As of September 2018, 43 percent of U.S. households were low to moderate income (LMI) – income levels lower than 80 percent of the median level income – according a recent report by the National Renewable Energy Laboratory (NREL). LMI households also usually have the highest energy burden – the ratio of energy expenditures to overall household income. Solar energy and energy efficiency can play a large role in combatting this issue.
Last month, SolSmart hosted a webinar titled Solar and Energy Efficiency: Resources to Support Local Initiatives for Low-to-Moderate Income Communities, where several of our experts discussed tools and resources that can help local governments plan for solar and energy efficiency in these communities. They also discussed financing challenges for LMI communities and how they can be overcome. The webinar concluded with case studies from cities that have created solar and energy efficiency programs to benefit LMI households.
The experts who participated in the webinar included:
Useful resources for local governments include the following:
Solar for All, developed by NREL, allows users to explore, analyze, and download local energy data in an interactive platform. Key layers of this platform include:
The Department of Energy created the Low-Income Energy Affordability Data Tool in 2016 to assist partners with understanding their LMI community characteristics. The LEAD tool provides worksheets with graphs and data on key energy affordability metrics. Datasets are available for all 50 states, census divisions, and census tract levels. It’s a spreadsheet-based tool accessible through open EI.
There are many types of data sets available on the LEAD tool based on different geographic areas. Combined, these data sets can help answer a variety of important questions about energy use, energy burden, and LMI populations. Data primarily comes from the Energy Information Administration (EIA) and the Department of Housing and Urban Development.
Using the LEAD tool data, NREL worked with several communities to analyze and explore their energy data. In Rochester, New York, NREL found that the city has one of the highest rates of extreme poverty in the country. It also has cold climate and older residential building stock, which both affect energy bills, especially in the winter. NREL worked with the Rochester Mayors’ Office of Innovation and Strategies Initiative to explore the nexus of poverty alleviation and greenhouse gas emission reduction using this LEAD data. Rochester wanted to demonstrate that energy burden is a key part of poverty in their city. When focusing on energy burden, it takes into account the inefficiency of buildings and more expensive heating fuels, in addition to household income. From their analysis, NREL found that:
Overall, this tool can be helpful for:
Financing plays an important role in unlocking solar for the LMI market. For LMI households to benefit from solar energy, it’s important to understand the challenges they face.
A key pathway to solve the issue of upfront costs is to develop innovate financing mechanisms that can help offset those costs and allow LMI households to adopt these systems and enjoy the benefits of them long-term. However, the effectiveness of these mechanisms can vary depending on the housing type and whether the individual is a renter or homeowner. The following chart outlines the top financing options based on building type.
These financing options can have tradeoffs that may be important to policymakers. The following chart outlines key state administration and LMI market considerations such as ease of implementation, up-front cost, and market potential.
Communities across the country have implemented strategies to help LMI households benefit from solar and energy efficiency. Today, there are three main approaches to city-administered LMI energy efficiency policies:
Throughout the country, there are many examples of cities that have integrated energy efficiency and solar to benefit LMI households. The cities of Austin, Texas, and Minneapolis, Minnesota, are case studies of cities that have implemented programs that incentivized both building owners and LMI households to procure energy efficiency upgrades and solar energy.
Case Study: Multifamily Affordable Housing Shared Solar – Austin, TX
The city of Austin, Texas, under the direction of the city council, launched the Multifamily Shared Solar Pilot Program in 2018, that installed shared solar on several multifamily affordable housing buildings. To pair together solar and energy efficiency, incentives were offered.
To evaluate project applicants, buildings that were more energy efficient were more competitive. Competitive scoring for applicants was based on:
Case Study: Green Cost Share & 4d – Minneapolis, MN
Minneapolis’ Green Cost Share program aims to create a cleaner, healthier, and more sustainable city. The Green Cost Share program offers matching funds for commercial, industrial, and multi-family properties undertaking an energy efficiency, solar, or innovative pollution reduction project. These properties are eligible for:
Participants in the city’s 4d Affordable Housing Incentive Program, which offers apartment building owners property tax reductions if they agree to keep 20% or more of their rental units affordable, get priority consideration for Green Cost Share program funding.
To learn more about expanding solar and energy efficiency in LMI communities, check out our Resources page which includes the full-length webinar. If you’re interested in learning more about SolSmart technical assistance or the designation process, request a consultation here.