Since the beginning of large-scale energy efficiency programs in 2000, clean-energy program providers have sought effective methods for reaching low-income and BIPOC customers. But they have largely fallen short, putting a timely and stable transition to clean energy, nationwide, at risk. With historic amounts of federal funding for clean energy increasing in the coming years, it is critical now to solve historical barriers to entry and full participation among those who need it most.
VEIC is an organization committed to creating equitable energy solutions. At least 48% of the customer benefit from VEIC’s implementation work to date is in underserved communities, and we are on track to achieve our target of raising this number to 50% by 2030. To learn more about the reasons for and extent of the barriers members of these communities face, we conducted research in 2023 in several urban, suburban, semi-rural, and rural markets. Specifically, we identified how certain clean-energy program designs have inadvertently created barriers to access.
The research offers new, valid, and reliable information for program designers interested in clearing those barriers. The key lies in the very strategy that has made clean-energy programs so versatile and wide-ranging: The greater the number and range of service providers competing in the market, the more they stymie lower-income consumer participation.
The result of these barriers is that too many clean-energy programs lack full participation, funding that can benefit the people who need it most is left on the table, and the personal and environmental benefits from clean-energy use—better indoor air quality in buildings, lower costs for heating and cooling, and reduced greenhouse gas emissions—go to someone else.
The Market Challenge
It is no secret that energy efficiency services—whether regulated by governments or offered in a completely free market—tend to serve first (and best) the utility customers who can pay for them right away. This is not the case for people on low incomes, and that is a problem for clean-energy programs.
It is not for a lack of trying. Even clean-energy programs with budget carve-outs for services to the low-wage workforce and low-fixed-income customers have a hard time delivering those services at a scale that matches the incentives available to those customers.
Efficiency programs and energy professionals have long been aware of the frequent dead ends in service delivery to socially vulnerable communities. What has been less understood is what makes them dead ends. Getting to the bottom of that can help clean-energy programs see how their program designs have evolved into the current labyrinth that income-qualified customers must travel to obtain the services for which they qualify.
The Research
VEIC undertook its research with two clients operating statewide efficiency programs. The research objective was to identify market failures that have contributed to this trend. The team collected perspectives from:
- Community-based organizations in areas served by Wisconsin’s Focus on Energy program
- Low-income participants in Efficiency Vermont’s market rate weatherization program
- BIPOC vehicle owners who live in Vermont
VEIC’s market researchers made two significant observations about classic clean-energy program design that has inhibited participation: (1) the role of community-based organizations (CBOs) in referring customers to clean-energy programs has been neither fully defined nor adequately supported; and (2) there has been a lack of engagement with many BIPOC communities—especially those that can benefit most from clean-energy services.
These observations equate to missed opportunities for delivering more and better clean-energy services to low-income households and small businesses.
The Major Research Observations, Up Close
- Programs operating independent of one another, with similar services, create confusion among customers. A study of customers who qualified for free weatherization services, but who participated in a market rate weatherization program, showed that some members of this group did not think they would have qualified for the more advantageous program. Thus, they did not apply to participate. The study also showed that others did not know the more advantageous program existed.
- CBOs offer a critically important and useful path for effectively informing and motivating the various customer groups they serve. The research showed that the current market is too diffuse, and the roles of CBOs and the local clean-energy services are too ill-defined to enable effective market uptake.
- BIPOC customers have a lower level of trust in clean-energy programs than non-BIPOC customers. The research showed that successfully serving BIPOC customers depends on transparent messaging and trustworthy points of entry to services. It also indicated that successful service depended on a relatively high level of confidence among BIPOC customers in the validity of the offer.
How Clean-Energy Programs Have Fallen Short
Despite designing initiatives specific to low-income (LI) and low- and moderate-income (LMI) customers, energy efficiency programs tend not to engage these customers very effectively, because the programs fail to make the most advantageous initiatives easy to navigate.
VEIC discovered that some low-income participants in a Vermont market rate weatherization program (Home Performance with ENERGY STAR®) did not seek out the enhanced no-cost services also available to them from the Vermont Weatherization Program. The reason: Accessing these services would have required a separate program application. The customers either did not think they would qualify for those services (when in actuality, they would have) or were not aware that the no-cost services existed.1
This failure to consistently connect low-income participants in the market rate program with the additional financial support they qualify for, via the no-cost program, is a missed opportunity.
This finding hints at what might be an even larger problem: If some of the low-income customers participating in the market rate program did not pursue the no-cost alternative they would have qualified for, it is likely that even more low-income customers are not participating in any program at all. This is because of the same perceived barriers. That is, some low-income customers do not know about or do not think they would qualify for the no-cost program; but they also do not pursue the market rate program because of the expense. These customers, who are likely to have high energy burdens, benefit even less because, unlike the participants in this study, they have not proceeded with the better-known market rate program, and therefore have presumably forgone any weatherization project at all.
How CBOs Have Not Been Able to Step in Effectively
Because the clean-energy services market is fragmented by utility customer classes, categories, and service providers, CBOs lack the expertise to route their own customers to clean-energy entities; the CBOs’ confusion has resulted, to date, in inaction.
CBOs are experts in helping their neighbors find services that supply food, clothing, translation, and shelter. But they are not experts in understanding the fragmented services available from clean-energy programs.
VEIC and APTIM (which together administer the Wisconsin Focus on Energy program) co-planned research to identify opportunities for collaboration between the state’s energy efficiency program and Wisconsin CBOs. VEIC and APTIM then interviewed Wisconsin CBOs providing a wide range of services, including direct support for and referrals to other programs to aid underserved community members.
Of the referrals these CBOs made, almost none connected community members with energy programs that could direct weatherization or other cold-climate services to them or reduce energy bills. Although they were somewhat aware that energy-saving programs existed in their region, many of the CBOs reported confusion about which (if any) programs could best support their constituents and whom they should contact to obtain services.
In Wisconsin, as in other jurisdictions, some income-qualified programs operate separately from market rate programs. The VEIC / APTIM research showed that CBOs lacked knowledge of such programs to the point that they were not confident they could guide their constituents to relevant, effective programs. The interviews strengthened the relationship between the CBOs and Focus on Energy, providing CBO staff with a contact at Focus on Energy. Even so, the fragmented nature of Wisconsin’s energy programs has brought CBO staff no closer to having relationships with the state’s Weatherization Assistance Program (WAP) operators and other clean-energy service providers for low-income people. 2
The Lack of Engagement with BIPOC Customers
Engaging BIPOC customers effectively on clean-energy projects means building trust with a reputable information source.
In a 2021 study investigating Vermonters’ attitudes about electric vehicles (EVs), researchers learned that some BIPOC members of this population hesitated to seek incentives, in part because a trust factor is in play. The research indicated heightened concern among BIPOC customers who:
- Were under the impression that their intended clean-energy purchases would not be truly eligible for incentives
- Believed retailers would offset the value of an offered incentive by raising the sticker price
This “trust factor” points again to the need for a reliable entity vouching for the validity of an incentive, and for the integrity of the seller. In the case of the Vermont market for EVs, capturing the full incentive value involves trusting the federal government, Vermont government, and the customer’s utility, each of which offers a separate incentive.
Moreover, none of these EV incentives comes from the same entity as Vermont’s income-qualified weatherization program, or from statewide market-rate incentive programs. This phenomenon means customers must create yet another, separate relationship with EV incentive providers. Again, a single, trusted point of contact for all such energy information, including information about EVs, would likely diminish the BIPOC population’s market reluctance. The point of contact would also help customers minimize their perceived risks by offering a gatekeeper between customers and the many market actors and offers.
The Solution
Conditions for CBOs and low-income and BIPOC customers are very different. However, all groups could benefit from a single, trusted point of entry into clean-energy programs. All groups need customized program recommendations that can meet their special circumstances.
Characteristics of the Single, Trusted Point of Contact
The VEIC research team’s analysis indicated a need for a comprehensive, jurisdiction-specific point of contact that can:
- Draw on deep engagement with community leaders, industry partners, and regional supply chains to navigate the jurisdiction’s energy efficiency initiatives, equipment suppliers, retailers, and contractors for all customers
- Offer each customer reliable, current information on available incentives, their sources, and the criteria for qualifying for them
- Determine effective options—and their cost criteria (repayment schedules, if relevant; necessary upfront costs; possible loans and their interest rates, and so on)—for each customer
- Offer a navigational map to each customer, showing the best route to achieving the goals and outcomes they seek
Why this is important
Once the energy incentives from the Inflation Reduction Act (IRA) enter the marketplace, all of the factors inhibiting participation are likely to intensify.
Most IRA incentives for the energy sector are keyed to income, but the qualification thresholds are relatively high. However, merely hearing the term income qualification attached to an incentive or a clean-energy service could inhibit some moderate-income customers from seeking the incentives at all—because of a presumption of disqualification.
A single point of contact for all customers is a better way than the current fragmentation of service delivery to match income qualifications to available incentives and services. Such a mechanism could essentially eliminate the market confusion that is likely to occur under the influx of funds from the IRA—and the resulting probable increase in the number of clean-energy initiatives and programs, and their inclusion criteria for participation.
Conclusion
The VEIC data show that a substantial need in the LI, LMI, and BIPOC marketplaces is customer support in navigating the range of available services, and in accessing them easily. This can be achieved with a model that relies on a jurisdiction-wide energy services “single point of contact” for all customers. Applying such a model would benefit these customer groups in the current programmatic context and even more so once the incentives from the Inflation Reduction Act enter the market.
1 VEIC surveyed recent participants in Efficiency Vermont’s long-running Home Performance with ENERGY STAR program. Its designers originally targeted customers able to pay the market rate for Home Performance services, but customers with low incomes have also participated. The survey will inform future engagement with low-income utility customers. This research stemmed from receipt of funds from the American Rescue Plan Act of 2021 to the State of Vermont and allocated by the Vermont General Assembly to Efficiency Vermont weatherization programs for income-qualifying customers.
2 Wisconsin has more than 100 municipal electric companies, electric cooperatives, and investor-owned energy utilities. Although Focus on Energy serves most of these entities, not all customers are aware of the scope of Focus on Energy’s services. Between the quadrennium ending in 2018 and the one ending in 2022, the number of residential participants with household incomes of $50,000 or less declined from 26 to 24 percent (Quadrennial Achievement Report, p. 7).