tax credits, PosiGen leases the systems from US Bank who owns the panels. In addition, they utilize community redevelopment points, which are necessary to comply with the Community Reinvestment Act to reduce the interest further.
Many companies are also utilizing the public interest in supporting solar through crowdfunding, bonds, and impact investing. For example, Mosaic is providing low-interest financing through crowdfunding, while SolarCity is selling Solar Bonds. All three mechanisms are creating pools of money to pay for low-income solar outright or provide low-interest loans.
For more information on various funding sources see our blog Finding Money and the great working paper by the GW Solar Institute. Also GRID Alternatives (a non-profit that focuses on bringing renewable energy to underserved communities) website has many resources that can be viewed.
Success #3: Utilizing LIHEAP funds for solar investment
The Low-Income Home Energy Assistance Program (LIHEAP) has historically assisted about 15 percent of all low-income households with their utility bills. This accounted for approximately $3.4 billion in 2014. Yet the costs of energy are rising and the need for energy assistance is growing rapidly. Traditionally, very little of these funds cover solar investment or energy efficiency and the majority of low-income households do not benefit from LIHEAP. Thankfully this is starting to change.
The state of California installed solar systems for 1,482 low-income households using LIHEAP ($14.7 million) funds and a match from outside partners ($3.5 million). Also, the State of New York has proposed that all recipients of LIHEAP automatically become enrolled in community solar projects. The goal of these programs is to stop paying simply for utility bills but have a more sustainable program that reduces costs over the long run enabling the program to support more than just 15% of low-income households.
These aforementioned challenges are just a few of the dozens of issues that lead to very few low-income households realizing the numerous benefits of solar. However, the overall theme from industry experts is that solutions are arising every day and there is great hope that in the near run through public, private, and nonprofit initiatives that we will be able to bridge the solar income gap.
Disclaimer: The information presented above is based on the opinions and experience of the authors. The authors are not liable for any errors or omissions in this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.
Emily Artale, PE, CEM, LEED AP is Principal and Owner at Lotus Engineering and Sustainability, LLC, www.lotussustainability.com. She has been working in the industry for nearly a decade and she has a background in energy management, sustainability planning, and water quality. Emily helps teams develop action-oriented solutions that will improve efficiency and integrate sustainability into current processes. She received her undergraduate and graduate degrees in environmental engineering from the University of Colorado at Boulder. She is a Colorado native and spends most of her time outdoors with her family.
Hillary Dobos, MBA, LEED GA is Principal and Owner at Lotus Engineering and Sustainability, LLC. Hillary brings both expertise and creative thinking to working with clients which she draws from her experience as a consultant advising public and private clients throughout the United States, as well as the one tasked with embedding sustainability throughout a 25,000+ person organization. Hillary has served on various local and national boards focused on conservation, energy efficiency, and renewable energy. Hillary earned her B.A. in Art History and Economics from Bowdoin College in Maine and her MBA from the University of Colorado-Boulder. Hillary was born and raised in Denver, Colorado, where she currently enjoys life with her husband, sons, and moderately trained canine, Mr. Smiles