It is possible to completely eliminate electric bills for affordable multifamily housing renters and property owners in California. That’s not some futuristic goal but possible right now with installations of solar photovoltaic (PV) systems combined with battery storage.
This notable outcome, supported by analysis released in a new report, Closing the California Clean Energy Divide, is particularly important in light of recently passed legislation, AB-693, which authorizes California’s Multifamily Affordable Housing Solar Roofs program. The program provides up to $1 billion in funding to support the installation of solar energy systems in affordable multifamily housing, making it the largest program of its kind in the country.
Affordable housing has long been passed by as an afterthought as new energy cost saving technologies emerge. There are a number of reasons for this, from split incentives for property owners and tenants to difficultly in securing financing for innovation. The report points to a new set of economic factors that will allow battery storage technologies to follow a different trajectory.
Battery storage has begun to emerge as the next effective strategy for reducing electricity costs in many markets. California has already installed numerous solar+storage projects; unfortunately, few have been deployed to serve the affordable housing sector. Many factors have contributed to this technology disparity, including a lack of information about the economic potential of these systems in affordable rental housing.
To help close this information gap, California Housing Partnership, Center for Sustainable Energy, and Clean Energy Group partnered with the energy software company Geli to perform the first ever analysis of the economics of solar+storage systems for affordable multifamily rental housing. Detailed electricity usage data from actual affordable housing properties was used to analyze the economics of stand-alone solar compared with that of solar+storage located across California’s three investor-owned utilities.
The report findings show that the combination of solar+storage can result significant bill savings across the state, demonstrating that it makes good economic sense today for solar+storage to be installed in affordable housing. In fact, the addition of battery storage improved the economics of stand-alone solar in every case examined, reducing project payback periods by as much as three years.
Storage has the potential to nearly double the savings achieved by property owners through solar-alone for about a third of the cost. For example, by adding storage, one property analyzed in the study had the potential to increase bill savings by 85 percent over what could be achieved through solar-alone, resulting in the virtual elimination of electricity expenses, while increasing upfront costs by less than 30 percent.
Unfortunately, just as momentum is building to increase access to solar power for low-income households, the valuation of solar is being reexamined. Last year alone saw the dismantling of retail net metering in two states, Nevada and Hawaii, with both electing to reduce compensation to the whole price of electricity, typically two to three times lower than the retail rate.
California, which ruled to largely keep its net metering program intact for now, also made changes to net metering that could erode the future value of solar to system owners. The state will shift net metered customers to time-of-use rates, where customers are charged higher prices for electricity during peak usage periods. As more and more solar comes online, these peak pricing periods are expected to shift away from periods when solar production is at a maximum, resulting in a degradation in the value of solar over time.
The good news is that, in addition to delivering value today, battery storage can help preserve the value of solar under the state’s evolving policy and regulatory environment. Because batteries can empower solar customers to take control of the energy they produce and consume, it has the potential to deliver even deeper cost reductions to low-income households over time.
With its billion-dollar Multifamily Affordable Housing Solar Roofs program, California has a chance to ensure that its most economically vulnerable residents have access to clean energy and cost saving technologies, and ensure that those savings do not erode over time. Not only can these integrated technologies improve the economic well-being of low-income households, they can also improve the health and resiliency of communities and help the state transition to smarter, more sustainable energy system. Now is the time to implement programs that can bend the arc of solar+storage deployment to reach those communities most in need.