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Low-Income Solar Policy Guide Shows Work Is Needed

Solar panels

The residential solar market has heated up in the United States during the past few years. Although its fortunes have fluctuated, it has seen dramatic improvements. The same cannot be said for the low-income solar market, which is just beginning to thaw.

According to the Low-Income Solar Policy Guide developed by the nonprofits Grid Alternatives, Center for Social Inclusion, and Vote Solar, there is a key set of structures that needs to be put in place at the government level to set the ground rules for a profitable market. The frameworks depend on the state policy environment.

These structures should include these eight goals:

  1. state targets for low-income participation
  2. credit support and targeted incentives to maximize participant savings
  3. development grants and assistance
  4. financial procurement or incentives for underwriting credit and mitigating risk
  5. seed funding for pilot projects and software
  6. government policies that facilitate smart siting choices
  7. constructive frameworks that encourage affordable housing owners to participate
  8. integrative collaboration with local communities

According to the guide, effective programs connect smoothly with energy efficiency and energy-assistance programs, engage local communities and organizations, have long-term and stable funding, support job training and placement, and offset upfront costs for participants.

Solar power can also be combined with energy storage to prevent humanitarian crises during weather emergencies when people cannot afford to evacuate. Clean Energy Group has published reports evaluating this option for low-income apartments and senior housing.

Financial Obstacles

Since low-income households spend a relatively large fraction of their incomes on utility expenses, solar power benefits them more than it benefits higher-income homeowners. However, they lack the resources and credit to participate in standard residential solar programs.

According to the guide, a four-to-eight-kW residential solar-electric system costs between $12,000 and $14,000. That includes labor and installation. This is expensive, given that the national median household income was $53,657 in 2014. For Latinos, it was $42,491. For African-Americans, it was $35,398.

Over 6 million affordable-housing units exist in the nation, the guide says. Data from the United States Census and other sources indicate that around 22 million owner-occupied households have incomes at or below 80 percent of the local median income.

Participating in solar leasing or power-purchase agreements (PPAs) requires financing that is based on having a solid credit score. In 2014, 72 percent of United States residential solar installations were financed using these plans, the guide says.

According to the guide, communities of color and low-income markets may have problems with their credit scores. This can happen if they avoid taking out loans or have had bad experiences with credit in the past. When customers are reluctant to take out loans, this affects their ability to finance solar installations.

Successful Outreach

Trust is an important ingredient for low-income-solar outreach. Because customers may have been targeted by scams in the past, they may be concerned about the promised savings or cautious about privacy. They may also see solar power as a luxury.

Sending culturally competent salespeople to multicultural and/or multilingual households can help establish rapport. Trusted community groups can also help bridge communication barriers.

A new report by Topos Partnership, “Being Heard: Voices from Marginalized Communities,” describes market research on why people who are experiencing economic hardship do not trust larger organizations. It offers suggestions on ways to bridge this gap.

The policy guide underscores that prevention of exploitative lending practices is crucial. Consumer protection, disclosure and accountability can help avert financially adverse behavior. 

Trusted community organizations can help connect low-income solar programs with their customers. The guide recommends that these programs and policies mesh well with existing energy efficiency, renewable energy, and energy-access policies. Similarly, they should integrate with workforce-development and healthy-home projects.

Cost of buying solar for a median-income household in the United States

Home Retrofits

There is a long-term history of low-income communities and/or communities of color facing redlining in the United States when they seek home ownership. They are often living in older homes with maintenance issues. So when they improve their homes, they may prioritize many other home repairs above solar power.

Rooftop solar requires stable non-slate roofing material, strong supporting structures, and leak-free surfaces, the guide says. Installers usually recommend that a roof where solar power is being installed not need maintenance for the next 10-15 years. Roof replacements cost around $12,000, according to Angie’s List.

State Commitments

Stan Greschner, vice president of government relations and market development at Grid Alternatives, said the policy climate for low-income solar has improved substantially in the past several years at the state level.

“It is stronger than I’ve ever seen it in the past nine years,” Greschner said. “We are today where the general market was 10 years ago. Some states are more serious about overcoming those barriers and trying to jump start a market segment.”

However, although the tone of the conversation has changed since California spearheaded low-income solar and partnered with Grid Alternatives, most states are not yet setting up the structures that are needed.

The states that are ahead of the curve – in addition to California – are Colorado, Illinois, and the District of Columbia, the guide says. Illinois dialogued with Grid Alternatives while developing its new policy plan.

Given the large amount of inefficient manufactured housing, older homes, and affordable apartments that could potentially be upgraded with solar installations to cut residential power bills, it appears that this is a market to watch.

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