Cheaper Solar Power Means Lower-Income Families Could Benefit
By Galen Barbose, Eric O'Shaughnessy and Ryan Wiser
Until recently, rooftop solar panels were a clean energy technology that only wealthy Americans could afford. But prices have dropped, thanks mostly to falling costs for hardware, as well as price declines for installation and other "soft" costs.
Today hundreds of thousands of middle-class households across the U.S. are turning to solar power. But households with incomes below the median for their areas remain less likely to go solar. These low- and moderate-income households face several roadblocks to solar adoption, including cash constraints, low rates of home ownership and language barriers.
Our team of researchers at the Lawrence Berkeley National Laboratory examined how various policies and business models could affect the likelihood of people at all income levels adopting solar. In a recently published study, we analyzed five common solar policies and business models to see whether they attracted lower-income households.
We found that three scenarios did: offering financial incentives to low- and moderate-income households; leasing solar panels to homeowners; and lending money to buy panels, with the loan repaid on property tax bills. All of these approaches resulted in people at a wider range of income levels trying solar energy.
Solar Power for Everyone
For over a decade our team at the Berkeley lab's Electricity Markets and Policy group has kept tabs on trends in the rooftop solar market through our annual report, "Tracking the Sun." It documents how prices have fallen, and the number of installations has risen in U.S. solar markets.
Over the past decade rooftop solar power has grown significantly in the U.S., spreading beyond initial hot spots in California and Hawaii to states such as North Carolina, Florida and New Jersey. The industry projects that rapid growth will continue for the foreseeable future.
More recently our researchers have combined this tracking report with data on household-level demographics and income of solar adopters, covering more than 70% of the U.S. residential solar market. Among the research products we've created is an online interactive tool that shows the demographic characteristics of solar adoption down to the county level.
Thanks to these price and growth trends, an increasing number of state and local governments, utilities and businesses want to help lower-income customers go solar. They believe solar will cut energy bills, reduce money spent on bill payment programs, avoid pollution and create green jobs.
So far, 20 states are offering 38 programs to help lower-income customers go solar. California, the largest, has budgeted over US$1 billion for such programs. A number of utilities and solar developers, like Posigen and GRID Alternatives, are also developing business models that work for all customers. These initiatives leverage state and federal incentives to deliver free or very low-cost solar to eligible households.
Donnel Baird's company makes energy-saving updates to buildings almost exclusively in low-income areas. Cutting the… https://t.co/5uWGSVnu9m— NPR (@NPR)1603088973.0
Reducing Upfront Costs
In our study we evaluated five policies and business models to see which ones helped low- and moderate-income households go solar:
- Financial incentives targeted at low- and moderate-income households, usually rebates or other incentives to reduce upfront costs.
- Leasing rooftop solar systems, which reduces upfront costs.
- Property Assessed Clean Energy financing, or PACE, which allows customers to finance energy improvements through their property tax payments. Currently, residential PACE is available only in California, Florida and Missouri.
- Financial incentives such as rebates offered to customers of any income level.
- "Solarize" campaigns, in which customers band together in a group purchase to get a good price.
The study includes data on more than 1 million residential rooftop photovoltaic systems installed on single-family homes in 18 states from 2010 to 2018. We compared modeled household-level income estimates for solar adopters with area median household incomes from U.S. Census data.
We found that three of the interventions – targeted incentives, leasing and PACE – effectively increased adoption equity. These approaches are boosting sales to low-income customers in existing markets and helping solar companies move into new markets, such as low-income areas where solar sales have been weak or absent.
Policies that don't address the needs and constraints of low-income households, like the federal income tax credit, have not had much effect on equity. And solarize campaigns are rarely pitched to low-income buyers.
An Untapped Customer Base
When solar expands into new markets and neighborhoods, it can have a spillover impact. If a system is installed in a neighborhood that had no solar before, neighbors who see it will be more likely to adopt it themselves. Moving into new markets may have greater potential effects on low-income adoption rates than reaching lower-income households in existing markets.
Expanding sales to low- and moderate-income households can also tap a larger base of potential customers. The U.S. National Renewable Energy Lab (NREL) found in a study that 42% of rooftops where solar power could work are on low- and moderate-income housing.
A 2018 study estimates that installing rooftop solar systems on low- and moderate-income housing could provide up to 42% of all rooftop technical potential in the residential sector and improve energy affordability in low-income communities. NREL
As the solar market grows, decisions to install solar systems are increasingly driven by the prospect of saving money, rather than strictly by green values or buyers' interest in new technologies. A survey led by NREL found that roughly half of people who decided to install solar in California, New Jersey, New York and Arizona in 2014 to 2016 identified cost savings as a primary factor in their decision to adopt solar.
For low- and moderate-income households, the financial benefits of solar power can make a big difference. Many lower-income households carry a large energy burden, meaning that energy and utility costs consume a large share of their income. Across the U.S., low-income households spend about three times more of their income on energy costs than other households. Solar power can reduce those energy burdens by providing on-site power at a lower cost than grid electricity.
Making homes more energy efficient is an established strategy for cutting energy bills, but there's growing interest in having solar play a role. Deploying solar power for low- and moderate-income households can be a way to fulfill policy and social goals like creating jobs and improving the environment.
The study described in this article was supported by the U.S. Department of Energy's Solar Energy Technologies Office.
Galen Barbose is a research scientist at Lawrence Berkeley National Laboratory.
Eric O'Shaughnessy is a research consultant at Lawrence Berkeley National Laboratory.
Ryan Wiser is a senior scientist at Lawrence Berkeley National Laboratory.
Disclosure statements: Eric O'Shaughnessy is a renewable energy research analyst at Clean Kilowatts, LLC. Ryan Wiser is a board member of the Clean Energy States Alliance. Galen Barbose does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
Reposted with permission from The Conversation.
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Wisdom the mōlī, or Laysan albatross, is the oldest wild bird known to science at the age of at least 70. She is also, as of February 1, a new mother.
<div id="dadb2" class="rm-shortcode" data-rm-shortcode-id="aa2ad8cb566c9b4b6d2df2693669f6f9"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1357796504740761602" data-partner="rebelmouse"><div style="margin:1em 0">🚨Cute baby alert! Wisdom's chick has hatched!!! 🐣😍 Wisdom, a mōlī (Laysan albatross) and world’s oldest known, ban… https://t.co/Nco050ztBA</div> — USFWS Pacific Region (@USFWS Pacific Region)<a href="https://twitter.com/USFWSPacific/statuses/1357796504740761602">1612558888.0</a></blockquote></div>
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Comparing rime ice and glaze ice shows how each changes the texture of the blade. Gao, Liu and Hu, 2021, CC BY-ND
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theDOCK aims to innovate the Israeli maritime sector. Pexels<p>The UN hopes that new investments in ocean science and technology will help turn the tide for the oceans. As such, this year kicked off the <a href="https://www.oceandecade.org/" target="_blank" rel="noopener noreferrer">United Nations Decade of Ocean Science for Sustainable Development (2021-2030)</a> to galvanize massive support for the blue economy.</p><p>According to the World Bank, the blue economy is the "sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystem," <a href="https://www.sciencedirect.com/science/article/pii/S0160412019338255#b0245" target="_blank" rel="noopener noreferrer">Science Direct</a> reported. It represents this new sector for investments and innovations that work in tandem with the oceans rather than in exploitation of them.</p><p>As recently as Aug. 2020, <a href="https://www.reutersevents.com/sustainability/esg-investors-slow-make-waves-25tn-ocean-economy" target="_blank" rel="noopener noreferrer">Reuters</a> noted that ESG Investors, those looking to invest in opportunities that have a positive impact in environmental, social and governance (ESG) issues, have been interested in "blue finance" but slow to invest.</p><p>"It is a hugely under-invested economic opportunity that is crucial to the way we have to address living on one planet," Simon Dent, director of blue investments at Mirova Natural Capital, told Reuters.</p><p>Even with slow investment, the blue economy is still expected to expand at twice the rate of the mainstream economy by 2030, Reuters reported. It already contributes $2.5tn a year in economic output, the report noted.</p><p>Current, upward <a href="https://www.ecowatch.com/-innovation-blue-economy-2646147405.html" target="_self">shifts in blue economy investments are being driven by innovation</a>, a trend the UN hopes will continue globally for the benefit of all oceans and people.</p><p>In Israel, this push has successfully translated into investment in and innovation of global ports, shipping, logistics and offshore sectors. The "Startup Nation," as Israel is often called, has seen its maritime tech ecosystem grow "significantly" in recent years and expects that growth to "accelerate dramatically," <a href="https://itrade.gov.il/belgium-english/how-israel-is-becoming-a-port-of-call-for-maritime-innovation/" target="_blank" rel="noopener noreferrer">iTrade</a> reported.</p><p>Driving this wave of momentum has been rising Israeli venture capital hub <a href="https://www.thedockinnovation.com/" target="_blank" rel="noopener noreferrer">theDOCK</a>. Founded by Israeli Navy veterans in 2017, theDOCK works with early-stage companies in the maritime space to bring their solutions to market. The hub's pioneering efforts ignited Israel's maritime technology sector, and now, with their new fund, theDOCK is motivating these high-tech solutions to also address ESG criteria.</p><p>"While ESG has always been on theDOCK's agenda, this theme has become even more of a priority," Nir Gartzman, theDOCK's managing partner, told EcoWatch. "80 percent of the startups in our portfolio (for theDOCK's Navigator II fund) will have a primary or secondary contribution to environmental, social and governance (ESG) criteria."</p><p>In a company presentation, theDOCK called contribution to the ESG agenda a "hot discussion topic" for traditional players in the space and their boards, many of whom are looking to adopt new technologies with a positive impact on the planet. The focus is on reducing carbon emissions and protecting the environment, the presentation outlines. As such, theDOCK also explicitly screens candidate investments by ESG criteria as well.</p><p>Within the maritime space, environmental innovations could include measures like increased fuel and energy efficiency, better monitoring of potential pollution sources, improved waste and air emissions management and processing of marine debris/trash into reusable materials, theDOCK's presentation noted.</p>
theDOCK team includes (left to right) Michal Hendel-Sufa, Head of Alliances, Noa Schuman, CMO, Nir Gartzman, Co-Founder & Managing Partner, and Hannan Carmeli, Co-Founder & Managing Partner. Dudu Koren<p>theDOCK's own portfolio includes companies like Orca AI, which uses an intelligent collision avoidance system to reduce the probability of oil or fuel spills, AiDock, which eliminates the use of paper by automating the customs clearance process, and DockTech, which uses depth "crowdsourcing" data to map riverbeds in real-time and optimize cargo loading, thereby reducing trips and fuel usage while also avoiding groundings.</p><p>"Oceans are a big opportunity primarily because they are just that – big!" theDOCK's Chief Marketing Officer Noa Schuman summarized. "As such, the magnitude of their criticality to the global ecosystem, the magnitude of pollution risk and the steps needed to overcome those challenges – are all huge."</p><p>There is hope that this wave of interest and investment in environmentally-positive maritime technologies will accelerate the blue economy and ESG investing even further, in Israel and beyond.</p>
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