Can public energy assistance funding be used for low-income solar?

Residential solar
November 08, 2017

There are a number of energy assistance programs already in place at the federal, state, and local levels designed to help low-income households afford their energy bills.

Incorporating solar investments into these programs could provide long-lasting reductions in low-income household energy spending and reduce overall demand for energy assistance. For example, a 4-kilowatt system could provide more than half of the electricity needs of a typical low-income family, energy worth more than $600 each year. However, while such investments could have long-lasting benefits that accrue over time, they may necessarily come at the expense of expanding coverage for the traditional role of these programs. 

The federal government spends billions of dollars each year to help with energy bills. For example, the U.S. Department of Housing of Urban Development (HUD) expends about $6.3 billion on energy costs each year for federally assisted housing. However, many of the energy assistance programs experience chronic under funding relative to documented needs and currently only a small percentage of program funds are set aside for increasing solar energy adoption. With continued and enhanced support from Congress during its annual appropriations process, and a commitment by the relevant federal agencies, public funds could be invested in more comprehensive long-term solutions for reducing energy demand and government spending.

Below is an overview of current government programs that use existing public funds to finance solar installation for low-income households.

Weatherization Assistance Program (WAP)

The Weatherization Assistance Program (WAP) is administered by the US Department of Energy and funds residential energy-efficiency retrofits for low-income families. WAP has funded tens of thousands of energy retrofits, and in 2007, they began allocating two percent of program funds for low-income solar installations.

Low-Income Home Energy Assistance Program (LIHEAP)

The Low-Income Home Energy Assistance Program (LIHEAP) is administered by the US Department of Health and Human Services (HHS) and assists low-income families with their home energy bills. This multi-billion dollar program could be expanded to include solar and energy efficiency upgrades for families already receiving assistance. 

Low-Income Housing Tax Credit (LIHTC)

The Low-Income Housing Tax Credit (LIHTC) helps finance the development of affordable rental housing to boost the housing stock for low-income households. Affordable housing projects that include solar installations can qualify for LIHTC, if structured properly, and LIHTC can cover a significant portion of the solar installation costs. 

US Department of Agriculture’s Programs (USDA)

The US Department of Agriculture’s Rural Energy for America Program (REAP) helps agricultural producers and rural small businesses finance and install solar energy systems and energy efficiency upgrades through grants and loan guarantees. 

Programs include:

US Department of Housing and Urban Development (HUD) Programs

The US Department of Housing and Urban Development (HUD) spends billions of dollars every year on energy costs for its public housing and federally assisted housing programs. In 2014, 27 affordable housing providers committed to installing more than 150 MW of on-site solar power.

There are many programs available through the Federal Housing Authority (FHA), which helps low-income families secure and use loans to finance efficiency improvements and solar installations.

Programs include:

Community Development Financial Institutions (CDFI)

The US Department of the Treasury oversees the Community Development Financial Institutions (CDFI) Fund that directly invests in financial institutions that provide services to underserved and economically distressed communities. These funds can be used to help finance solar installations for low-income households.

Photo by NREL/Dennis Schroeder