Work description: I researched and wrote this piece to deliver as a byline article to Boykin Industries, LLC (a PR rep working with cleantech businesses) in May of 2019. The draft went through additional revisions after this version, including changes to the working title.
Opportunities for LMI (low- and moderate income) Residents of New York City to Benefit from Community Solar
Community solar has experienced enormous growth over the past few years. The total capacity leapt from roughly 300 to 1400 megawatts (MW) from 2016 to 2019, more than quadrupling the supply. By 2020, community solar could reach between a third and a half of the total distributed PV market according to the National Renewable Energy Laboratory (NREL).
New York is one of the leaders in the development of community solar thanks to the NY-Sun Initiative which gave the sector a $1bn boost. Enough community solar to supply an additional 120,000 homes is slated for development. Governor Cuomo also recently increased the size cap on community solar projects from 2 to 5 MW increasing the number of available household subscriptions from roughly 220 to 660, so individual projects can expand their reach.
With all of this new online solar power available, policy leaders are nevertheless concerned that not all income groups benefit from it equally. Over forty percent of households in the U.S. classify as low-income according to the U.S. Department of Housing and Urban Development definition of falling at or below 80 percent of the local median income. This market accounts for 49.8 million households, but half of these cannot support PV panels. Just under a quarter of the below median income households in New York state access solar energy.
Community solar presents an important solution, particularly for New York City residents, because it allows residents to access renewable energy without owning, building or installing PV panels. And thanks to the offsite location of the shared solar array, users can subscribe regardless of their building unit type or home ownership status. In New York City, 87 percent of very low income, 77 percent of low income, and 70 percent of moderate income residents are renters, and at least 85% of all three income category groups live in multi-family units according to the New York State Low- to Moderate-Income (LMI) Census. Renters and residents of multi-family units often lack the decision making power to determine the energy source of their household. In spite of these barriers, LMI households in New York City still deserve opportunities to get in on the community solar action.
Here’s how it works. Multiple users draw from the energy supply generated by a large array of solar panels (PV). This shared form of solar energy use requires coordination between offsite solar array sites, utility companies, and users resulting in a community solar program. Participants in a program either subscribe to the solar energy source, or become partial owners. Some utilities offer premium subscriptions for this “boutique” service. Alternately, the savings on the cost of energy can be captured via virtual net metering (VNM) that tracks the off-site energy output and adjusts users’ electricity bills according to the net value of energy they have consumed. So far, sixteen states including New York have passed VNM legislation. Community solar VNM subscriptions can lower the cost of energy for users.
For participating VNM subscribers, community solar enables tenants to access renewable energy without a large upfront expense. Tenants can also bring their subscription with them if they move. For these reasons, community solar presents a great opportunity to bring renewable energy to LMI communities of large cities, whose residents are more likely to be renters. In practice, however, not all users can easily access VNM community solar due to financing and policy-making difficulties. This is why states and local governments seek strategies to improve LMI access and shrink the solar socio-economic divide.
The two most popular policy objectives include lowering energy costs for low- and moderate income residents and supporting a thriving local workforce. Low-income households spend 8.2 percent of their income on energy costs on average. Cities developing net cost reduction programs made possible by VNM community solar could extend their efforts to curb LMI living costs. And when community solar developers include training and hiring from local communities, the result is a win win situation for LMI communities. The impressive growth in solar energy jobs, which has increased 168 percent in the last decade, presents an exciting opportunity for distributing jobs among communities in need.
So far, LMI users still account for a very small percentage of community solar users. The majority of community solar users are larger organizations like businesses, universities and government agencies or upper income households. Only around five percent of the projects that supply LMI users exceed ten percent inclusion. Because community solar is often financed through premium pricing, high enrollment fees, or long payback periods when the solar array is partially owned, LMI participants don’t see any immediate cost savings advantages. This obviously deters them from joining, while developers also lack incentives to attract low income customers.
A number of innovative approaches to achieving greater inclusion have been implemented across the states offering community solar. Most of these either involve mandating a percentage of LMI participation or making programs that cover the costs of LMI participants through alternate payment or credit rating structures. A recent initiative in New York state plans to cover the community solar enrollment fees and other costs for 7,000 low-income households. In another important project aimed at inclusion, the New York State Energy Research and Development Authority intends to benefit LMI communities by offering a third of the subscriptions for community solar contracts amounting to a 26.4 megawatt capacity free of cost.
Apart from mandated inclusion, LMI households wishing to seek approval to a community solar program may be denied approval if their credit score is low or non-existent. To address this, the Green Jobs--Green New York program offers alternate qualification tiers for solar power and energy efficiency loans. Tier 1 relies on the standard credit score approval criteria, while Tier 2 focuses on mortgage payment history and an added sliding debt-to-income ratio requirement. In Massachusetts, a test program by the Solstice Initiative, an NGO marketing solar to LMI communities, qualifies LMI users for community solar based on a more comprehensive set of criteria including income data, FICO score, and household expenses (utilities, rent and cellphone) repayment history.
In other arrangements, community institutions may play the role of an anchor subscriber which absorbs the fluctuating costs or participation to enable more LMI subscribers to join. Local NGOs or government agencies can also help find LMI subscribers and take care of the administrative burden of signing up LMI participants for the solar developers. Likewise, by keeping a waiting list of subscribers ready to join when other participants leave, community solar can reduce the likelihood of price variation.
Through well planned policies, community solar has potential to tackle a number of socio-economic disparities that LMI households face. By including LMI participants, solar programs can reduce any stigmas that solar only benefits wealthy individuals. Meanwhile, it can reduce the long-term costs of energy and provide jobs for those most in need, reducing financial strain. Lastly, including LMI participants in community solar programs pushes them forward as a mainstream option and helps the programs to shed their “niche” status.