New local campaigns can bring cheaper and cleaner rooftop solar to communities of color
Thu, 08/06/2020 – 00:20
There is a new urgency across the United States to address structural and systemic racial inequities in criminal justice, wealth and housing, employment, health care and education. These disparities are also pervasive in energy. One common measure of this is “energy burden,” or the share of take-home income spent on energy bills.
Communities of color have been shown to have a 24–27 percent higher energy burden than White Americans when controlling across income levels, and low-income residents experience an energy burden up to three times higher than high-income residents.
Rooftop solar has the potential to reduce energy burden in communities of color, but it has not yet lived up to its potential due to systemic barriers: lack of solar education and outreach; financial challenges such as lower income and access to credit; and issues related to home ownership, such as lower ownership rates or roof condition.
Rooftop solar has the potential to reduce energy burden in communities of color, but it has not yet lived up to its potential due to systemic barriers.
Local governments can play a pivotal role in expanding access to solar for these communities by developing programs that address these systemic barriers and helping to bring the benefits of clean energy to the communities that need them the most. One useful program that local governments can consider is a “Solarize,” or community bulk-purchasing, campaign, which has been shown to reduce solar costs and address marketing and outreach barriers to solar.
Cities can take these programs to a new level by partnering with community groups to focus outreach in communities of color and collaborating with financial institutions to develop solutions for low-and moderate-income (LMI) residents.
Solar can help relieve energy burden, but has not yet reached communities of color
With a simple payback of less than the 25-year life of solar photovoltaics in all 50 states and less than half that time in most states, rooftop solar has reduced energy costs for residents throughout the country. However, these cost savings have mostly benefited White residents.
A 2019 report indicated that in census tracks with the same median household income, Black- and Hispanic-majority neighborhoods have 69 percent and 30 percent less rooftop solar installed, respectively, than neighborhoods without a racial majority (versus 21 percent more solar in majority White communities). This is not just because of differences in homeownership. When controlling for ownership, majority Black and Hispanic communities still had 61 percent less and 45 percent less solar installed, respectively, than neighborhoods with no racial majority (versus 37 percent more in majority White neighborhoods).
As a result, nearly half of Black majority communities in the United States do not have a single solar system installed.
One thing is fairly certain: It is not because communities of color don’t care about reducing their environmental footprint. Recent polls have indicated that Black and Hispanic Americans are more likely, at 57 percent and 69 percent, respectively, to be concerned or alarmed about climate change than White Americans, at 49 percent.
Marketing and education through ‘Solarize’ campaigns
Solar marketing and education provide essential exposure to the many benefits of solar and are necessary for increased and persistent solar adoption in any community. Unfortunately, this outreach and local solar education have not reached all communities equally.
Marketing may not be reaching communities of color as effectively due to the solar industry’s focus on profitable and affluent areas, as well as its lack of diversity at the decision-making level. With nearly 70 percent of small-scale solar concentrated in just five of the most profitable states, most of which offer solar incentives and are highly affluent, large swaths of the country and communities of color have been left out of the solar industry’s marketing.
Marketing may not be reaching communities of color as effectively due to the solar industry’s focus on profitable and affluent areas, as well as its lack of diversity at the decision-making level.
Furthermore, the lack of persons of color represented in solar companies — almost 90 percent of solar senior executives are White and only 2 percent Black and 6 percent Hispanic — likely affects which communities are predominantly targeted through marketing campaigns and the effectiveness of those campaigns.
The significant lack of solar in communities of color also has resulted in a lack of general knowledge of how to access and benefit from solar. These communities have not fully benefited from the “solar contagion effect,” in which residents who see solar being installed in their neighborhood are more likely to install their own solar systems.
This is no surprise considering residents are significantly more trusting of their neighbor’s opinions of solar than information communicated by the solar industry. In fact, SolarCity released a report indicating one-third of solar customers were referred by a neighbor and another study suggests that the presence of two to three solar installations in a neighborhood results in one additional installation. Notably, this contagion effect has been shown to be highest in communities of color but has not yet realized its full potential.
Community purchasing campaigns can help fill this void if they focus outreach to specific underserved communities. Long the target of scams and predatory lending, communities of color may be more skeptical of solar product offerings that sound too good to be true.
Community purchasing campaigns can help fill this void if they focus outreach to specific underserved communities.
However, partnering with a trusted local community organization that understands the community dynamics can build trust and enable solar education to come through community leaders, newsletters and events. These sources have shown to be most effective for increasing solar uptake in low-income and communities of color. For communities with minimal solar exposure (again, nearly 50 percent of Black communities have zero solar), these campaigns provide the essential education to drive community-wide solar adoption.
Bringing down solar costs and — in some cases — reducing credit barriers
The top barrier to installing residential solar is typically financial, regardless of income or race. Solarize campaigns have shown to help lessen these financial barriers by reducing solar costs by about 20 percent. These cost savings result from removing solar company costs for customer marketing and using economies of scale. The cost and time savings with this simplified process can be even more prevalent in jurisdictions that streamline solar permitting given the high volume of installations that come with Solarize campaigns.
While this discount has been shown to be a leading factor to participate in Solarize campaigns at every income level, these savings alone do not solve the compounding issues of overall cost and creditworthiness facing communities of color.
First, Black and Hispanic families have significantly lower median household incomes, 41 percent and 27 percent lower than White families, and therefore additional incentives beyond Solarize may be necessary to enable participation.
Second, they are more likely to have lower credit scores that can result in challenges in obtaining a loan to pay the upfront cost ($16,500 for the typical 5 kW system) or meeting the credit requirements for a solar power purchase agreement or lease. This situation can lead to higher interest rates and make solar less economic or uneconomic for these community members.
To make Solarize campaigns work for LMI residents, cities can develop partnerships with local green lending institutions (a Green Bank, community development financial institution or local credit union) to address cost and credit barriers. Connecticut’s version of Solarize, the Solar for All Campaign, offers a great example of using a financial partnership to expand the reach of a typical Solarize campaign to LMI residents.
To make Solarize campaigns work for LMI residents, cities can develop partnerships with local green lending institutions to address cost and credit barriers.
After realizing that business as usual wasn’t spurring solar uptake in low-income communities, the Connecticut Green Bank created new incentives specifically for LMI residents, paired solar with energy efficiency upgrades, instituted “no money down, no credit required” Solarize offerings and recruited contractors with experience reaching underserved markets.
In three years, this multifaceted approach increased solar penetration in Connecticut’s low-income communities by 188 percent, and helped over 900 low-income households go solar.
Pairing Solarize with community solar to bring solar to renters
Lack of home ownership is a major barrier to solar in communities of color due to a long history of discriminatory housing policies. Black and Hispanic households are less likely to own their homes, at 43 percent and 46 percent, respectively, versus 72 percent of White households. With a higher percentage of renters, it is much more difficult for communities of color to access residential solar due to a split incentive between the landlord, who typically decides whether to pursue capital improvements, and the renter, who pay the utility bills.
Further, for people of color that do own their home, many live in older homes that need significant roof or structural repairs to support a solar system.
One successful way that cities are expanding solar access to renters is through community solar projects, which enable participants to subscribe to a local clean energy project and receive the associated credits on their electricity bill. Combining marketing and outreach on parallel Solarize campaigns and community solar projects can leverage limited local government resources and more effectively reach both renters and homeowners. This has been an effective strategy for NY-Sun’s community solar Solarize option and Denver’s parallel Solarize and community solar campaigns.
Take action today to implement a Solarize campaign
The American Cities Climate Challenge Renewables Accelerator, co-led by Rocky Mountain Institute and World Resources Institute, is launching a residential solar cohort this summer to help local governments implement Solarize campaigns and accelerate residential solar adoption in their community, with a particular focus on historically marginalized communities.
If your local government is interested in learning how a community purchasing campaign can help expand solar access in your community, please reach out to Ryan Shea at [email protected] to learn more.
Equity & Inclusion