Solar wealth gap: New reports show size of low-income solar market, solutions to boost installs

solar low income incentives

Something that’s not talked about enough: one of the largest barriers to solar adoption and a game-changing move into a distributed generation future is the wealth gap. A new report released by the National Renewable Energy Laboratory (NREL) shows that nearly half of all the United States’ residential rooftop solar technical potential is on the dwellings of low-to-moderate income (LMI) households, representing 320 GW of potential solar capacity. Although residential solar adoption has increased over the past decade, adoption among LMI households (defined as 80% or less of the Area Median Income) and affordable housing providers continues to lag.

Given that solar lowers the cost of electricity, and that electricity is a public utility, solutions to bridge this gap and make lower cost electricity available to homeowners that need it most should be a top priority.

The issues

The Institute for Energy and the Environment (IEE) at Vermont Law School released “Low-Income Solar Ownership in Vermont: Overcoming Barriers to Equitable Access,” a report prepared for the Vermont Low Income Trust for Electricity (VLITE), Inc. The report examines how to give low-income customers equitable access to the benefits of distributed solar as the renewable energy resource becomes an increasingly cost-effective option to meet clean energy goals. The authors examine four categories of barriers: upfront capital costs; unsuitable housing; lack of information, time and trust; and existing incentives.

“Vermonters should have equal access to the benefits of solar and it is clear in looking at both federal and state policy that is not the case, particularly when it comes to access to solar ownership among low-income Vermonters,” said IEE Director Kevin B. Jones. “In order for our state and nation to meet our clean energy and climate goals, in an equitable fashion, we need both our legislators and our regulators to help level the playing field. There is much work to do to remove the barriers to low-income solar ownership.”

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“It is particularly difficult for any Vermonter, particularly low-income Vermonters, to make the numbers work and truly purchase net-metered solar with the punitive $0.06/kWh REC [renewable energy certificate] adjusters put in place by the Vermont Public Utility Commission in opposition to what many Vermonters requested,” Jones said. “If the commission does not change this shortsighted, punitive policy, then the legislature should.”
According to Energy Fellow for Climate Justice Christa Shute JD’13, in addition to environmental benefits, solar is about stabilizing energy costs over the next 40 years.

“Increasing access to net-metering for low-income Vermonters is an equity issue that deserves attention,” Shute said. “This Vermont Law School report on increasing access to low-income solar ownership highlights challenges and proffers potential solutions. There are answers if we consider the problem from the perspective of those facing the challenges. I have faith that our state can come together and be a leader to find energy solutions that work for our most vulnerable.”

Solutions?

To inform the report, the Energy Clinic at the IEE explored how Vermont’s low-income residents are participating in the solar net-metering program, identified challenges faced in procuring solar energy, and developed policy proposals that will help lower barriers to and encourage low-income customers’ participation in these programs. Researchers interviewed local financial institutions, community action agencies, affordable-housing developers, and others involved in the industry. They also researched what other states and regions are doing to promote diverse solar ownership opportunities.

Proposed solutions consist of improved incentives, financing and education and training—all with an eye toward long-term policy. Solution highlights include:

1. Incentives

  • Create low-income specific adders to net-metering projects.
  • Reversal or modification of harmful 2017 changes to net-metering, including the punitive REC adjuster.

2. Financing

  • Legislative mandate for the Public Utility Commission and utility implementation of an on-bill tariff program that lends to the meter instead of the person. This addresses three primary barriers: the split incentive in rental homes, access to financing, and an aversion to risking additional debt.
  • Support existing financing programs with increased access to loan guarantees and funding sources.

3. Informing

  • Collaboration with community partners, utilities and providers is necessary to create a successful program that is promoted statewide.
  • Identify and inform targeted demographic based on volunteer answer to one question on state tax return.
    Motivate citizens to inform neighbors on ways to save money and stay warm.

“Vermont has an opportunity to advance its energy and climate goals, strengthen the economy, and assist those with the highest energy burden,” Jones said. “We can bring the benefits of solar ownership to a larger portion of the population by creating market-specific incentives, leveraging that investment through financing, and informing them of opportunities.”

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