Equity in Energy: How Community Solar Is Involved

In the U.S., there has always been a direct correlation between the disparity in income and the distribution of renewable resources. Equity in energy refers to fairness in the distribution of energy, benefits, and burdens among different people and communities. It was designed to rectify historical inequalities, recognizing the need to create a fair and inclusive energy landscape. Equity was often forgotten and considered optional when crafting renewable policies and opportunities. However, with the recent focus on environmental justice at both the federal and state levels, it has been revived.

Access to clean energy is essential in transitioning to sustainable energy to ensure no one is left behind, regardless of socioeconomic status or location. Community solar is an avenue to increase access to sustainable energy for underprivileged people and communities. It enables residents and businesses who do not have access to rooftops for solar panels to subscribe to solar installations to receive credits from their subscription to reduce their electric bills and carbon footprint.

The lack of affordable housing has caused community solar to mushroom in many parts of the U.S. According to the Harvard Joint Center for Housing Studies, one-third of all U.S. households live in a rental property. The rental population grows when examining minority communities, where 56% of the Black community lives in a rental household, while for the Hispanic community, it is 49%, according to the National Association of Realtors.

In 2023, community solar policies have expanded and improved in Maryland, New Jersey, Colorado, and Minnesota to be more inclusive to disadvantaged communities. Additionally, federal programs under the Inflation Reduction Act have made community solar more attractive, with bonus credits available for projects serving low- to moderate-income (LMI) neighborhoods and people.

State Legislation

States have seen the benefits of community solar, with 43 states and the District of Columbia having at least one community solar installation, and 22 states and the District of Columbia having implemented policies that support community solar. In 2023, various community solar legislative measures created large carveouts for LMI subscribers. New Jersey’s Community Solar Energy Program requires 51% of subscribers of each facility to be LMI customers. In comparison, the Maryland Community Solar Energy Generating Systems Program requires 40% of subscribers of each solar facility. In Minnesota, amendments to the Community Solar Garden Program required 30% of subscribers to be LMI. The recent trend in protecting the LMI community shows the importance of community solar projects in ensuring that disadvantaged communities have access to clean and sustainable energy.

LMI carveouts in community solar were implemented to reduce the traditional barriers vulnerable populations face, such as financing, education, and outreach. This group usually has less disposable income to afford solar and generally doesn’t have access to financing. Therefore, solar developers often did not target this population, so LMI customers were usually unfamiliar with the state’s or utility companies’ incentives. Community organization within the population is crucial for the success of these programs because these communities are generally less informed about them. Strategic marketing campaigns through community groups, agencies, and non-profits are vital in educating customers about the various opportunities.

State legislatures have tasked solar developers and municipalities to reach the LMI population for enrollment in community solar programs and projects. However, this strategy is sometimes unsuccessful, for example, in Massachusetts. Massachusetts’ growth in community solar is in the top three in the nation, resulting from its Solar Massachusetts Renewable Target (SMART) Program.

The SMART program has been successful but only has a mere 5% LMI carved out in each capacity block. There is also a community solar incentive program where developers receive incentives if the project serves at least 50% LMI customers. As of July 2022, community solar facilities built for LMI customers were only 18 of the 210 structures in Massachusetts. The limited LMI projects resulted from a few solar developers participating in the unattractive LMI incentive program and ineffective market campaigns to attract subscribers. Therefore, it is not sufficient to have LMI incentive programs and crave-outs, but the programs must be attractive to developers and subscribers.

Several states have gone beyond just having LMI carveouts and have created successful programs for the enrollment of subscribers, such as the District of Columbia and New York. The District of Columbia’s award-winning Solar for All Program aims to serve 100,000 households by 2032 and reduce their utility bill by 50%. There have been 50,000 residents enrolled thus far. The District has aggressively enrolled residents by targeting a subset of the population that receives low-income energy assistance.

The program is free to all qualified residents who pay their utility bills. It explicitly targets neighborhoods at risk for future climate impacts. The District has successfully built a coalition to educate and enroll prospective applicants and incentivize solar developers.

New York has led the deployment of community solar with 1.274 GW of installed capacity at the end of 2022. Under the Climate Act, equity and access to sustainable energy must be considered when developing policies, with at least 35% of the investments going to disadvantaged communities. The state has three programs to increase access to sustainable energy for disadvantaged communities:

  • Solar for All offers no-cost community solar for 175,000 low-income residents who receive energy assistance.
  • Community solar adders that dedicate 20% of their capacity to LMI residents or disadvantaged communities can receive incentives.
  • The Multifamily Affordable Housing Incentive is available for nonresidential solar installations sited on regulated multifamily affordable housing in the Con Edison, Upstate, and Long Island regions.

Federal Legislation

The Inflation Reduction Act (IRA) has transformed the renewable industry. There are protections in the IRA for disadvantaged communities with the implementation of Justice 40, where 40% of certain federal investments flow to disadvantaged communities affected by pollution. On June 28, 2023, the Environmental Protection Agency launched the $7 billion Solar for All competition that will award 60 grants to states, municipalities, tribal governments, and other eligible non-profits that will expand the deployment of solar to LMI and disadvantaged communities. The environmental justice movement is necessary for equal access to the deployment of solar and to create meaningful benefits for many communities that have been overlooked yet are experiencing the effects of climate change.

More often than not, conversations around access to renewable energy are centered around affordability. Equity in energy attempts to create a level playing field and brings everyone to the table, thus making the impact of community solar far-reaching for the LMI community. However, the effectiveness of the new policies requires unprecedented strategic planning to inform the disadvantaged community of the opportunities available. The mindset of “if you build it, they will come” is impractical for LMI projects. It’s not enough to create these opportunities for the beneficiaries, but they must be informed to benefit.

Janique Williams is a licensed attorney, working as a Senior Regulatory Analyst with Pepco.

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