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In early September, initiatives from federal and state government agencies amplified the Environment Justice movement across the United States. In its Solar Futures Study, the U.S. Department of Energy (“DOE”) highlighted equitable distribution of the benefits of clean energy. In the same week, the New York State Public Service Commission announced that disadvantaged communities will receive 40% of the benefits associated with its $6 billion Clean Energy Fund. In support of the DOE study, the National Renewable Energy Laboratory (“NREL”) released its technical report Affordable and Accessible Solar for All: Barriers, Solutions, and On-Site Adoption Potential. This article analyzes the NREL report, highlighting its major implications for low- and moderate-income (“LMI”) customers.
The NREL report argues that technology advancements resulting in lower electricity costs must provide supplementary assistance to LMI electricity customers in cases where their utility bills increase. LMI households represent 43% of all U.S. households, and the energy burden on LMI households is higher than that of other U.S electricity customers – 8.1% of LMI household income goes towards paying for electricity compared to 2.3% of other households.
The report focuses on rooftop solar, but NREL notes that less than half of off-site community solar projects include LMI households, and only 5% of these projects include LMI households as a “sizable share.”
LMI-owned households account for 31% of estimated solar PV capacity for all single-family homes. Therefore, deployment of solar on these rooftops is an essential component in meeting the DOE’s aggressive goals to decarbonize the US electricity system by 2035 and decarbonize the energy sector by 2050. Historically, solar deployment on LMI household rooftops has lagged significantly compared to deployment on non-LMI household rooftops.
LMI economic incentives resulting in energy savings are immediately spent in the local economy, which contribute to community development.
In general, LMI households are more severely impacted by climate events and fossil fuel emissions due to community placement. With a focus on these vulnerable communities, the development of renewable energy could combat the negative impacts of emissions and climate crises, thereby reducing overall healthcare costs, long-term negative health effects on children, and costs of disaster recovery for LMI households. In turn, our society and economy would benefit from renewable energy development through decreased need for mitigation efforts. The construction of renewable energy facilities near LMI households would displace fossil fuel plants, allowing for a cleaner environment through reduced emissions. Additional reductions in emissions can be accomplished in the transportation sector. By focusing on the electrification of school buses, government vehicle fleets, and commercial truck fleets that service these areas, emissions that directly impact the communities can be substantially reduced.
Inclusive renewable energy programs are an important part in promoting justice and fairness. By providing LMI households accessibility to renewable energy, participants, especially future generations, engender a greater sense of autonomy and empowerment.
However, the challenges of accessibility and affordability are significant. The DOE’s Solar Futures Study uses NREL models to review the potential role of solar in decarbonizing the U.S. electric grid, and broader energy system, while summarizing solutions for regulatory barriers to low-income solar access and affordability. This approach is challenged by the confinements specified in the NREL models. The NREL models rely upon: (1) net metering, which is undergoing review in California with the NEM 3.0 CPUC process, (2) the continued decrease in the cost to deploy solar, (3) the expanded legislation and regulations in individual states, and (4) federal incentives for LMI that may or may not occur. Without these assumptions holding true, the growth of LMI household solar may not reach its full potential.
The key to obtaining the funding required to ramp up LMI household renewable energy growth starts at the top. It is imperative that the recognition of the true value of renewable energy generation come from the federal mandates to the states to meet minimum criteria. It is important that the conversation around renewable energy, especially for marginalized communities, shift away from the “incentive” or “subsidy” narratives towards capturing the inherent value of accelerated deployment with renewable solutions.
Financial, housing-related barriers, ownership, and access to education all present challenges for LMI customers to adopt solar energy solutions.
Because of the high upfront cost of rooftop solar, many LMI households face a substantial financial barrier to clean energy. One solution that has been deployed in the past is third-party ownership, eliminating the need for upfront capital. However, those third-party models often reduce the financial benefit to LMI customers compared to their ownership model counterparts. High income households use more energy, while LMI customers often use less energy, resulting in a smaller total reduction of their overall bills from transitioning to a cheaper electricity alternative like solar. Due to these smaller savings, even a slight increase in utility charges to LMI customers can quickly eliminate any savings.
Housing-related barriers in adopting rooftop solar include roof suitability and faulty or dated electrical wiring. LMI families are more likely to live in older homes that may require complicated repairs due to asbestos, lead, and mold. This is an additional upfront cost that restricts many customers from installing solar, and most solar companies will not risk the liability of an older roof’s integrity.
For renters and residents of multi-family housing, solar incentives may be split between the building owners and the tenants, or the tenants may have their utility charges included in their cost of rent. LMI households face many of the same barriers with off-site solar as with traditional rooftop solar, including financing, education, and outreach. Legislation is lacking in many states to support community solar and to encourage LMI participation.
Some available incentives and financing mechanisms are not as accessible to LMI customers, as they may require high credit scores or the “right type” of taxable income to be advantageous. Almost 90% of solar adopters have prime or super-prime credit scores greater than 680.
Because of all the barriers and clear disadvantages stacked against LMI customers, these communities are rightfully distrustful of energy saving promises. Additionally, this customer base has been the target of scams and exploitation in the past. While educating LMI customers on the savings from beneficial programs may prove promising, complications arise due to the lack of broadband in a large proportion of these homes. A staggering 44% of households with income below $30,000 a year do not have access to home broadband services, limiting accessibility to online educational material.
The impact of solar savings and implementation is clear, but high income households receive much higher benefits than LMI households from solar deployment.
Single-family, owner-occupied households adopt more solar energy solutions overall due to their higher energy consumption and the disparity in suitable roof space between single-family and multi-family homes. Lower solar prices drive greater impact in moderate-income than low-income, with incentives providing the greatest change for low-income households.
First-year utility bill savings from solar are much greater for single-family owners ($525 to $870) than other categories of households, which could be as low as $40 to $50. NREL modeled incentives that would raise the savings for other categories. These incentives would significantly reduce the energy burden on LMI household budgets, providing “48%-49% of LMI households with solar systems, resulting in $69 billion - $101 billion in total net first-year utility bill savings.”
To ensure adoption, the report outlines short- and long-term actions in finance and funding, community engagement, site suitability, policy, regulation, resilience, and recovery.
Environmental justice requires taking steps that go beyond simply providing economic relief to LMI households. Measures must be taken to focus on the communities most directly affected by the changing climate.