Solar power is a growing industry that provides clean energy and can result in big savings on monthly energy bills. But not everyone can easily reap the benefits of solar power. Low-to-moderate income families struggle with many barriers that prevent them from going solar.
Some of these barriers include:
- Large upfront costs
- Lack of access to financing options
- Low credit scores
- Inability to harness tax incentives
- Lack of home ownership
- Residence in multi-family housing
- Lack of roof access
These barriers are especially troubling because low-to-moderate income households have the most to benefit from installing solar. Low-income families spend three to four times more on energy expenses than higher income families. A recent report identified the best ways utility companies and communities can help low-income households break through the barriers and go solar.
Whole communities stand to gain from better solar access.
When low-to-moderate income participation in the solar market is absent, it negatively affects everyone. As more people go solar, not only do those individual households save money on their monthly energy bill, but the community at large often saves money on traditional energy expenses. Residents generating their own solar power means that the community doesn’t have to pay for new and expensive power plants or transmission line upgrades. This saves all residents of the community money while also benefiting the environment. These benefits highlight the importance of recognizing the barriers low-to-moderate income households face and having the tools necessary to break these barriers.
Broken Barriers: Upfront Costs and Bad Credit
Although costs for solar have decreased significantly over the past few years, large upfront costs remain a barrier for low-to-moderate income families. One way to mitigate this barrier is for solar utility companies to offer leases or power purchase agreements (PPA) to consumers. Leases or PPAs allow consumers to “rent” their rooftops to the solar company in exchange for credits on their energy bill, with no upfront costs. However, many low-to-moderate income families would still be ineligible for leases or PPAs due to another common barrier: bad credit. But on-bill financing could be the solution to solve both of these barriers.
On-bill financing is a loan that gives customers the ability to pay for their energy efficiency efforts, such as solar, over an extended period of time at no upfront cost. This allows customers to save money and energy from day one! On top of that, eligibility for on-bill financing is determined by using utility bill payment history instead of credit score. However, it is important to note that on-bill financing is a very new financial tool and as such there is a great deal of uncertainty as to how each utility company may set up their system. States should ensure that their on-bill financing program allow low-to-moderate families to realize the benefits of solar by saving money and energy while protecting other financial and consumer interests.
Broken Barriers: Lack of Homeownership and Roof Access
Lack of homeownership or roof access is another major barrier low-to-moderate income families must overcome in order to go solar. Many low-to-moderate income families rent, live in an apartment or have other living situations without the roof access necessary for solar installation. To combat this barrier, communities can invest in community solar projects, where the costs and savings are divided by the community. To truly encompass all socioeconomic groups in community solar projects, communities should focus on the following guidelines:
- Communities should make sure to use on-bill financing or other financing options that keep subscription fees low for all participants. This will allow more low-to-moderate income families to participate regardless of their living situation. Low fees will also incentivizing more community members to partake in community solar projects.
- Communities should reserve a portion of available community solar subscriptions for low-to-moderate income families. This will ensure that low to moderate income families will be able to partake and benefit from community solar projects.
- Utilities should reserve between 25% to 50% of community solar projects for siting in underserved communities.
California has recognized the benefit of ensuring low-to-moderate income solar participation and recently passed a law that stipulates that ⅙ of community solar projects are reserved for siting in disadvantaged communities. In enacting this bill, California enables more low-to-moderate income families to go solar, creates 5 million jobs with a total payroll of $45 billion, saves homeowners $200 a year on energy bills, benefits the entire community and the environment and more!
The government has advocated for similar solutions through the Clean Power Plan with the Clean Energy Incentive Program, CEIP. This program rewards renewable energy investment, such as solar, in low-income communities. However implementation of this plan is on hold as the Supreme Court reviews its constitutionality. So, until then it is important for all of us to tell our community leaders that we all want lower energy bills, and a great way to do it is by helping low-to-moderate income families break down barriers and go solar! For more information on what solar policies and incentives your state offers click here.