2016 was a banner year for most aspects of the U.S. solar industry, perhaps none as meaningfully as for solar serving low-income communities. Multiple states enacted policies expanding solar access, but action in three states and the District of Columbia, in particular, could pave the way for new capacity, lower utility bills, and expand workforce training for underserved communities in 2017 and beyond.
Multiyear efforts by regulators, solar advocates and community organizers culminated in significant low-income policy success in California, Colorado, Illinois, and Washington, D.C., in 2016. Although each state took a different type of action, they all show how the solar industry and policymakers can build on policies and programs underpinning the general market to benefit their most energy-burdened residents.
Falling costs, industry support create momentum
This trend is a result of multiple variables. First, according to analysis from Lazard, solar costs have fallen more than 80% since 2009, with rooftop solar declining 26% just in 2016. Second, the solar industry is placing increased emphasis on reaching low-income communities for expanded energy access and workforce development opportunities.
Solar growth among low-income communities could generate new demand for solar projects and create economic benefits for families. Recent analysis by the George Washington University Solar Institute found the 49.1 million U.S. households (40% of all homes) earning less than $40,000 per year account for less than 5% of all solar installations.
Although solar developers and advocates have begun expanding low-income efforts, this industry emphasis starts at the top – the Solar Energy Industries Association (SEIA) has supported low-income efforts, and new SEIA President Abigail Ross Hopper listed opening access to solar for low-income consumers as one of her top three priorities at a press briefing in January.
So, what’s working well for low-income solar policy, what results could those policies have in coming years, and how can we leverage these successes to open solar energy’s benefits to even more communities in the future? Let’s take a look:
California turns cap-and-trade funds into low-income solar capacity
California pioneered low-income solar funding through the Single-family Affordable Solar Homes (SASH) and Multifamily Affordable Solar Housing programs in 2008, setting aside 10% of California Solar Initiative funds for low-income-family solar installations in investor-owned utility service territories. In the initial program run, 5,200 families received rooftop solar, and last year, the funding was extended through 2021 with the SASH2 program. The program was so successful at bringing both solar and workforce development opportunities to low-income families, it served as a model for state agencies looking to deliver greenhouse-gas-reducing projects to disadvantaged communities using proceeds from the state’s cap-and-trade auctions, dubbed California Climate Investments.
In addition to a single-family component modeled on the SASH program, climate funding is being deployed to catalyze solar and energy efficiency on multifamily affordable housing across the state. The California Department of Community Services and Development’s Low Income Weatherization Program created the U.S.’ first program requiring energy-efficiency retrofits on participating properties, then adding solar installations to further push utility bills down for low-income families.
And starting in 2017, California will begin allocating up to $100 million annually from cap-and-trade auction proceeds to fund solar installations on multifamily affordable housing paired with workforce development in disadvantaged communities under the “solar roofs” program established by A.B.693.
But perhaps the biggest opportunity for low-income solar access comes in the state legislature, which could establish long-term auction authority and carbon pricing mechanisms beyond the cap-and-trade system’s current 2020 expiration date. With system certainty, policymakers could establish funding stability for these programs to invest in projects and evolve with the renewable energy sector across California.
The state could also revisit its community solar rules to facilitate use of that mechanism to reduce low-income consumer energy bills. Although several utilities in the state offer green tariff programs providing customers with access to large-scale solar, they often have a higher price for the energy, which runs counter to the goal of reducing costs for low-income consumers.
Colorado utility collaboration drives dedicated low-income solar expansion
While California’s low-income policy successes were the result of government action, Colorado’s 2016 policy victory and potential came through utility collaboration. In November, the state approved one of the country’s most comprehensive low-income solar programs through Xcel Energy. The agreement was supported by the Colorado Public Utilities Commission and 26 stakeholders, and it expands low-income customer solar access by dedicating new rooftop solar investment and community solar projects specifically toward underserved communities.
Xcel Energy will add up to 342 MW of new solar generation capacity, including up to 117 MW of community solar and up to 124 MW of new rooftop solar, between 2017 and 2019. Low-income customers will be guaranteed access to up to 20 MW of new solar capacity, including 4.5 MW of dedicated community solar annually for a total of 13.5 MW, up to 5.25 MW of additional utility-owned, low-income community solar, and up to 300 rooftop solar systems. These investments will reach around 5,000 families and include auxiliary provisions, such as workforce training for residents.
The Xcel-Colorado agreement captured every different solar market segment and all potential participants in one comprehensive program, including weatherization components. Combining single-family and multifamily projects with the country’s first 100% dedicated community solar component allows all underserved populations to participate in solar (including renters) and opens up a whole new group of potential customers who couldn’t previously participate in solar.
This all also creates the need for solar developers to provide innovative and creative solutions that previously didn’t exist. While we’ll see in time which aspects of the program are scalable, it’ll be exciting to see the testing and creative approaches evolve, and the regulatory framework provides certainty to invest in creating these models while pushing forward Colorado’s solar market.
Illinois’ Future Energy Jobs Bill expands environmental justice and solar jobs
In Illinois, a recent low-income solar policy success will have extensive solar jobs and environmental justice implications. The Future Energy Jobs Bill made headlines in December 2016 by creating a pathway to 3 GW of new solar capacity – up from just 66 MW today.
What’s innovative about the Future Energy Jobs Bill is that the general solar and low-income markets are being opened up at the same time via the workforce-centric Illinois Solar for All Program – disadvantaged communities were not an afterthought. The legislation also identified set-aside funding for programs to reach customers in different ways, including distributed generation rooftop and community solar projects.
Solar for All requires integration with energy-efficiency programs, provides funding for solar job training and directs solar developers participating in the program to hire qualified job trainees. Nonprofit organizations serving low-income families can also participate in installations in various ways. These all help support market growth and create a skilled workforce by opening avenues for individuals in disadvantaged communities to receive job training and career pathways into what will be a fast-growing solar market.
Environmental justice also plays a significant role. Low-income communities are often on the front lines of the harmful effects of fossil fuel generation, especially with asthma rates. Renewable energy can improve local environmental quality, and Solar for All will provide meaningful benefits through dedicated solar generation carve-outs located within these communities. It also specifies solar developers must plan community solar projects with community stakeholders and includes funding for grassroots education near projects to maximize equitable access and participation. This brings powerful new voices into the solar conversation and ensures meaningful collaboration in developing programs.
Solar for All will take effect on June 1, 2017, and stakeholders are already working closely together to ensure program rules are structured to maximize energy savings and consumer protections for participants, promote partnerships with community organizations, and provide job training and career pathways for individuals in disadvantaged communities.
D.C.’s ambitious RPS shines for low-income households
Last but not least, Washington, D.C., launched an ambitious 50% by 2032 renewable portfolio standard (RPS) in 2016. This RPS promises significant low-income benefits that will start taking shape in 2017 as the D.C. Department of Energy & Environment presents an implementation plan to city council.
D.C.’s RPS includes a 5% solar carve-out and targets serving 100,000 low-income households and reducing their electricity bills 50% through solar by 2032. The goals set by this program are lofty, but they are part of an aggressive trend we’ve seen in recent years where policymakers create large-scale goals and stakeholders develop innovative solutions to meet government targets.
This solar expansion is largely expected to occur through community solar projects and innovative siting. Although city government passed the Community Renewable Energy Act in 2013, allowing renters and homeowners without access to rooftop solar to access virtual net metering, the D.C. Public Service Commission didn’t finalize rules setting the credit rate solar customers receive from community solar projects until December 2016. These projects will need to ensure low-income customers receive rate relief as part of their subscriptions, but we’re excited to see the model move forward.
D.C.’s solar expansion will also expand solar job opportunities for low-income communities. Mayor Muriel Bowser estimated D.C. will create at least 100 green jobs in the first year of the expanded RPS, with the number growing every year and an estimated 3,500 jobs ultimately created by implementing the bill. D.C.’s Green Zone Environmental Program Solar Plus program, which provides hands-on solar installation training to youth from disadvantaged communities, is already helping build a pipeline of trained solar workers.
Different approaches, same goal
California, Colorado, Illinois, and Washington, D.C., may have taken different approaches to expanding low-income solar access and employment opportunities, but they’re all part of a wider and growing trend. State-level policies and programs provide the most substantive opportunities to create equitable access to low-income populations and empower the solar industry to focus its efforts to create the most-effective results. We’re excited to see how these four efforts take shape over 2017, as well as which states and cities join the movement in the months and years ahead.
Stan Greschner is vice president of government relations and market development at nonprofit solar installer GRID Alternatives.