Energy News Network

State’s Utilities Lag on Solar Equity

Doing little to connect low-income customers to solar, report says.

By , Energy News Network - Mar 2nd, 2020 11:25 am
Solar training. Photo courtesy of the Midwest Renewable Energy Association.

Solar training. Photo courtesy of the Midwest Renewable Energy Association.

Even as the concept of “energy justice” is increasingly embraced, residents of low-income neighborhoods most affected by the old energy economy usually find it hard to tap the benefits of renewable energy — namely cost savings from rooftop or community solar and the satisfaction of participating directly in the clean energy economy.

Recently the Environmental Law & Policy Center and national groups Grid Alternatives and Vote Solar called on utilities to do more to facilitate solar access for their low-income customers nationwide. Last month they released a low-income solar policy guide, which makes recommendations and highlights best practices including programs by Xcel Energy in Minnesota and Colorado and others in California and Washington, D.C.

But in the heart of the industrial Midwest — Wisconsin, Indiana, Illinois and Michigan towns and cities hugging the Great Lakes — low-income people have little access to solar. And some utilities have even tried to turn low-income people against solar, framing rooftop solar as the purview of elites that leaves others paying more to keep up the grid.

In Indiana, Michigan and Wisconsin, that is largely because the states have no strong programs or policies promoting solar access for anyone, no less low-income or marginalized people. And as many advocates see it, utilities in these states have generally not been friendly to solar.

In Illinois, meanwhile, the state’s 2017 Future Energy Jobs Act created a program meant to bring solar and solar jobs to low-income and environmental justice communities. A currently proposed bill would expand the program significantly. Even so, the state is seeing how difficult it can be for such communities to access solar when dealing with economic, structural, cultural and other obstacles.

“When it comes to low-income households, we know that solar is often the cheapest source of energy out there,” said MeLena Hessel, a senior policy advocate with the Environmental Law & Policy Center and a co-author of the guide. “We know it’s really crucial that low-income households share in those benefits.”

Recommendations

The report outlines a number of ways utilities could help low-income customers tap savings, whether with rooftop or community solar, or through credits from other solar installations.

Community solar originated as a way for people who can’t host their own installations to join together in developing solar. But community solar projects have often become large-scale, for-profit ventures wherein developers seek large subscribers.

The guide advises that developers can take risks on smaller and less financially stable community solar subscribers if they have “back-up subscribers” — including a utility — willing to step in if an original subscriber pulls out.

If utilities own community solar installations directly, they can also donate unused subscriptions to lower-income customers.

“There are unresolved questions about the appropriate role for utilities in the community solar space,” Hessel said. “But if they are doing some sort of community solar pilot, they should focus at least in part on low-income households. Part of the value proposition for community solar and why it’s so important is overcoming barriers for anyone who doesn’t own their own home, and low-income folks are more likely to be renters.”

The report also asks utilities to let customers with solar panels “donate” credit for unused solar energy to lower-income customers who can’t afford their own installations.

Programs such as net metering compensate solar owners for the excess power their panels generate — but often only up to a certain threshold. The report suggests that credit for the surplus could be given to others.

Ideally, more low-income people will be able to have their own rooftop solar installations. To make that happen, utilities need to provide more options to make solar financially viable, especially the up-front costs.

Among other things, utilities should make sure to fully compensate all customers for the true value of solar, advocates argue. That means monetizing the reduction in peak load, carbon emissions reductions, or various grid services that solar provides.

On-bill repayment can also make solar more accessible for anyone, especially those on a fixed income. That’s where the upfront cost of a solar installation gets charged to customers as part of their monthly bill. This is a boon especially for people with poor credit or other obstacles to getting a traditional loan.

Utilities can also help customers access solar through programs that generally reduce their energy burden — the percentage of income they spend on energy. This includes robust energy efficiency and conservation programs and programs that work with customers struggling to pay their bills.

A bleak landscape in Wisconsin

In the Badger State, according to Renew Wisconsin policy director Michael Vickerman, “To the extent anything is happening [on low-income solar access], it’s all driven by individual customers and localities.”

Renew supports solar in marginalized communities through its Solar for Good program, which gives grants to organizations for solar. In rural, northern Sawyer County, for example, Renew partnered with the Carlson Electric company, the Legacy Solar Co-op, and the county housing authority to provide 153 kilowatts of solar to public housing tenants in six multifamily buildings. An additional 100 kW of solar is also being installed through the partnership.

A local, family-owned business, Carlson “is well on its way to completing the state’s most expansive solar initiative aimed at low- and moderate-income households,” Vickerman said, praising the company’s skill in combining private grants, a state energy innovation grant, and a financing tool known as property assessed clean energy, or PACE.

Renew also works with the city of Madison on a project called Backyard Solar that provides grants covering up to 20% of the cost of solar for community organizations and affordable housing.

In southeast Wisconsin, utility We Energies is seen by many advocates as hostile to customer-owned distributed solar. Solar advocates and developers have been in an ongoing standoff with the utility over third-party solar, which is crucial for nonprofit organizations like churches and community groups to take advantage of tax breaks, and can also help individuals get solar if they don’t have upfront capital.

We Energies spokesperson Amy Jahns said that We Energies pays customers with solar retail rates for the energy they send back to the grid, and she said “all customers” benefit from the utility’s solar pilot program and its investment in a solar farm called Badger Hollow.

“We have been and will continue to work with lawmakers, regulators, customer groups and stakeholders on programs and solutions that serve customers and help us continue on a path to a cleaner energy future that is safe, reliable and affordable,” Jahns said.

Vickerman noted that some electric cooperatives in Wisconsin have made community solar available essentially for free to customers by building their own community solar installations.

“They’ve basically socialized the cost so no one is paying more for the solar capacity,” he said, noting that these co-ops have more flexibility since they don’t need approval from the state’s Public Service Commission.

The Public Service Commission’s positions on solar have made it nearly impossible for utilities to even consider some models that would help subsidize solar for low-income customers, Vickerman argued.

With the commission opposing “any appearance of cost-shifting or subsidization, it wouldn’t have been a profitable venture to provide a service trying to overcome the income challenges,” Vickerman said. “It would have run afoul of the commission’s orientation that no one customer should pay a penny more for another customer’s service.”

With an empty seat on the three-member commission now set to be filled by Gov. Tony Evers, a Democrat, the commission’s positions could shift.

But “for the foreseeable future, bringing solar power to moderate and low-income people will be entirely community-driven in Wisconsin,” Vickerman said. “Possibly some utilities might get into it in some fashion in the future, but [there’s currently] not a single utility in the state that has created a program targeting that particular customer.”

Similar stories in Indiana and Michigan

In Indiana, a 2017 law pushed by utility companies virtually ended net metering, making solar harder to afford for all customers, especially those with low incomes.

“We have a real interest in figuring out a way to get solar to low-income communities for all of the obvious reasons,” said Kerwin Olson, executive director of the Citizens Action Coalition. “We have started to push that envelope, but nothing has materialized.”

A 2016 lawsuit settlement involving Duke Energy’s controversial Edwardsport coal gasification plant called for the utility to invest in solar for community organizations or low-income customers. A 2017 Duke press release listed $400,000 worth of grants related to the settlement given to partners to fund solar projects that include a number of individual low-income households and community organizations.

Olson said the coalition has had meetings with utilities Indianapolis Power & Light and the Northern Indiana Public Service Company regarding low-income solar programs.

“But that fell apart — nothing came of it,” he said. “We’re getting agreements to have conversations, but the conversations have gone nowhere. … A lot of us are working on it, talking about it, trying to make it happen. But the utilities are completely unwilling to dip their toe in the water, for many reasons.”

NIPSCO spokesperson Nick Meyer said, “While options are available to all customers to generate their own electricity from renewable resources, we do not currently have rooftop or community solar programs designed for low-income customers. We have worked previously to foster discussions with regulatory stakeholders, consumer advocacy groups and local community leaders regarding community solar to identify potential options and we remain open to the future possibility.”

Indianapolis Power & Light did not respond to a request for comment.

The Indiana chapter of the NAACP has made access to solar a key focus of its push for energy justice. Solar is “almost nonexistent in the African American community because of the cost,” said chapter president Barbara Bolling, since “many times Black people don’t have the resources to make that initial outlay.”

As in Wisconsin, Olson said municipalities and private organizations have taken initiative on low-income solar. In December, the city of Indianapolis announced a partnership with Solar United Neighbors to provide free solar panels for up to 20 low-income households.

Michigan, meanwhile, has convened an advisory council for environmental justice that will, among other things, look at access to clean energy and remedying the impacts of disproportionate exposure to coal plants. But as in Indiana and Wisconsin, advocates say, utilities have not been proactive in facilitating distributed solar for anyone, no less low-income customers.

DTE Energy, which operates two coal-fired power plants within 25 miles of Detroit, has fought to reduce rates paid to customers with solar. DTE, like We Energies and other utilities across the country, has argued that the proliferation of distributed solar hurts low-income people, since they are less likely to have solar and hence pay more proportionally to keep up the grid.

Bright spots in Illinois

A marquee component of Illinois’s 2017 Future Energy Jobs Act was the Illinois Solar for All program, meant to help low-income people and environmental justice communities access solar and solar jobs. It incentivizes developers at a higher rate than the state’s general solar program for installing solar in low-income communities, and guarantees customers 50% savings compared to utility rates, with no upfront costs.

Last year, a dozen projects comprising 5.3 megawatts of rooftop and community solar were selected for the program’s first round. They include rooftop solar for schools, a children’s home, a center for people with disabilities and other institutions serving lower-income communities. This year, about 9 MW of solar projects have been chosen for Illinois Solar for All incentives, 4.1 MW of that in community solar.

Solar developers accept some level of risk in the program, since they will own and operate the solar installations and are committed to delivering the savings to their community solar subscribers or distributed generation customers regardless of the solar panels’ performance or trends in utility prices.

The developers need to secure subscribers for the community solar projects, a task that can be challenging. Ken Pedotto is CEO of Solar Simplified, a New York-based firm that connects community solar developers with subscribers. He is moving into the Illinois market thanks to the Future Energy Jobs Act, though he doesn’t immediately plan to focus on the low-income sector.

“In Illinois and other states, one problem is awareness — certainly a lot of people don’t know what community solar is or confuse it for rooftop solar,” Pedotto said. “Illinois Solar for All is a step in the right direction, but it depends on how successful developers are in collecting the debt owed.”

Illinois’s proposed Clean Energy Jobs Act would expand incentives for solar in low-income and environmental justice communities, while also expanding solar job training and entrepreneurship opportunities that were created by the Future Energy Jobs Act.

ComEd vice president of strategy and energy policy Scott Vogt said that the utility has no programs specifically targeting low-income customers for solar, but “given we have the most experience of probably any utility dealing with low-income customers, we’re evaluating what we can do on a go-forward basis and also waiting for the market to mature and see what we can do to help.”

Solar penetration for low- and moderate-income customers in the Chicago area is very low, Vogt noted.

“From a rooftop solar perspective, there must be a barrier out there because it’s not happening,” he said. “I don’t know if it’s the type of roofs, what developers are charging — there might be some credit issues with financing.”

Since Illinois has a deregulated energy market, unlike Wisconsin and Indiana, there are limits on what utilities can do in terms of offering solar generation directly to customers.

Solar advocates say that ComEd and downstate Illinois utility Ameren could help low-income people get access to solar through simple measures like improving the solar interconnection process, which makes solar cheaper and easier for everyone, and helping customers take control of their energy situation.

“There is a real argument to be made for getting people out of energy poverty and potentially lowering unpaid bills,” Hessel said. “When you have households with really high energy burdens you get caught up in this cycle of nonpayment; it makes it harder to access any program. … The barrier here is we know someone can save money [with solar] — we know there is value to this. How do you tap it?”

This story was originally published by the Energy News Network.

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