Studies have recently emerged concerning how well the rooftop solar industry is serving low-income communities and communities of color—and the news is disheartening.
A recent study published in Nature Sustainability brought to light the fact that communities of color are missing out on the benefits of solar. Previous studies have focused on high upfront costs and lack of home ownership as particular reasons for this disparity.
While the solar industry has done an excellent job at converting and financing projects targeted at high credit homeowners, it has avoided the real and perceived challenges associated with bringing low-income solar options to market. These challenges include increased project financing costs, high customer acquisition costs, and the high expectation of default. The result is that the economic benefits of solar innovation have been accruing to the wealthier consumers, overlooking those that need the savings most.
Fortunately, there is an emerging business model that is overcoming many of these obstacles: Community solar farms can serve these otherwise underserved markets.
Community solar is a local solar facility shared by multiple community subscribers who receive credits on their electricity bills for their share of the power produced. Today, only a small minority of American households and businesses have access to rooftop solar because they rent, live in multi-tenant buildings, have roofs that are unable to host a solar system, are shaded by trees, or experience some other mitigating factor.
Community solar is an option in 19 states and the District of Columbia–several of these states are actively encouraging community solar projects through policies and laws–with Minnesota leading the pack. It’s a start, but there is plenty of room for growth.
Let’s review the ways community solar is the perfect vehicle to serve non-traditional solar communities.
Access: Opening access to low- to moderate-income (LMI) communities means being able to serve multi-family, renter-occupied buildings. Community solar removes roof ownership as a prerequisite for participation, and as a result, hundreds of thousands, if not millions, of Americans who do not own their roof will have the opportunity to apply.
Cost and Savings: According to the National Renewable Energy Laboratory, low-income households spend twice the percentage of their income on energy than their higher-income peers. With community solar, customers can reduce the cost of their electricity bill by 5% to 15%, and in the majority of scenarios, there are no upfront costs to customer participation. Community solar subscribers are only paying for the number of credits generated each month, which are sold at a savings.
States and communities are starting to embrace policies to allow for greater low-income participation in solar. New Jersey and Maryland, for example, have set up pilot programs which either carve out or incent asset owners to serve low-income populations. While these states are leading the charge in ensuring that the benefits of solar reach underserved communities, more work needs to be done to remove burdensome eligibility requirements such as requiring low-income households to provide tax return information to participate.
GTM Research, Wood Mackenzie and Vote Solar recently released a report indicating that community solar installations could reach 84 GW of operating capacity, serve 8.8 million customers and account for as much as 2.6% of U.S. electricity consumption by 2030.
With that magnitude of impact, it’s time the solar industry stepped up to serve low-income communities —and community solar is the way to do it.