EnergyScore
Solstice’s Patent-Pending Tool for Financial Inclusion in Clean Energy
In the US today, low-to-moderate income households disproportionately affected by
Climate Change
Bear the effects of climate change, pollution, and extreme weather
Energy Burden
Pay a larger portion of their income on electricity
Energy Justice
Are locked out of the benefits of clean energy
One of the greatest barriers that US households face to going solar are FICO score requirements of 650+, when about 47% of consumers have subprime credit scores or are unscored¹.
Additionally, lower income, Black and Hispanic inidividuals are significantly more likely to be credit invisible or credit unscored in the US than white and middle/upper income individuals². Solstice created the EnergyScore as an alternative qualification metric to expand access to clean energy to low-to-moderate income households.
The EnergyScore is a machine-learning algorithm that improves access to clean energy products. By predicting the probability of utility payment delinquency using several consumer datasets, Solstice can ensure that churn and default rates for clean energy products are kept low while ensuring greater equity within the clean energy transition.
The EnergyScore was developed in partnership with The Department of Energy and data scientists at MIT and Stanford using more than 800,000 individuals’ data across 5,000 variables. Our research was published in the National Bureau of Economic Review. In our research to develop EnergyScore, we found that the EnergyScore is more accurate than FICO at predicting defaults and more inclusive of low-to-moderate income households.
¹ 2020 Prosperity Now ScoreCard (scorecard.prosperitynow.org)
² CFPB Data Point: Credit Invisible (Washington, DC: CFPB Office of Research, 2015)
How does EnergyScore work?
During the qualification process, Solstice will collect financial history data from customers through a credit bureau as well as customers’ utility payment history.
These variables are inputted into the patent-pending EnergyScore algorithm to output their EnergyScore – a number between 0 and 1. This number reflects their likelihood of not defaulting for 90+ days. For example, an EnergyScore of .90 implies there is only a 10% chance that someone would default on their utility payment for 90+ days.
Solstice and the EnergyScore user (i.e. a solar developer or lender) will establish an EnergyScore cut off for each project that represents a risk-level (i.e. the likelihood of default) that the user is comfortable with or that is comparable to their current FICO score requirements. For example, given the conditions of an average FICO score for all customers of 700, with no more than 20% of customers with FICO score ranging from 650-699, no more than 10% of Customers with FICO score ranging from 650-679, and a minimum FICO score of 650, the EnergyScore cuto will be a probability of default of [X]%.
