The growth of solar in the United States provides a tremendous opportunity to address some of the greatest challenges faced by lower-income communities: the high cost of housing, unemployment, and pollution. Solar can provide long-term financial relief to families struggling with high and unpredictable energy costs and a source of clean, local energy sited in communities that have been disproportionately impacted by traditional power generation.
There are many different policy tools available for supporting solar adoption at large that form the foundation of effective low-income solar programs, as well as tools specifically geared toward the low-income sector. These tools can be combined in multiple ways to create programs that address the unique access issues and policy environments of different states and communities, and form the foundation for the models described in the Best Practices section of Vote Solar and GRID Alternative’s Low-Income Solar Policy Guide.
Three examples are provided below:
Also called “Solarize” programs, Community Purchase Programs help multiple homeowners go solar together, making the process easier and more affordable. Typically a third-party administrator (often a nonprofit organization or public agency) helps homeowners pool their purchasing power and navigate the process of issuing a request for proposals, selecting a qualified solar provider, and assessing financing options. This model can result in prices that are 15-20 percent lower than market rates, putting solar within reach of some lower-income homeowners.
Research continuously shows that local ownership of businesses and infrastructure paired with place-based investments can both build community wealth and facilitate development without displacement. Frontline communities, such as environmental justice communities and communities of color, are disproportionately subject to fossil fuel development and public disinvestment in infrastructure. When development occurs, low-income residents are often pushed out of the community before they can benefit from innovative solutions. Investment in solar projects sited in low-income communities and developed in close collaboration with community organizations and residents can help meet community-specific needs, create employment opportunities, and build community wealth.
Production-based incentives, (PBIs) are incentives that are paid to solar generating system owners based on the energy that is generated by the system.
A common vehicle for the payment of PBIs, and one of the primary drivers of renewable energy development across the country, including projects that benefit low-income customers, have been state renewable electricity standards (RES) or renewable portfolio standards (RPS). These policies require that a certain percentage of the electricity consumed by the state’s customers come from renewable sources. Some of these policies also have a smaller percentage within the standard requiring a certain amount of solar in particular, often called a solar carve-out. Thirty-seven states have a mandatory or voluntary RES or RPS, with 29 of those and the District of Columbia’s being mandatory.
Solar projects benefit from an RPS or RES because the value of their renewable energy production is monetized in the form of renewable energy credits (RECs) that are purchased by electric utilities to meet their standard. If a solar carve-out is in place, solar projects generate solar renewable energy credits (SRECs) that are often more valuable than a generic REC. The generation and sale of credits may provide a financial incentive to solar projects, which could make them more economically beneficial to all customers, including low-income. These incentives can benefit the customer directly or be used by project developers or financial partners to subsidize the cost of financing for low-income customers.
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Discover tools and best practices for expanding solar to underserved communities in the Low-Income Solar Policy Guide, developed by GRID Alternatives and Vote Solar.