Study Highlights Ways to Narrow the Solar Equity Gap | Article

Even though the cost of rooftop solar has drastically fallen in recent years, low- to moderate- income (LMI) households are still less likely to adopt solar than higher-income ones. In 2018, households that earned more than $200,000 per year were four times more likely to adopt rooftop solar than households making $50,000 or less. Researchers at the Department of Energy’s Lawrence Berkeley National Laboratory, led by Research Affiliate Eric O’Shaughnessy, decided to find out how this discrepancy could be addressed by examining existing policy and business models to see which ones foster the adoption of rooftop solar among LMI households.

“People can save money by going solar, so if anything, low- and moderate-income households stand the most to gain from adopting rooftop solar,” O’Shaughnessy said. “But they are still being largely excluded from the market.”

The study, The Impact of Policies and Business Models on Income Equity in Rooftop Solar Adoption, was recently published by Nature Energy. The study used income data from more than 70 percent of all residential PV installations in the United States.

Analyzed Business Models in Brief

Low- to moderate-income -specific Incentives: These are financial incentives, like rebates, aimed at households under certain income thresholds in an effort to reduce solar adoption costs.
PACE Financing: Property assessed clean energy (PACE) programs allow private property owners to take out loans to pay for energy improvements and then repay the loans over time through an assessment that is attached to their properties rather than to themselves.
Photovoltaic (PV) Leasing: In such a leasing arrangement, a homeowner enters into a contract with the owner of a PV system and agrees to make monthly lease payments over a set period of time while consuming the electricity generated by the solar panels. In some cases, the homeowner will receive credit for any excess electricity sent back to the grid.
Solarize: A collective purchasing program ran by communities to spur solar energy deployment in local communities.
Financial Incentives: Rebates or other ongoing incentives aimed at reducing solar adoption costs.

Of the five policy and business models analyzed, three led to the increased adoption of rooftop solar in previously underserved communities: LMI-specific financial incentives, photovoltaic (PV) leasing, and property-assessed clean energy (PACE) financing. Of these models, only LMI incentives were specifically designed to increase equity. However, all three were successful in shifting the deployment patterns of rooftop solar to low-income areas, which is vital for improving energy equity and solar energy production.

Shifting deployment patterns is an opportunity to not only save low-income households money but also to increase renewable energy production overall. According to the National Renewable Energy Laboratory, LMI rooftop solar could contribute 42 percent of all residential rooftop solar energy generation in the future, a significant share that would make it easier for the United States to reach its climate goals. Expanding solar into new markets also leads to spillover impacts, as more and more people become aware of solar opportunities, which leads to more adoption.

“Solar adoption is inequitable, it tends to be skewed towards high-income households, but it does not have to be that way,” O’Shaughnessy said. “It is possible to correct it and you can do that through this deployment shifting. If you can just get a few systems into low-income neighborhoods, you can get people to actually see rooftop solar and then maybe become more interested in it. That is why deployment shifting really matters.”

Currently, low-income households have a higher energy burden, or a portion of their income that goes to energy costs, than their higher-income counterparts. On average, low-income households spend 8.6 percent of their income on energy, compared to 3 percent for higher-income households. Bringing rooftop solar to LMI communities allows for households to save money on their electricity bills for the lifetime of the solar panel system, or about 20 years. O’Shaughnessy urges environmental justice advocates to dial in their efforts in these communities because doing so will increase energy equity by managing energy burdens, promote environmental conservation by reducing carbon emissions, and save families money. He says advocates need “to focus on location and put solar where it’s going to have the greatest impact.”

For decision-makers, the study provides evidence for how to design equitable policy using existing business models that directly address the barriers LMI communities face, like cash constraints.

While the adoption of solar is increasing over time, more work is needed to reduce the disparity between low-income and high-income solar adoption. Ultimately, deploying rooftop solar into underserved communities is an essential step for energy equity and the renewable energy transition. Designing business models with equity in mind will allow for rooftop solar to reach more people, strengthen the grid, and help accomplish national renewable energy goals.

“People are adopting rooftop solar—there are over 2 million households already in the United States that have adopted it—and that’s going to be millions more in the next few years and decades, and from a simple equity perspective, it is not fair to leave behind such a large chunk of the population,” O’Shaughnessy said.

Author: Sydney O’Shaughnessy

Note: The author of this article has no relation to Eric O’Shaughnessy