Making solar energy available in low-income areas can provide lasting financial relief from high electric bills, as well as expanded employment opportunities and improved environmental health, says a new report released this week.
The Low-Income Solar Policy Guide for strategies to achieve that goal comes from three national nonprofit groups: GRID Alternatives, Vote Solar and the Center for Social Inclusion.
For Ohio, the group estimates that more than 855,000 low-income households stand to benefit. Data released last month by the Ohio Development Services Agency show that approximately one in nine families in the state are currently poor.
According to the new low-income solar report, though, getting solar energy into poorer communities requires policies to promote those efforts and to support solar energy in general.
“You need a healthy solar economy,” stressed Stan Greschner, a vice president for GRID Alternatives. “You need the underlying foundational elements that make solar possible for everyone [in order] to make it possible for low income families.”
That could be a challenge in Ohio.
Growth in Ohio’s solar energy industry slowed after 2014, when the state placed a two-year “freeze” on its renewable energy standards. It’s unclear whether further changes will be made to those standards before their targets resume next year.
Proportionately bigger benefits
In general, energy bills eat up a larger share of earnings for low-income families than for those who are better off. Thus, the new report says, net savings from solar energy likewise yield relatively bigger benefits for low-income families.
Families with solar energy buy less electricity from the grid, so utility bills are lower. Sales of renewable energy credits and excess power supplied to the grid can add to financial benefits.
The new report also argues that environmental justice demands facilitating clean energy in low-income communities. Those communities are more likely to be adversely affected by pollution from fossil fuel power plants, which has been linked to higher rates of asthma and other illnesses.
Adding solar capacity in low-income areas can also stimulate the local economy and add employment opportunities, Greschner noted. He cited his own organization as an example.
“Think of us as the Habitat for Humanity model for solar,” Greschner said. The nonprofit brings together community groups, volunteers and job trainees to install solar panels in low-income communities. Skills learned by those trainees can help them land jobs in the clean energy industry.
“These are good-paying jobs, and they’re very local,” Greschner stressed.
Financing options
Prices for solar equipment have come down dramatically. So far, however, most low-income families who struggle with electric bills can’t afford to buy and add solar panels on their own. To help them, the new report outlines various strategies and policies.
One of those suggestions notes Ohio’s 2009 law for Special Energy Improvement Districts. That law lets local governments set up districts to finance and install improvements for energy efficiency and renewable energy.
In most cases, money for those programs would come from the state’s Property Assessed Clean Energy program, or PACE. PACE allows loans to be repaid in installments with property taxes. The repayment obligations — as well as the benefits — stay with the property.
In practice PACE has had limited funders, so relatively few Special Energy Improvement Districts have been set up so far. Nonetheless, some successful projects have been completed, including ones in the Toledo and Cleveland areas. A financing hub set up last year in Cuyahoga County also offers promise for making more funding available, at least for commercial projects.
Potential residential projects have also suffered from roadblocks to PACE properties’ ability to get mortgage financing from the Federal Housing Authority. Guidance issued last year by the FHA should lessen those obstacles, the report notes.
Meanwhile, a bill before the Ohio legislature could provide more support for Special Energy Improvement Districts by simplifying the process for setting them up and funding them.
That bill, Senate Bill 185, was introduced by state Sen. Bill Seitz (R-Cincinnati) last June. It has not moved out of committee since then.
Economic incentives
Net metering policies and renewable energy standards are also important, the low-income solar report notes.
Renewable energy standards create and support a market for credits, and any sales speed up the payback period for a solar panel investment. Adoption of Ohio’s renewable energy standards sparked an active market for those credits until 2014.
Then a state law relaxed the standards and put a two-year “freeze” on them. The solar renewable energy credit market suffered, and new solar installations slowed significantly.
Gov. John Kasich has said a legislative committee’s recommendation for a continued, indefinite suspension of the state’s clean energy standards is unacceptable, and he recently warned the state legislature not to “gut” them. Yet Kasich has not made clear what revisions, if any, he would approve.
Critics have warned that some changes proposed by that same 2015 lawmakers’ committee report would be clear “giveaways” for industry.
Ohio’s net metering law, which currently compensates solar customers at retail rates, has also been under the microscope. Some utilities and other critics of the policy argue that it amounts to a subsidy for customers who can afford solar.
The Regulatory Assistance Project counters such arguments by noting that distributed solar energy actually provides benefits to the grid that are not otherwise compensated.
And Greschner believes it’s just wrong to try to cut solar energy benefits by characterizing them as something that helps only wealthy people.
“Any reduction in benefit that the solar system produces has a proportionately higher negative impact on a low-income family,” he said. As he sees it, $20 of benefits each month “means a lot more” to a low-income family.
Beyond that, Greschner noted, restrictions on net metering or cutbacks to renewable energy standards limit the overall market for solar energy and keep costs high for everyone. In his view, that would lead to a situation where only wealthy people could afford the systems.
“I would argue that if you don’t have strong policies that are incentivizing broader access to solar across the board, there is kind of a self-fulfilling prophecy here,” Greschner said.
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