Policy and market solutions can address financial barriers, unlock solar opportunity for 78 million low-income, low-credit U.S. households

The solar energy industry has experienced significant growth over the last decade. During this time there has been a significant transformation in how customers receive, interact, use and generate the clean energy that powers our homes and businesses. Dramatic reduction in the price of solar photovoltaics (PV) and advancement of solar-friendly policies have allowed significant numbers of customers to decide to install solar systems on their roofs and nearby properties to generate their own electricity. Not only does the installation of solar PV have the potential to save on energy costs, but it also empowers customers to recast their relationship with their utility in an entirely unique way. By exercising options available (lease, power purchase agreements, PACE, community solar and others), customers are no longer passive participants in this clean energy revolution but are free to choose how, what, and when they transact in these evolving energy markets.

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Photo Credit: Camille Seaman & Stephen Yang / Solutions Project 

As technologies continue to improve, policies adjust, and markets evolve, all customers now have a greater voice in how and when they consume and produce electricity. 

However, this clean energy evolution and revolution has not been equally accessible to all customers in every community across the United States. By and large, low-income customers have faced disproportionately greater obstacles in implementing projects that have the potential to produce much needed economic benefits. Many of these barriers are not new: cost (up-front expenses associated with solar PV installations), credit restrictions, policy challenges, and federal incentives provided through the Investment Tax Credit (“ITC”), collectively have the impact of limiting the options available for more customers to actively participate in the solar marketplace. Not to mention that quite often low-income and/ or low credit score customers are not prioritized in business development efforts of solar installers and developers. 

So, why is developing an inclusive solar market for all so essential? First, the inability for our low-income and/or low credit score neighbors to access solar energy endangers the ability of the low-carbon revolution to deliver the environmental and societal benefits it promises. Second, across the country states utilize system benefits charges, carbon taxes, renewable energy credits and others to fund economic incentives for customers to adopt new energy technologies, including energy efficiency, storage, solar and others. When customers who pay into these funds, through their energy bills, are unable to access both traditional and innovative PV technologies due to market and policy barriers, inequities develop, which can eventually have a destabilizing effect. Lastly, low-income and/or low credit score customers represent a significant portion of the United States population. Identifying opportunities for our target customers to participate is paramount to the continued growth of the solar market. Finding ways to make financing more inclusive has the potential to make participation in solar energy more expansive, by breaking down some of the more challenging barriers that have prevented our target customers from participating. 

Providing a suite of inclusive solar finance solutions will necessitate changes to the status quo. State, local and federal policies will need to be adjusted while new market tools and approaches will need to be supported by governments, foundations, capital providers, solar industry participants, utilities and others interested in providing greater access to solar for more customers. It is crucial that policy and financial market tools are developed with knowledge and consideration of each other. The goal is to establish an environment where all actions and interventions work efficiently together to expand much-needed access to low-income, low credit score and low-income/low credit score customers. Policy changes at the legislative and regulatory levels will serve to create a stable enabling environment conducive for market actors to develop, test, and prove novel yet adequate solutions. Not only is inclusive solar finance the right thing from a policy, social and environmental justice lens, but it is also advantageous from a business standpoint for solar companies, technology providers, utilities and capital providers alike. By combining innovative financing approaches with supportive policies, we can ensure that equity is at the center of the next chapter of the continued expansion of our nation’s solar economy. 

In this report, we outline a framework that policymakers, advocates, the solar industry, community groups, and financial organizations can use to think more broadly about ways to achieve greater equity as the nation transitions to a cleaner energy economy. 

We hope that this report is a useful tool to start a broader and action-oriented discussion about how to make solar more inclusive for all.

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 Prepared By

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Special Thanks...

Abell Foundation 
Acadia Center 
Amalgamated Bank 
Binghamton Regional Sustainability Coalition & Energy Democracy Alliance 
Boston Community Capital 
California Clean Energy Fund 
City and County of Maui, HI 
Clean Energy Collective 
Clean Energy Works 
Cohn Reznick LLP

Connecticut Green Bank 
Denver Housing Authority 
Dividend Solar 
East Bay Community Energy 
Elevate Energy 
Energy Foundation 
Erie County, NY 
Georgia Watch 
Green Mountain Power 
GRID Alternatives 
High Noon Advisors

Michigan Saves 
National Association for the Advancement of Colored People (NAACP)

National Consumer Law Center 
New York City Environmental Justice Alliance 
New York Green Bank 
Philadelphia Energy Authority 
Reinvestment Fund 
Renew Financial 
Rhode Island Housing Finance Authority 
Rocky Mountain Institute 
Rural Renewable Energy Alliance

Solar Energy Industries Association 
Self Help Credit Union 
Sol Systems 
Solar Energy Loan Fund

Solar One 
The Solutions Project 
Turning Point Energy