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Commentary: Low-income carve-outs aren’t really making community solar more equitable

WRITTEN BY Kacie Peters / Pivot Energy
 

PHOTO BY Tony Webster / Flickr / Creative Commons

closeup of a solar panel

 

Community solar is often idealized as the magic bullet for many of the issues associated with traditional solar — offering scale to reduce cost, delivering access to clean energy for 51% of the population that rents or lives in homes unsuitable for onsite solar installations, and providing increased local grid resiliency, amongst many others. More recently, community solar has been acclaimed for one of the most important and unique benefits it provides: equitable access to clean and affordable solar energy for low- and moderate-income households who have been traditionally left out of solar. As a result, we are seeing legislators and regulators design programs that specifically set out goals to ensure these households are not just included but are integral players in new community solar projects — a noble goal that the industry is proud of and supports.  

Unfortunately, even the best intentions are causing challenges that can make the promise of equity significantly less attainable. Often, in order for a low-income household to subscribe to these community solar programs, they are subject to unreasonable and oftentimes humiliating verification processes. Similarly, subscriber managers are placed in difficult compliance and security positions, and financiers are deterred by the presumed risk. In order to solve the problem, we must address the unique needs of this community, the true goals of an equitable community solar program, and look to new program models and partnerships that truly provide access to solar for all.  

Noble goal, arbitrary measurements 

The general perception about community solar is that like rooftop assets, developers may be tempted to target wealthy subscribers when building solar gardens. Legislators and regulators try to proactively address this issue by mandating that a program, and more specifically each community solar project, has reserved capacity specifically for low- and moderate-income households. The first program to open in Colorado nearly a decade ago required 5% of each site be subscribed to by this category. Likewise, the latest program to open in 2019 in New Jersey assumes 51% low- and moderate-income component for each garden. Basically, if you force it, the market can’t ignore the demographic. 

Unfortunately for these subscribers, program managers want real “proof” that a developer is not gaming the system. Residents are required to provide verification of income, including sensitive documents like years of tax returns or paystubs before they can join the program. Oftentimes, the onerous process of delivering these documents does not provide any additional benefits over a traditional subscriber. Low-income subscribers are required to provide these documents simply to take part and realize sometimes the same savings as their wealthier neighbors. In essence, by seeking to expand access to clean energy for an underserved segment of the market, we are now realizing the unintended consequences associated, which can make it harder for low-income homes to participate in community solar, not easier. 

Finally, community solar programs themselves are capped by utilities and regulators, making the total addressable market even smaller, and limiting the potential benefits that community solar can offer to local communities. 

Why traditional subscriber models miss the mark 

Community solar management is a complex undertaking. Management platforms must provide secure and accurate portals for bill payments, follow protocols for cost effective collections of overdue accounts receivable, and replace lost subscribers in a timely manner. 

We must recognize the unique and structural challenges facing low-income single-family households in the context of community solar management:  

  • Data: Traditional subscriber management and acquisition firms don’t have access to the data to locate qualifying households, particularly in rural communities. 
  • Trust: Low-income communities are often targeted by scams, so customer acquisition campaigns must be closely monitored to ensure they adhere to consumer protection laws.     
  • Mobility and churn: Less wealthy users are more likely to rent rather than own their homes, creating frequent changes in service addresses. While subscriptions are easy to move, it’s hard for managers to track moves and reassign credits, especially if subscribers move out of the program territory and neglect to mention the change of address. Credits can go unclaimed before a management company is aware of a move. 
  • Payment methods: Most community solar user management platforms are designed to accept ACH and credit card payments, but users without credit or access to a bank account need more flexible options. Cash payments can cause security and accounting issues.
  • Access to technology: Most community solar bills are distributed via email, but without consistent access to the internet, users may not be able to find or pay invoices. 
  • Billing cycle issues: Solar production is seasonal, often creating a surplus of credits in the summer months. The uneven distribution can make it hard for a household to budget.
  • Data Security: Verification methods that require holding sensitive data like tax returns with social security numbers require increased focus on security.

Traditional community solar management solutions are designed to engage with users almost exclusively online and accept electronic payments for credits that change overtime. While none of these challenges are insurmountable, they all result in additional costs and resources to manage subscribers — costs that ultimately impact the savings for the subscribers that community solar is meant to serve. 

Industry training wheels and a maturing market 

Traditional community solar management firms interface with subscribers and potential subscribers on a regular basis. Overcoming the most common objections and answering the concerns of residents puts these firms at an advantage to fully meet the needs of all subscribers, including low- moderate-income households. However, due to the inflexibility of utility programs, subscription managers are forced to operate and manage these programs in a specific way that is limiting. Currently, the industry is turning to housing authorities and master metered properties to act as an intermediary for subscribers. But as community solar continues to scale, this isn’t a sustainable option. If we want to meet this important goal, regulators must rethink how the programs are administered while using our existing resources more effectively. 

Colorado eventually altered their program rules to make low-income access a program requirement, rather than a project carveout. Specific program capacity is now set aside to create 100% low- and moderate-income gardens administered by the utility and managed by a third party. Which makes sense: Xcel Energy has a built-in customer base they can use to attract low-income users with assistance programs, they have established community trust, and they can process payments in a more flexible manner. In New York, the program administrator NYSERDA manages all low-income community solar projects. Private developers still develop and build assets to ensure a cost competitive asset. While I am not recommending the utility own all customer relationships, there is an opportunity for utility partnerships, designated program administrators, or nonprofits that service these households to actively promote third-party programs until the industry can scale, and eventually shed its training wheels. 

The long-term solution is scale 

While programs can be key in early implementation, ultimately, the long-term solution that provides equitable access to community solar will occur when the product becomes more flexible, and the programs are uncapped. Removing credit checks, making contracts more friendly, and ensuring tangible savings make the product attractive to all users. And as investors become more comfortable with churn and shorter-term contracts, adding low-income users will not be such a perceived risk. 

Further, if we believe that community solar is the best way to serve these households and residential customers more broadly, program caps will always limit the total population served. More community solar means expanding the growth of these programs, allowing for improved products to be introduced to the market, and more access to clean local energy for everyone. 

As the market grows, so should the opportunity and the access. But for now, trying to shoehorn this goal into projects without strong considerations around how these programs are structured can undermine the noble goal of solar that is truly available for all. 

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Matt Chester's picture
Matt Chester on Sep 11, 2019 2:07 pm GMT

And as investors become more comfortable with churn and shorter-term contracts, adding low-income users will not be such a perceived risk. 

This is certainly true, but I don't think that's at odds with the near-term goals of making sure lower income households are benefitting as much as possible from solar. Make it equitable now, but with a longer-term eye towards full penetration

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