Bridging the Solar Income Gap

Author:  Mueller, James | Ronen, Amit
Organization:  GW Solar Institute
Report Date: 
2015
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Summary: 

This working paper provides a synopsis of the 2014 Solar Symposium discussion and provides specific recommendations for how to expand solar energy in lower income communities. The authors provide several policy recommendations and tools that federal, state, and local policymakers could use to expand lower income solar markets. Serving as a starting point for addressing the solar income gap, the authors will incorporate refinements to reflect ongoing discussions and emerging solutions.

Key Take-Aways: 
  • Proven policies that make solar more accessible and affordable should be continued and expanded:
    • Continue net energy metering (NEM)
    • Extend the 30 percent Investment Tax Credit (ITC) beyond 2016 and make it transferrable.
    • Extend the New Markets Tax Credit (NMTC) and the Community Development Financial Institutions (CDFI) Bond Guarantee Program.
    • Fully fund the U.S. Department of Housing and Urban Development (HUD) and U.S. Department of Agriculture (USDA) financing programs during annual appropriations process.
    • Maintain funding for the U.S. Department of Energy's Solar Energy Technologies Program.
  • Emerging community and shared solar policies expand the solar marketplace and should be established in more states. Enabling legislation is needed in many states to allow community solar projects.
  • More tools are needed to enhance credit, lower lender risk, and leverage private capital:
    • Establish a federal low-income green bank
    • Expand state credit enhancement programs
    • Expand on-bill repayment and commercial property assessed clean energy (PACE) financing options.
  • Solar should be fully integrated into existing energy efficiency and energy assistance programs, including the Weatherization Assistance Program (WAP) and the Low-Income Home Energy Assistance Program (LIHEAP).
  • Substantial outreach and education will be necessary to reach lower income communities. Recommendations include:
    • Encouraging employers and national organizations to sponsor solarize and leasing programs for their employees and/or members.
    • Create a government-sponsored check-off program to impose mandatory assessments on producers to fund broad industry-wide research and education campaigns.
  • Solar deployments in lower income communities will require utility partners, whether directed through state legislation or utility commissions or induced through creative value propositions.
Key Facts: 
  • Between $17.9 billion and $23.3 billion of electricity value alone would flow into these communities, if all low-income households went solar.
  • The installation and operation of a full low-income solar build-out would also contribute an additional $18.7 billion of local economic output each year, resulting in roughly 138,376 jobs.
  • The 49.1 million households that earn less than $40,000 of income per year make up 40 percent of all US households but only account for less than 5 percent of solar installations. Lower income households face key barriers that are difficult to overcome.
  • Lower income households are less likely to own their roof due to higher rates of living in multi-family buildings and being renters (49.1 percent of households with incomes less than $40,000 are renters versus 21.8 percent of households with incomes greater than $40,000).
  • Electricity costs account for 5.7 percent of the median low-income family’s budget, while they only account for 1.9 percent for other families.
  • A typical low-income family consumes roughly 10,060 kilowatt-hours of electricity at a cost of $1,272 per year. Other, more affluent families consume roughly 11,720 kilowatt-hours of electricity on average, at a cost of $1,558 per year. Nevertheless, low-income families do use less electricity overall and use only 22 percent of the electricity used in American homes despite accounting for roughly 25 percent of all housing units.
  • The federal government spends billions of dollars each year on energy for low-income households:
    • In fiscal year 2014, the federal government provided states with $3.4 billion through the Low-Income Home Energy Assistance Program (LIHEAP) to assist low-income families with their home energy bills. Historically, these LIHEAP dollars only cover about 15 percent of all eligible low-income households.
    • The U.S. Department of Housing of Urban Development (HUD) expends about $6.3 billion on energy costs each year for federally assisted housing.